Environmental efficiency : meaning and measurement and application to Australian dairy farms

Technical efficiency has been widely studied in the literature, but in its pursuit, many of the inputs used can impact on the environment. Environmental effects can be modelled as undesirable output or, as has been the case in more recent studies, as conventional inputs. This paper examines the concept of environmental efficiency and how it can be used to evaluate the performance of Australian dairy farming, using nitrogen surplus, arising from excessive applications of fertilizer, as a detrimental input. Farming promotes the image of clean and green production and if this image is to be maintained, there is a need to ensure activities are environmentally friendly.