Can Spatial Dependence Enhance Industry Sustainability? The Case of Pasture-Based Beef

Can sustainability be enhanced by maximizing the sum of private and social benefits from an industry? This might take place, for example, by identifying production options that increase profitability side-by-side with societal goals such as renewable energy production and carbon sequestration, healthier communities, environmental quality, and economic development. We explore this issue for pasture based beef (PBB), a nascent industry where industry profitability, community development, and quality of life can be enhanced by explicitly linking the PBB supply chain spatially and intertemporally, thereby increasing the sum of private and social benefits. We develop a framework based on optimal control theory that integrates a spatial component in which the production of PBB and alternative energy production as well as greenhouse gas emission reduction enhances private as well as social wealth. This model provides a basic foundation for developing agglomeration economies in a spatially dependent industry in which other locations are able to supply resources to given locations as a way of improving regional economic and environmental conditions. The framework is subsequently employed to identify possible industry conditions and configurations that demonstrate how profits, economic development, and environmental improvement can be created through increased pasture-beef production in a region where economic activities across locations play a crucial role across the spatial domain. Of course, the intensification of benefits derived from the agglomeration economies require coordination and cooperation among the key players within the impacted region.