Measuring Eco-efficiency of Agricultural Activity in European Countries: A Malmquist Index Approach

Abstract

This paper develops an environmental performance index by applying the benefit of the doubt weighting and the Malmquist index concepts using Kuosmanen and Kortelainen’s approaches. The main difference between these approaches and other methods is that environmental performance is based on the definition of the eco-efficiency as the ratio of economic value added to the environmental damage index. The overall environmental performance index is also decomposed into two components representing changes due to technological progress (or regress) and due to changes in relative eco-efficiency. The dynamic environmental performance analysis is applied to 15 European agricultures from 1990 to 2004. Model results show that technical progress mostly explain overall environmental performance growth, while relative eco-efficiency changes have been minor for most European agricultures for the sample period.