Accounting for Undesirable Outputs in Irish Agricultural Productivity: A Non-Parametric Index Approach

Abstract

The common agricultural policy (CAP) pursues both productivity and sustainability objectives. Technologically induced productivity increases are also a frequent recommendation of economists to establish a sustainable agricultural sector. This recommendation might be misleading though if byproducts of intensive practices are ignored. This paper therefore integrates Nitrogen surpluses in productivity analysis of Irish agriculture for 2006 to 2016. The Malmquist-Luenberger productivity index (MLI) shows volatile and decreasing results, questioning the recommendation of relying on productivity gains. An index decomposition further suggests that reductions in byproduct are not driven by technological progress since they rather occur on inefficient farms.