The value of environmental health in agricultural production across nonparametric efficiency quantiles

The valuation of environmental assets is a key current issue in the analysis of environmental assets from an economic viewpoint. Economic assessment often involves the assessment of community values for environmental protection (public benefits) and any complementary or offsetting changes to production (net private benefits). Whilst the majority of studies focus on final demand aspects of environmental values (e.g. recreational use, existence and amenity values from better environmental protection) there is a need to consider any associated impacts on production of economic commodities. The shadow prices and elasticity of production with respect to environmental inputs is of interest in determining efficient public procurement mechanisms for environmental improvements. In particular, distributional aspects of the use of environmental assets by agricultural enterprises may have implications for the efficiency of different approaches to environmental benefit procurement. We use production data from rangelands beef enterprises in Australia and nonparametric conditional quantiles to show that the efficiency of enterprises may be associated with the efficiency of utilisation of environmental inputs and thus may indicate that environmental procurement mechanisms may be benefiting relatively inefficient producers.