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Comparing frontier methods for economic-environmental trade-off analysis

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  • Van Meensel, Jef
  • Lauwers, Ludwig
  • Van Huylenbroeck, Guido
  • Van Passel, Steven

Abstract

This paper uses a mechanistic frontier approach as a reference to evaluate the ability of conventional parametric (SFA) and non-parametric (DEA) frontier approaches for analyzing economic-environmental trade-offs. Conventional frontier approaches are environmentally adjusted through incorporating the materials balance principle. The analysis is worked out for the Flemish pig finishing case, which is both representative and didactic. Results show that, on average, SFA and DEA yield adequate economic-environmental trade-offs. Both methods are good estimators for technical efficiency. Cost allocative and environmental allocative efficiency scores are less robust, due to the well-known methodological advantages and disadvantages of SFA and DEA. For particular firms, SFA, DEA and the mechanistic approach may yield different economic-environmental trade-offs. One has therefore to be careful when using conventional frontier approaches for firm-specific decision support. The mechanistic approach allows for optimizing performances per average present finisher, which is the production unit in pig finishing. Conventional frontier methods do not allow for this optimization since the number of average present finishers varies along the production functions. Since the mechanistic production function is based on underlying growth, feed uptake and mortality functions, additional firm-specific indicators can also be calculated at each point of the production function.

Suggested Citation

  • Van Meensel, Jef & Lauwers, Ludwig & Van Huylenbroeck, Guido & Van Passel, Steven, 2010. "Comparing frontier methods for economic-environmental trade-off analysis," European Journal of Operational Research, Elsevier, vol. 207(2), pages 1027-1040, December.
  • Handle: RePEc:eee:ejores:v:207:y:2010:i:2:p:1027-1040
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    Cited by:

    1. Sueyoshi, Toshiyuki & Yuan, Yan & Goto, Mika, 2017. "A literature study for DEA applied to energy and environment," Energy Economics, Elsevier, vol. 62(C), pages 104-124.
    2. Aldanondo-Ochoa, Ana M. & Casasnovas-Oliva, Valero L. & Almansa-Sáez, M. Carmen, 2017. "Cross-constrained Measuring the Cost-environment Efficiency in Material Balance Based Frontier Models," Ecological Economics, Elsevier, vol. 142(C), pages 46-55.
    3. Bijttebier, J. & Hamerlinck, J. & Moakes, S. & Scollan, N. & Van Meensel, J. & Lauwers, L., 2017. "Low-input dairy farming in Europe: Exploring a context-specific notion," Agricultural Systems, Elsevier, vol. 156(C), pages 43-51.
    4. Hoang, Viet-Ngu & Nguyen, Trung Thanh, 2013. "Analysis of environmental efficiency variations: A nutrient balance approach," Ecological Economics, Elsevier, vol. 86(C), pages 37-46.
    5. Yiridoe, Emmanuel K. & Amon-Armah, Frederick & Hebb, Dale & Jamieson, Rob, 2013. "Eco-efficiency of Alternative Cropping Systems Managed in an Agricultural Watershed," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150357, Agricultural and Applied Economics Association.
    6. Picazo-Tadeo, Andrés J. & Beltrán-Esteve, Mercedes & Gómez-Limón, José A., 2012. "Assessing eco-efficiency with directional distance functions," European Journal of Operational Research, Elsevier, vol. 220(3), pages 798-809.
    7. Leen, Frederik & Van den Broeke, Alice & Aluwé, Marijke & Lauwers, Ludwig & Millet, Sam & Van Meensel, Jef, 2018. "Stakeholder-driven modelling the impact of animal profile and market conditions on optimal delivery weight in growing-finishing pig production," Agricultural Systems, Elsevier, vol. 162(C), pages 34-45.
    8. Kuosmanen, Natalia & Kuosmanen, Timo, 2013. "Modeling Cumulative Effects of Nutrient Surpluses in Agriculture: A Dynamic Approach to Material Balance Accounting," Ecological Economics, Elsevier, vol. 90(C), pages 159-167.
    9. Huysveld, Sophie & Van Meensel, Jef & Van linden, Veerle & De Meester, Steven & Peiren, Nico & Muylle, Hilde & Dewulf, Jo & Lauwers, Ludwig, 2017. "Communicative farm-specific diagnosis of potential simultaneous savings in costs and natural resource demand of feed on dairy farms," Agricultural Systems, Elsevier, vol. 150(C), pages 34-45.
    10. Aldanondo, Ana M. & Casasnovas, Valero L. & Almansa, M. Carmen, 2016. "Cost-constrained measures of environmental efficiency: a material balance approach," MPRA Paper 72490, University Library of Munich, Germany.
    11. Rødseth, Kenneth Løvold, 2016. "Environmental efficiency measurement and the materials balance condition reconsidered," European Journal of Operational Research, Elsevier, vol. 250(1), pages 342-346.
    12. Emmanuel K. Yiridoe & Frederick Amon-Armah & Dale Hebb & Rob Jamieson, 2017. "Eco-efficient choice of cropping system for reducing nitrate-N leaching in an agricultural watershed," Journal of Bioeconomics, Springer, vol. 19(2), pages 201-221, July.
    13. Menegaki, Angeliki N., 2013. "Accounting for unobserved management in renewable energy & growth," Energy, Elsevier, vol. 63(C), pages 345-355.

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