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Econometric Estimation of Technical and Environmental Efficiency: An Application to Dutch Dairy Farms

Stijn Reinhard, C. Lovell and Geert Thijssen

American Journal of Agricultural Economics, 1999, vol. 81, issue 1, 44-60

Abstract: In this article we estimate the technical and environmental efficiency of a panel of Dutch dairy farms. Nitrogen surplus, arising from the application of excessive amounts of manure and chemical fertilizer, is treated as an environmentally detrimental input. A stochastic translog production frontier is specified to estimate the output-oriented technical efficiency. Environmental efficiency is estimated as the input-oriented technical efficiency of a single input, the nitrogen surplus of each farm. The mean output-oriented technical efficiency is rather high, 0.894, but the mean input-oriented environmental efficiency is only 0.441. Intensive dairy farms are both technically and environmentally more efficient than extensive farms. Copyright 1999, Oxford University Press.

Date: 1999
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Handle: RePEc:oup:ajagec:v:81:y:1999:i:1:p:44-60