Does the energy-related greenhouse gas emission abatement cost depend on the optimization direction: shadow pricing based on the weak disposability technology in the European Union agriculture

The European Green Deal and similar strategies seek to improve sustainability of the agricultural sector via public support programmes. It is important to assess the costs of sustainable energy use in agriculture by exploiting the shadow price approach. However, the earlier literature often ignored the fact that shadow price analysis may be sensitive to the assumed direction of optimization. This paper seeks to disentangle the major patterns in energy-related greenhouse gas (GHG) emission performance in the selected European Union countries by assuming different optimization directions. The country-level data are used to construct the environmental production technology by means of the data envelopment analysis. The different directional output distance functions (aggregate, unit and radial) for the weak disposability data envelopment analysis models are used to quantify the shadow prices of the energy-relevant GHG emission and construct the marginal abatement cost curves. The results indicate spatial and temporal variation in the environmental performance that can be addressed by adjusting the support programmes.

Automated summary

The European Green Deal and similar strategies aim to improve sustainability in agriculture through public support programs. This paper examines the costs of sustainable energy use in agriculture using the shadow price approach and explores the sensitivity of shadow price analysis to different optimization directions. By using country-level data and data envelopment analysis, the study quantifies the shadow prices of energy-related greenhouse gas emissions and constructs marginal abatement cost curves. The findings highlight the spatial and temporal variation in environmental performance, emphasizing the need for tailored support programs.