Measuring technical efficiency in the presence of pesticide spillovers and production uncertainty: The case of Dutch arable farms

Pesticides’ dynamic effects and production uncertainty play an important role in farmers’ production decisions. Pesticides have a current production impact through reducing crop damage in the current period and a future impact through impacting the farm biodiversity which alters the future production environment. This study presents the difference in inefficiency arising from models that ignore the dynamic effects of pesticides in production decisions and the impact of production uncertainty. A dynamic data envelopment analysis (DEA) model is applied to outputs, inputs, and undesirables of Dutch arable farms over the period 2003–2007. A bootstrap approach is used to explain farmers’ performance, providing empirical representations of the impact of stochastic elements on production. These empirical representations are used to adjust firms’ inefficiency scores to incorporate production uncertainty in efficiency evaluation. We find that efficiency increased dramatically when a production technology representation that considers both pesticides’ dynamic impacts, and production uncertainty is adopted.

[1]  Stefan Sperlich,et al.  Efficiency, subsidies and environmental adaptation of animal farming under CAP , 2005 .

[2]  Elvira Silva,et al.  Non-Parametric Production Analysis of Pesticides Use in the Netherlands , 2004 .

[3]  Douglas A. Landis,et al.  Refuge habitats modify impact of insecticide disturbance on carabid beetle communities , 2001 .

[4]  A. J. Morris,et al.  Evidence for the indirect effects of pesticides on farmland birds , 2004 .

[5]  J. Coggins,et al.  The Price of Pollution: A Dual Approach to Valuing SO2Allowances , 1994 .

[6]  Ariel Dinar,et al.  Evaluating the impact of agricultural extension on farms' performance in Crete: a nonneutral stochastic frontier approach , 2007 .

[7]  P. W. Wilson,et al.  Estimation and inference in two-stage, semi-parametric models of production processes , 2007 .

[8]  William H. Greene,et al.  Reconsidering heterogeneity in panel data estimators of the stochastic frontier model , 2005 .

[9]  David Pimentel,et al.  Environmental and Economic Costs of Pesticide Use , 1992 .

[10]  Vangelis Tzouvelekas,et al.  Technical Efficiency, Technological Change and Output Growth of Wheat Farms in Saskatchewan , 1999 .

[11]  David Kendrick,et al.  GAMS, a user's guide , 1988, SGNM.

[12]  Pierre Ouellette,et al.  Technological change and efficiency in the presence of quasi-fixed inputs: A DEA application to the hospital sector , 2004, Eur. J. Oper. Res..

[13]  Chien-Ming Chen,et al.  Production , Manufacturing and Logistics A network-DEA model with new efficiency measures to incorporate the dynamic effect in production networks , 2008 .

[14]  Timothy R. Carter,et al.  The effect of climatic variations on agricultural risk , 1985 .

[15]  Atakelty Hailu,et al.  Environmentally Sensitive Productivity Analysis of the Canadian Pulp and Paper Industry, 1959-1994: An Input Distance Function Approach , 2000 .

[16]  C. A. Knox Lovell,et al.  Environmental efficiency with multiple environmentally detrimental variables; estimated with SFA and DEA , 2000, Eur. J. Oper. Res..

[17]  Chien-Ming Chen,et al.  Measuring dynamic efficiency: Theories and an integrated methodology , 2010, Eur. J. Oper. Res..

[18]  Gale A. Boyd,et al.  The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants , 1999 .

[19]  G. Battese,et al.  Identification of Factors Which Influence the Technical Inefficiency of Indian Farmers , 1996 .

[20]  Irina V. Bezlepkina,et al.  Effects of subsidies in Russian dairy farming , 2005 .

[21]  John Quiggin,et al.  Event-Specific Data Envelopment Models and Efficiency Analysis , 2011 .

[22]  D. Hallam,et al.  Efficiency Analysis with Panel Data: A Study of Portuguese Dairy Farms , 1996 .

[23]  Mark L. Winston,et al.  Pollinators provide economic incentive to preserve natural land in agroecosystems , 2006 .

[24]  Alfons Oude Lansink,et al.  Impact of CAP Subsidies on Technical Efficiency of Crop Farms in Germany, the Netherlands and Sweden , 2010 .

[25]  Timo Kuosmanen.  Weak Disposability in Nonparametric Production Analysis with Undesirable Outputs , 2005 .

[26]  Clement A. Tisdell,et al.  Why farmers continue to use pesticides despite environmental, health and sustainability costs , 2001 .

[27]  Rolf Färe,et al.  A Comment on Weak Disposability in Nonparametric Production Analysis , 2009 .

[28]  Frank Ewert,et al.  Economic impacts of climatic variability and subsidies on European agriculture and observed adaptation strategies , 2008 .

[29]  Grigorios Emvalomatis,et al.  An Examination of the Relationship Between Subsidies on Production and Technical Efficiency in Agriculture: The Case of Cotton Producers in Greece , 2008 .

[30]  C.A.K. Lovell,et al.  Multilateral Productivity Comparisons When Some Outputs are Undesirable: A Nonparametric Approach , 1989 .

[31]  Rolf Färe,et al.  Nonparametric Productivity Analysis with Undesirable Outputs: Comment , 2003 .

[32]  J. Cooper,et al.  The benefits of pesticides to mankind and the environment , 2007 .

[33]  T. R. Nunamaker,et al.  Using data envelopment analysis to measure the efficiency of non‐profit organizations: A critical evaluation , 1985 .

[34]  Robert G. Chambers,et al.  Efficiency analysis in the presence of uncertainty , 2010 .

[35]  Grigorios Emvalomatis.  Adjustment and unobserved heterogeneity in dynamic stochastic frontier models , 2012 .

[36]  Ana Roldán Serrano,et al.  Quality fruit improvement in sweet pepper culture by bumblebee pollination , 2006 .

[37]  Agapi Somwaru,et al.  Incorporating indesirable outputs into models of production: an application to US agriculture , 1994 .

[38]  Daniel Tyteca,et al.  Linear Programming Models for the Measurement of Environmental Performance of Firms—Concepts and Empirical Results , 1997 .

[39]  A. Hailu,et al.  Non‐Parametric Productivity Analysis with Undesirable Outputs: An Application to the Canadian Pulp and Paper Industry , 2001 .

[40]  Rolf Färe,et al.  Productivity and Undesirable Outputs: A Directional Distance Function Approach , 1995 .

[41]  Marco Vighi,et al.  Impacts of a pesticide on pollinator species richness at different spatial scales , 2010 .

[42]  Kazuyuki Sekitani,et al.  Returns to scale in dynamic DEA , 2005, Eur. J. Oper. Res..

[43]  Calum G. Turvey,et al.  Decomposition Measures of Technical Efficiency for Ontario Dairy Farms , 1990 .

[44]  Rolf Färe,et al.  Environmental Performance : an Index Number Approach , 2004 .

[45]  W. Greene.  Fixed and Random Effects in Stochastic Frontier Models , 2002 .

[46]  Edzer J. Pebesma,et al.  Real-time automatic interpolation of ambient gamma dose rates from the Dutch radioactivity monitoring network , 2009, Comput. Geosci..

[47]  R. Färe,et al.  An activity analysis model of the environmental performance of firms—application to fossil-fuel-fired electric utilities , 1996 .

[48]  Wayne L. Fairchild,et al.  Perturbation of the aquatic invertebrate community of acidic bog ponds by the insecticide fenitrothion , 1993 .

[49]  R. Färe.  Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach , 1993 .

[50]  J. Chavas,et al.  On Crop Biodiversity, Risk Exposure, and Food Security in the Highlands of Ethiopia , 2009 .

[51]  Alfons Oude Lansink,et al.  Competitiveness of dairy farms in three countries: the role of CAP , 2008 .

[52]  Steve Wiggins,et al.  The Future of Small Farms , 2010 .

[53]  R. Färe,et al.  Intertemporal Production Frontiers: With Dynamic DEA , 1996 .

[54]  Fatima Lambarraa,et al.  The impact of the 1999 CAP reforms on the efficiency of the COP sector in Spain , 2009 .

[55]  Ada Wossink,et al.  Environmental and cost efficiency of pesticide use in transgenic and conventional cotton production , 2006 .

[56]  Giannis Karagiannis,et al.  Measuring and explaining scale efficiency with the parametric approach: the case of Greek tobacco growers , 2005 .

[57]  Elvira Silva,et al.  CO2 and Energy Efficiency of Different Heating Technologies in the Dutch Glasshouse Industry , 2003 .

[58]  Timo Kuosmanen,et al.  Weak Disposability in Nonparametric Production Analysis: Reply to Färe and Grosskopf , 2009 .

[59]  M. Goto,et al.  Measurement of Dynamic Efficiency in Production: An Application of Data Envelopment Analysis to Japanese Electric Utilities , 2003 .