Estimating Production and Environmental Efficiency Under Uncertainty

Robert G. Chambers (), Saurav R. Kunwar, John Quiggin, Teresa Serra and Shuo Wang ()
Additional contact information
Robert G. Chambers: Department of Agricultural and Resource Economics, University of Maryland, College Park, Maryland, USA
Saurav R. Kunwar: Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign, Urbana, Illinois, USA
John Quiggin: School of Economics, University of Queensland, Brisbane, Queensland, Australia
Teresa Serra: Department of Agricultural and Consumer Economics, University of Illinois Urbana-Champaign, Urbana, Illinois, USA
Shuo Wang: Department of Agricultural and Resource Economics, University of Maryland, College Park, Maryland, USA

Annual Review of Resource Economics, 2025, vol. 17, issue 1, 85-104

Abstract: The Arrow-Savage-Debreu framework provides a theoretical foundation for analyzing productivity and efficiency under uncertainty. It treats uncertainty while preserving core economic principles and offering insights into producer decision-making. A key challenge is to reconcile ex ante conceptual models with ex post empirical data. We survey econometric and mathematical programming methods used to address this challenge. These methods include stochastic production functions, latent state models, auxiliary-variable methods, and data envelopment analysis techniques. We discuss the strengths and limitations of each method, highlighting how they handle the fundamental challenge of measuring efficiency when production decisions are made under uncertainty but only realized outcomes are observable. Our analysis demonstrates that such measurement complexity necessitates carefully designed empirical approaches to capture the true nature of production and environmental efficiency.

Keywords: producer decision-making; uncertainty; environmental efficiency; production (search for similar items in EconPapers)
JEL-codes: C61 D24 D81 Q12 Q15 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1146/annurev-resource-121523-015001
Full text downloads are only available to subscribers. Visit the abstract page for more information.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:anr:reseco:v:17:y:2025:p:85-104

Ordering information: This journal article can be ordered from
http://www.annualreviews.org/action/ecommerce

DOI: 10.1146/annurev-resource-121523-015001

Access Statistics for this article

More articles in Annual Review of Resource Economics from Annual Reviews Annual Reviews 4139 El Camino Way Palo Alto, CA 94306, USA.
Bibliographic data for series maintained by http://www.annualreviews.org ().