Epsilon Archive for Student Projects

Abstract

This study adopts the concept of environmental efficiency to evaluate the environmental performance of the crop sector in Sweden in terms of their N emission from arable land, using unbalanced panel data from 2009 to 2021 with a total of 2231 observations from the FADN dataset. This study computes N emission from arable lands and treats it as an undesirable output in the production function, employing a translog hyperbolic distance function to estimate the environmental efficiency of Swedish crop farms. The average environmental efficiency is 0.777, suggesting that environmental efficiency for sample crop farms can be improved by 22.3% on average via reducing N emission and expanding FNVA with a given set of inputs and technology T. The environmental efficiency scores vary heavily among counties and municipalities. Meanwhile, the relative shadow price is estimated with a value of 2.42, indicating that reducing one unit of N emission needs to sacrifice 2.42 units of FNVA. In the second step, a fixed effect model is applied to investigate the impact of nitrogen compensation and other farms’ socio-economic characteristics on environmental efficiency performance. It is found that the nitrogen compensation does not drive higher environmental efficiency and the crop diversification index is negatively associated with environmental efficiency. The other influencing factors i.e., economic size, and age of farm owner do not show significant impacts on environmental efficiency.