Efficiency, environmental contaminants and farm size: testing for links using stochastic production frontiers

Paper number: 95/05

Year: 1995

Paper Category: Discussion Paper

Authors

K. HADRI and J WHITTAKER*

University of Exeter

Abstract

This paper investigates whether there is any relationship between farm size, technical efficiency and the use of agrichemicals which are potentially environmentally contaminating. These questions are pertinent in the context of current EU policy decions. Using two models of stochastic frontier production and a set of panel data on 35 farms from the South West of England for the years 1987-1991, we obtain an indication that there is a positive, though weak relationship between technical efficiency and the use of contaminants, and between technical efficiency and farm size. However, there is a negligible negative relationship between farm size and use of contaminants.

JEL Classification numbers: C23, C24, D24.
Keywords: Frontier production, technical efficiency, panel data, environment, farm size.

Corresponding author: Kaddour HADRI, Department of Economics, Amory Building, University of Exeter, Exeter EX4 4RJ, England.

*We would like to thank T. Coelli from the University of New England, Australia, for kindly allowing us to use his software FRONTIER version 4.1