The Good and the Bad: Environmental Efficiency in Northeastern U.S. Dairy Farming
Boris Bravo-Ureta and
Agricultural and Resource Economics Review, 2016, vol. 45, issue 1, 22-43
This study evaluates the environmental performance of northeastern U.S. dairy operations that differ in size using a directional output-distance function that measures the joint production of milk and emissions while incorporating a four-way error approach that captures farm-size heterogeneity, transient and persistent technical efficiency, and random errors. For the emission component, a comprehensive pollution index is generated that incorporates three major sources of pollution in dairy farming: fuel, fertilizer, and livestock. Computed shadow prices and Morishima elasticities of substitution reveal that large dairy operations are environmentally inefficient compared to their smaller counterparts.
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