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Incorporating Environmental Impacts in the Measurement of Agricultural Productivity Growth

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  • Ball, V. Eldon
  • Lovell, C.A. Knox
  • Luu, H.
  • Nehring, Richard F.

Abstract

Agricultural production is known to have environmental impacts, both adverse and beneficial, and it is desirable to incorporate at least some of these impacts in an environmentally sensitive productivity index. In this paper, we construct indicators of water contamination from the use of agricultural chemicals. These environmental indicators are merged with data on marketed outputs and purchased inputs to form a state-by-year panel of relative levels of outputs and inputs, including environmental impacts. We do not have prices for these undesirable by products, since they are not marketed. Consequently, we calculate a series of Malmquist productivity indexes, which do not require price information. Our benchmark scenario is a conventional Malmquist productivity index based on marketed outputs and purchased inputs only. Our comparison scenarios consist of environmentally sensitive Malmquist productivity indexes that include indicators of risk to human health and to aquatic life from chronic exposure to pesticides. In addition, we derive a set of virtual prices of the undesirable by-products that can be used to calculate an environmentally sensitive Fisher index of productivity change.

Suggested Citation

  • Ball, V. Eldon & Lovell, C.A. Knox & Luu, H. & Nehring, Richard F., 2004. "Incorporating Environmental Impacts in the Measurement of Agricultural Productivity Growth," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 29(03), December.
  • Handle: RePEc:ags:jlaare:30911
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    References listed on IDEAS

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    Cited by:

    1. Ramli, Noor Asiah & Munisamy, Susila, 2015. "Eco-efficiency in greenhouse emissions among manufacturing industries: A range adjusted measure," Economic Modelling, Elsevier, vol. 47(C), pages 219-227.
    2. Graham, Mary, 2009. "Developing a social perspective to farm performance analysis," Ecological Economics, Elsevier, vol. 68(8-9), pages 2390-2398, June.
    3. Walter Briec & Kristiaan Kerstens & Nicolas Peypoch, 2012. "Exact Relations Between Four Definitions Of Productivity Indices And Indicators," Bulletin of Economic Research, Wiley Blackwell, vol. 64(2), pages 265-274, April.
    4. Emilio Galdeano-Gómez, 2010. "Exporting and Environmental Performance: A Firm-level Productivity Analysis," The World Economy, Wiley Blackwell, vol. 33(1), pages 60-88, January.
    5. Kortelainen, Mika, 2008. "Dynamic environmental performance analysis: A Malmquist index approach," Ecological Economics, Elsevier, vol. 64(4), pages 701-715, February.
    6. Wamisho, Kassu, 2012. "The Shadow Price of GHG Reduction in Corn Ethanol Plants," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124719, Agricultural and Applied Economics Association.
    7. repec:pal:marecl:v:19:y:2017:i:1:d:10.1057_mel.2015.29 is not listed on IDEAS
    8. repec:jns:jbstat:v:227:y:2007:i:3:p:273-294 is not listed on IDEAS
    9. Wamisho, Kassu, 2012. "The Shadow Price of GHG Reduction in Corn Ethanol Plants," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126862, International Association of Agricultural Economists.
    10. Singbo, Alphonse G. & Lansink, Alfons Oude & Emvalomatis, Grigorios, 2015. "Estimating shadow prices and efficiency analysis of productive inputs and pesticide use of vegetable production," European Journal of Operational Research, Elsevier, vol. 245(1), pages 265-272.
    11. Murillo Carmen & San Juan Carlos & Sperlich Stefan, 2007. "An Empirical Assessment of the EU Agricultural Policy Based on Firm Level Data," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 227(3), pages 273-294, June.
    12. Cuesta, Rafael A. & Lovell, C.A. Knox & Zofío, José L., 2009. "Environmental efficiency measurement with translog distance functions: A parametric approach," Ecological Economics, Elsevier, vol. 68(8-9), pages 2232-2242, June.
    13. Chuku, Chuku, 2015. "Incorporating Environmental Externalities in Total Factor Productivity Analysis: The Case of Soil Erosion in Nigerian Agriculture," MPRA Paper 68165, University Library of Munich, Germany.
    14. Lien, Gudbrand D. & Kumbhakar, Subal C. & Hardaker, J. Brian, 2008. "Determinants Of Part-Time Farming And Its Effect On Farm Productivity And Efficiency," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6701, European Association of Agricultural Economists.
    15. Huffman, Wallace, 2009. "Technology and Innovation in World Agriculture: Prospects for 2010-2019," Staff General Research Papers Archive 13060, Iowa State University, Department of Economics.
    16. Dubrocard, Anne & Prombo, Michel, 2012. "International comparison of Environmental performance," MPRA Paper 48072, University Library of Munich, Germany, revised 05 Jul 2013.
    17. Alessandro Manello, 2011. "Environment and economic efficiency: an analysis of some polluting Italian industries," CERIS Working Paper 201103, Institute for Economic Research on Firms and Growth - Moncalieri (TO) ITALY -NOW- Research Institute on Sustainable Economic Growth - Moncalieri (TO) ITALY.
    18. Plesha, Nataliya & Ray, Subhash C. & Nehring, Richard F. & Ball, V. Eldon, 2012. "Incorporating "Bads" and "Goods" in the Measurement of Agricultural Productivity Growth in the U.S," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124585, Agricultural and Applied Economics Association.
    19. Bostian, Moriah B. & Herlihy, Alan T., 2014. "Valuing tradeoffs between agricultural production and wetland condition in the U.S. Mid-Atlantic region," Ecological Economics, Elsevier, vol. 105(C), pages 284-291.
    20. K Hervé Dakpo & Philippe Jeanneaux & Laure Latruffe, 2014. "Inclusion of undesirable outputs in production technology modeling:The case of greenhouse gas emissions in French meat sheep farming," Working Papers SMART - LERECO 14-08, INRA UMR SMART-LERECO.
    21. Skevas, Theodoros & Stefanou, Spiro E. & Oude Lansink, Alfons, 2014. "Pesticide use, environmental spillovers and efficiency: A DEA risk-adjusted efficiency approach applied to Dutch arable farming," European Journal of Operational Research, Elsevier, vol. 237(2), pages 658-664.
    22. Bellenger, Moriah J. & Herlihy, Alan T., 2010. "Performance-based environmental index weights: Are all metrics created equal?," Ecological Economics, Elsevier, vol. 69(5), pages 1043-1050, March.
    23. Graham, Mary, 2008. "Biophysical Modelling and Performance Measurement," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6773, Australian Agricultural and Resource Economics Society.
    24. Andersen, Matthew A. & Alston, Julian M. & Pardey, Philip G., 2009. "Capital Service Flows: Concepts and Comparisons of Alternative Measures in U.S. Agriculture," Staff Papers 50098, University of Minnesota, Department of Applied Economics.

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