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Incorporating "Bads" and "Goods" in the Measurement of Agricultural Productivity Growth in the U.S

Author

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  • Plesha, Nataliya
  • Ray, Subhash C.
  • Nehring, Richard F.
  • Ball, V. Eldon

Abstract

Productive utilization of resources has enabled American agriculture to supply the nation with vast quantities of food at a high level of efficiency. However, the USDA shows that 2011 pesticide expenses increased by about $100 million resulting from a slight increase of planted acres and a one-percent rise in prices paid. Some believe that increased food and fiber production has come at a cost to environmental quality. Modern pest management utilizes a wider range of appropriate pest management options despite the diversity of chemical use in agriculture. In fact, modern agriculture may suffer significant economic losses in yield and quality without intensive use of pesticides and other chemicals. This paper presents findings on the efficiency score measures with undesirable or bad outputs and the offending bad input (i.e., pesticides and fertilizers) for twelve key corn producing states, twelve key cotton producing states, and fifteen key soybean producing states using a unique panel of state-level data set for 1960-1997. Our preliminary findings indicate that the efficiency scores for corn, cotton, and soybean producing states are consistent with the pesticide risk indicators for protection of drinking water patterns discussed in Kellogg et al, 2002. In general, there is more room for reducing the bad output along with the polluting input (e.g., pesticide and fertilizer) than for expanding the good outputs (e.g., crops, livestock, and farm related output) in the major corn and soybean producing states. Only half of the 12 cotton producing states were found to be efficient over the entire period. Our findings using the updated, revised and extended through 1997 USDA data on “goods” and “bads” differ from the previous results reported in Harper et al. “New Developments in Productivity Analysis” (2001) due to the different approach (i.e., measured efficiency scores) used in this study.

Suggested Citation

  • 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.
  • Handle: RePEc:ags:aaea12:124585
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    References listed on IDEAS

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    1. Fare, Rolf & Grosskopf, Shawna & Tyteca, Daniel, 1996. "An activity analysis model of the environmental performance of firms--application to fossil-fuel-fired electric utilities," Ecological Economics, Elsevier, vol. 18(2), pages 161-175, August.
    2. Rolf Färe & Shawna Grosskopf, 2007. "A Comment on Weak Disposability in Nonparametric Production Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 535-538.
    3. Murty, Sushama & Russell, R. Robert, 2010. "On modeling pollution-generating technologies," The Warwick Economics Research Paper Series (TWERPS) 931, University of Warwick, Department of Economics.
    4. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February.
    5. Atakelty Hailu & Terrence S. Veeman, 2001. "Non-parametric Productivity Analysis with Undesirable Outputs: An Application to the Canadian Pulp and Paper Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 605-616.
    6. 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.
    7. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-891, December.
    8. Rolf Färe & Shawna Grosskopf & Carl A Pasurka, Jr., 2001. "Accounting for Air Pollution Emissions in Measures of State Manufacturing Productivity Growth," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 381-409.
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    More about this item

    Keywords

    Agricultural productivity; Good Outputs; Undesirable or bad outputs; Data envelopment analysis; Environmental Economics and Policy; Production Economics; Productivity Analysis; Q18; Q10; Q50; D24;

    JEL classification:

    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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