Revealing the cost of environmental services in dairy farms

Kofivi Dzegle and Aude Ridier ()
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Kofivi Dzegle: SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement
Aude Ridier: SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement

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Abstract: The aim of this article is to assess the impact of dairy farms' environmental performance on milk production costs. Five classes of environmental performance of dairy farms, based on greenhouse gas emissions, and three classes of performance based on the Shannon diversity index, are defined. The analysis is based on accounting data from a panel of conventional dairy farms in Bretagne region between 2020 and 2022. Two methods are compared to evaluate the intrinsic cost of environmental services: the linear mixed-effects model and the treatment effects method. Our findings reveal that the marginal production costs induced by improved environmental performance based on emissions increase with the performance classes, whereas increased biodiversity reduces production costs. The results of the two tested methods are consistent, with the mixed-effects model better accounting for unobservable heterogeneity.

Keywords: Environmental performance; Production cost; Dairy farms; Mixed effects model; Generalised propensity score (search for similar items in EconPapers)
Date: 2023-08-31
New Economics Papers: this item is included in nep-agr
Note: View the original document on HAL open archive server: https://hal.inrae.fr/hal-04679354v1
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Published in XVII EAAE Congress, European Association of Agricultural Economics, Aug 2023, Rennes, France

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