Journal
EUROPEAN JOURNAL OF OPERATIONAL RESEARCH
Volume 237, Issue 2, Pages 658-664Publisher
ELSEVIER
DOI: 10.1016/j.ejor.2014.01.046
Keywords
Arable farming; Environmental spillovers; DEA; Pesticides; Production risk
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Pesticides are widely used by crop producers in developed countries to combat risk associated with pests and diseases. However, their indiscriminate use can lead to various environmental spillovers that may alter the agricultural production environment thus contributing to production risk. This study utilises a data envelopment analysis (DEA) approach to measure performance of arable farms, incorporating pesticides' environmental spillovers and output variance as undesirable outputs in the efficiency analysis and taking explicitly into account the effect of pesticides and other inputs on production risk. The application focuses on panel data from Dutch arable farms over the period 2003-2007. A moment approach is used to compute output variance, providing empirical representations of the risk-increasing or -decreasing nature of the used inputs. Finally, shadow values of risk-adjusted inputs are computed. We find that pesticides are overused in Dutch arable farming and there is a considerable evidence of the need for decreasing pesticides' environmental spillovers. (C) 2014 Elsevier B.V. All rights reserved.
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