Stijn Reinhard

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

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.

Environmental efficiency with multiple environmentally detrimental variables; estimated with SFA and DEA

Abstract The objective of this paper is to estimate comprehensive environmental efficiency measures for Dutch dairy farms. The environmental efficiency scores are based on the nitrogen surplus, phosphate surplus and the total (direct and indirect) energy use of an unbalanced panel of dairy farms. We define environmental efficiency as the ratio of minimum feasible to observed use of multiple environmentally detrimental inputs, conditional on observed levels of output and the conventional inputs. We compare two methods for the calculation of efficiency; namely Stochastic Frontier Analysis (SFA) and Data Envelopment Analysis (DEA). This paper reveals the strengths and weaknesses for estimating environmental efficiency of the methods applied. Both SFA and DEA can estimate environmental efficiency scores. The mean technical efficiency scores (output-oriented, SFA 89%, DEA 78%) and the mean comprehensive environmental efficiency scores (SFA 80%, DEA 52%) differ between the two methods. SFA allows hypothesis testing, and the monotonicity hypothesis is rejected for the specification including phosphate surplus. DEA can calculate environmental efficiency scores for all specifications, because regularity is imposed in this method.

Analysis of Environmental Efficiency Variation

In this article, we develop and implement a methodology for analyzing the sources of variation in environmental efficiency across producers. We formulate a two-stage model. In the first stage, we use stochastic frontier analysis to estimate both technical and environmental efficiency. In the second stage, we again use stochastic frontier analysis to regress estimated environmental efficiency scores against a variety of technology, physical environment, and management variables. In this stage we estimate the impact of each explanatory variable on environmental efficiency, and we derive conditional estimates of environmental efficiency from the one-sided error component. We illustrate our methodology with an empirical application to a panel of Dutch dairy farms. We find evidence of relatively low levels of environmental efficiency, and we find that environmental efficiency can be improved through a number of policy options, including the provision of farmers with more insight into the nutrient balance of their farms.

Investigating technical efficiency and potential technological change in Dutch pig farming

This paper uses data envelopment analysis (DEA) to investigate the possibilities for improving the technical, economic and environmental performance of Dutch pig farms relative to currently applied technologies and relative to currently available but not yet applied technologies. First, the efficiency is computed relating observed pig farms to the current best practice frontier. This frontier is computed from a sample of observed pig farms, using DEA based on linear programming. Second, potential technological change is computed as the change of the frontier due to addition of virtual farms (based on technologies that are available but not applied in practice yet) to the dataset. It is found that the mean technical efficiency of farms is rather high relative to the currently available technologies. Overall technical performance increases slightly when new technologies are introduced. Environmental performance increases importantly when applying new technologies. In particular, the ammonia emissions can be reduced largely by utilising the up-to-date housing techniques.