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Incorporating Environmental Impacts in the Measurement of Agricultural Productivity Growth

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

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.

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File URL: http://purl.umn.edu/30911
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Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 29 (2004)
Issue (Month): 03 (December)
Pages:

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Handle: RePEc:ags:jlaare:30911
Contact details of provider: Web page: http://waeaonline.org/

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  1. Reig-Martinez, Ernest & Picazo-Tadeo, Andres & Hernandez-Sancho, Francesc, 2001. "The calculation of shadow prices for industrial wastes using distance functions: An analysis for Spanish ceramic pavements firms," International Journal of Production Economics, Elsevier, vol. 69(3), pages 277-285, February.
  2. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September.
  3. Michael Ollinger & Jorge Fernandez-Cornejo, 1995. "Innovation and Regulation in the Pesticide Industry," Working Papers 95-14, Center for Economic Studies, U.S. Census Bureau.
  4. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
  5. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December.
  6. Hailu, Atakelty & Veeman, Terrence S., 2000. "Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach," Journal of Environmental Economics and Management, Elsevier, vol. 40(3), pages 251-274, November.
  7. V. Eldon Ball & Frank M. Gollop & Alison Kelly-Hawke & Gregory P. Swinand, 1999. "Patterns of State Productivity Growth in the U.S. Farm Sector: Linking State and Aggregate Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 164-179.
  8. Coggins, Jay S. & Swinton, John R., 1996. "The Price of Pollution: A Dual Approach to Valuing SO2Allowances," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 58-72, January.
  9. George C. Davis & Ni Lin & C. Richard Shumway, 2000. "Aggregation without Separability: Tests of the United States and Mexican Agricultural Production Data," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 214-230.
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