Abstract
Better understanding the trade-offs/synergies between desirable and environmentally harmful
(undesirable) outputs of farms is relevant for future targeting and tailoring of agri-environmental policy measures. In this study we use a hyperbolic distance function to represent the production technology employed by dairy farms located in the mountainous region of Switzerland, thus allowing for simultaneous expansion of desirable outputs (milk and non-milk) and contraction of undesirable output (nitrogen surplus). We calculate the farm-specific shadow price of the undesirable output. The obtained shadow prices (mean value with respect to milk output was equal to 28 Swiss francs per kg of nitrogen) provide quantitative information on farmers’ cost of reducing
nitrogen pollution.
(undesirable) outputs of farms is relevant for future targeting and tailoring of agri-environmental policy measures. In this study we use a hyperbolic distance function to represent the production technology employed by dairy farms located in the mountainous region of Switzerland, thus allowing for simultaneous expansion of desirable outputs (milk and non-milk) and contraction of undesirable output (nitrogen surplus). We calculate the farm-specific shadow price of the undesirable output. The obtained shadow prices (mean value with respect to milk output was equal to 28 Swiss francs per kg of nitrogen) provide quantitative information on farmers’ cost of reducing
nitrogen pollution.
| Original language | English |
|---|---|
| Pages (from-to) | 225-246 |
| Number of pages | 22 |
| Journal | Journal of Agricultural and Resource Economics |
| Volume | 41 |
| Issue number | 2 |
| Publication status | Published - May 2016 |
Keywords
- dairy farms
- environmental performance
- hyperbolic distance function
- shadow prices