Heterogeneity in and determinants of technical efficiency in the use of polluting inputs

Abstract

Many industries are using damage control inputs to control the unpredictable damages to yield. For example, chemical production processes are using catalysts to promote reactions. However, use of these inputs can generate the pollutions and the efficient use of them can contribute to the protection of environment. This paper uses a famous nonparametric method (Data Envelopment Analysis: DEA) to estimate the efficiency in the use of polluting inputs such as damage control inputs and uses a regression analysis to identify factors which affect the efficiency. The results from application to an agricultural field show the existence of substantial inefficiency and heterogeneity across farms. This implies that uniform standards or incentives such as Pigouvian taxes are not useful to regulate the use of polluting inputs. Moreover, technical efficiency was determined by some farm-level characteristics. © Springer-Verlag Berlin Heidelberg 2005.