Proceedings of The 2nd International Conference on Management, Economics, and Finance
Modeling undesirable factor in efficiency assessment of agricultural sector within EU-27 countries and over a time period
Seyyed Hassan Pishgar-Komleh, Lukáš Čechura, Elena Kuzmenko
Agriculture plays an important role in economy influencing both society and environment due to its crucial contribution to food security, employment opportunities and climate change. According to the energy and climate policy framework, the target for 2030 is reduction of 40% of greenhouse gas (GHG) emissions in the European Union without any decline in productivity of production. One critical challenge in assessing the productivity is involving the undesirable outputs a long with a series of time. This approach essentially requires applying new management methods. In this study we applied a slack based measurement (SBM) of efficiency in the presence of undesirable outputs in a window data envelopment analysis (WDEA) framework to evaluate the crop production sector of 27 EU countries. The required data consisting the average input costs (€ ha-1) (including fertilizer, protection, seed and other costs as the model inputs), the gross domestic product (€ ha-1) and the total GHG emissions (kg CO2-eq ha-1) as the model desirable and undesirable outputs were collected from FADN and Eurostat databases. To indicate the ideal window width, the efficiency scores of ten window data envelopment analysis (WDEA) models were evaluated. Obtained results showed the highest efficiency scores for Spain, Greece, Italy and Malta. To compare the proposed model with the conventional ones, the results of a SBM-WDEA incorporated with undesirable outputs have been compared with a SBM-WDEA model without undesirable output and a SBM-DEA model with undesirable output and without window analysis. The results advocate in favor of the new model, showing promise for its better performance.
Keywords: Agriculture; Europe; Productivity; SBM with undesirable; Window-DEA.