MEASUREMENT OF AGRICULTURAL TOTAL FACTOR PRODUCTIVITY GROWTH INCORPORATING ENVIRONMENTAL FACTORS: A NUTRIENTS BALANCE APPROACH
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This paper develops a new measure of total factor productivity growth in agricultural
production which incorporates environmental effects. The new measure is called the Total
Factor Nutrient-Orientated Productivity (TFNP) Index, and incorporates a materials balance
condition. TFNP measures changes in nutrient-orientated efficiency and can be
decomposed into efficiency change (EC), technological change (TC) and nutrient-orientated
technological change (NTC) components. An empirical analysis, involving country-level data
from OECD countries during 1990-2003, is provided using DEA methods. Estimates of
mean technical and nutrient-orientated efficiency are 0.798 and 0.526, respectively.
Estimated mean TFNP growth is 1.5% per year, with nutrient-orientated technological
progress contributing 0.8%.