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Economic Value of Greenhouse Gases and Nitrogen Surpluses: Society vs Farmers’ Valuation

  • David Berre

    ()

    (IESEG School of Management (LEM-CNRS) and University Lille 1, CIRAD/UMR SELMET)

  • Jean-Philippe Boussemart

    (IESEG School of Management (LEM-CNRS) and University Lille 3)

  • Emmanuel Tillard

    (UMR SELMET / CIRAD La Réunion)

Livestock supply must challenge the growth of final demand in the developing countries. This challenge has to take into account its ecological effects since the dairy and livestock sectors are clearly pointed out as human activities which contribute significantly to environmental deterioration. Therefore, livestock activity models have to include desirable and undesirable outputs simultaneously. Using this perspective, we implement a Data Envelopment Analysis model to evaluate shadow prices of outputs under contradictory objectives between the society and the farmers. Our results highlight the current debate about the negative or positive shadow prices of the undesirable outputs in efficiency frameworks. Furthermore, we show that farmers are able to reduce pollution significantly if society accepts to balance farmers’ opportunity cost. Finally, we observe that the initial levels of CO2 tax are in line with farmers’ valuation while the current tax evolution tends to reach the value of pollution targeted by the society

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Paper provided by IESEG School of Management in its series Working Papers with number 2012-ECO-02.

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Length: 15 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:ies:wpaper:e201202
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  1. Boussemart, Jean-Philippe & Leleu, Herve & Ojo, Oluwaseun, 2011. "Could Society’s willingness to reduce pesticide use be aligned with Farmers’ economic self-interest?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 120402, European Association of Agricultural Economists.
  2. Gupta, Manish, 2005. "Estimation of marginal abatement costs for undesirable outputs in India's power generation sector: An output distance function approach," Working Papers 05/27, National Institute of Public Finance and Policy.
  3. Minh Ha-Duong, 2009. "What is the Price of Carbon? Five definitions," Post-Print halshs-00451715, HAL.
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  5. 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.
  6. Speck, Stefan, 1999. "Energy and carbon taxes and their distributional implications," Energy Policy, Elsevier, vol. 27(11), pages 659-667, October.
  7. Timo Kuosmanen & Victor Podinovski, 2008. "Weak Disposability in Nonparametric Production Analysis: Reply to F�re and Grosskopf," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 539-545.
  8. Pittman, Russell W, 1983. "Multilateral Productivity Comparisons with Undesirable Outputs," Economic Journal, Royal Economic Society, vol. 93(372), pages 883-91, December.
  9. Kuosmanen, Timo & Kazemi Matin, Reza, 2011. "Duality of weakly disposable technology," Omega, Elsevier, vol. 39(5), pages 504-512, October.
  10. Andrés J. Picazo-Tadeo & José A. Gómez-Limón & Ernest Reig-Martínez, 2010. "Assessing farming eco-efficiency: A Data Envelopment Analysis approach," Working Papers 1004, Department of Applied Economics II, Universidad de Valencia.
  11. Li, Sung-Ko, 1995. "Relations between convexity and homogeneity in multioutput technologies," Journal of Mathematical Economics, Elsevier, vol. 24(4), pages 311-318.
  12. Rolf F�re & Shawna Grosskopf, 2003. "Nonparametric Productivity Analysis with Undesirable Outputs: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1070-1074.
  13. Rolf F�re & 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.
  14. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  15. 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.
  16. Timo Kuosmanen, 2005. "Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 1077-1082.
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