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Environmental Efficiency and Pollution Costs of Nitrogen Surplus in Dairy Farms: A Parametric Hyperbolic Technology Distance Function Approach

Author

Listed:
  • Adewale Henry Adenuga

    (Agri-Food and Biosciences Institute (AFBI))

  • John Davis

    (Agri-Food and Biosciences Institute (AFBI))

  • George Hutchinson

    (Queen’s University Belfast)

  • Trevor Donnellan

    (Teagasc, Rural Economy and Development Centre)

  • Myles Patton

    (Agri-Food and Biosciences Institute (AFBI))

Abstract

Negative externalities such as nitrogen (N) surplus that accompany dairy production activities are not usually accounted for in the market place since they are not costed. Using a parametric hyperbolic environmental technology distance function approach, we estimate the environmental efficiency and farm-specific abatement costs (shadow price) of nitrogen surplus in dairy farms on the island of Ireland (Northern Ireland and the Republic of Ireland). The methodology, unlike previous approaches (output/input distance functions), allows for asymmetric treatments of production outputs (desirable and undesirable outputs). We also analyse the farm level nitrogen pollution costs ratio and its determinants. The results of our analyses showed that the average environmental technical efficiency estimates for the Republic of Ireland and Northern Ireland are 0.89 and 0.92 and the mean abatement costs per kg of N surplus is €4.02 and €6.2 respectively. We found a reasonable degree of variation in the spectrum of abatement costs across the dairy farms with a relative increase observed over the years.

Suggested Citation

  • Adewale Henry Adenuga & John Davis & George Hutchinson & Trevor Donnellan & Myles Patton, 2019. "Environmental Efficiency and Pollution Costs of Nitrogen Surplus in Dairy Farms: A Parametric Hyperbolic Technology Distance Function Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 1273-1298, November.
    • Handle: RePEc:kap:enreec:v:74:y:2019:i:3:d:10.1007_s10640-019-00367-2
    DOI: 10.1007/s10640-019-00367-2
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