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

Stijn Reinhard, C. A. Knox Lovell and Geert Thijssen
American Journal of Agricultural Economics
Vol. 81, No. 1 (Feb., 1999), pp. 44-60
Stable URL: http://www.jstor.org/stable/1244449
Page Count: 17
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Econometric Estimation of Technical and Environmental Efficiency: An Application to Dutch Dairy Farms
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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.

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