THE OPPORTUNITY COST OF FOOD SAFETY REGULATION - AN OUTPUT DIRECTIONAL DISTANCE FUNCTION APPROACH

This paper provides a novel methodology to measure the impact of food safety regulation. An output directional distance function approach is applied to estimate the opportunity cost of food safety regulation and the shadow price of food risk. Such measures should be included as part of the overall cost of compliance for a more precise comparison of the benefits and costs of food safety regulation. Further, comparing the implicit shadow price of food risk and willingness to pay for food safety can bridge the gap of understanding how valuable safer foods are from the perspective of two different market participants - consumers and firms respectively.Food Consumption/Nutrition/Food Safety,

MEASURING THE IMPACT OF FOOD SAFETY REGULATION-AN OUTPUT DIRECTIONAL DISTANCE FUNCTION APPROACH

This paper provides a novel methodology to measure the impact of food safety regulation. An output directional distance function approach is applied to estimate the opportunity cost of food safety regulation. Such a measure should be included as part of the overall cost for a more precise benefit-cost analysis of food safety regulation. Using US Census and food safety recall data, the value of potential output loss due to food safety regulation is suggested $2.5 billion.Food Consumption/Nutrition/Food Safety,

Is organic farming inefficient, or are indicators of economic performance of agriculture incomplete?

Organic farming is expected to alleviate the environmental burden of agriculture, since it rules out the use of chemicals such as synthetic fertilizers, pesticides, herbicides. However, organic farming technology may turn out to be less efficient when evaluated by conventional productivity measures that are less informative regarding environmental efficiency. We derive a framework for a combination of more comprehensive indicators reflecting whether organic farming increases sustainability in agriculture and how much of the total agricultural value added is produced at the expense of environmental deterioration. We show that it is important to separate flow and stock effects of pollution so that aggregate measurement is consistent with conventional national accounting. Shadow pricing of undesirable output and policy implications are discussed. For adoption of a technology and allocative efficiency in the agricultural sector, economic policy instruments should be redesigned and proper incentives through prices should be used

Eco-Efficiency Analysis of Consumer Durables Using Absolute Shadow Prices

We develop a method for eco-efficiency analysis of consumer durables by utilizing Data Envelopment Analysis (DEA). In contrast to previous product efficiency studies, we consider the measurement problem from the perspective of a policy maker. The novel innovation of the paper is to measure efficiency in terms of absolute shadow prices that are optimized endogenously within the model to maximize efficiency of the good. Thus, the efficiency measure has a direct economic interpretation as a monetary loss due to inefficiency, expressed in some currency unit. The advantages as well as technical differences between the proposed approach and the traditional production-side methods are discussed in detail. We illustrate the approach by an application to eco-efficiency evaluation of Sport Utility Vehicles.Activity Analysis, Data Envelopment Analysis (DEA), Environmental efficiency, Product evaluation, Sport Utility Vehicles (SUVs)

Environmentally Adjusted Elasticity Measures

Here, using input, output and nitrogen pollution data related to one state, we propose to extend the elasticity concept to include environmental pollution treated as undesirable output to provide the environmentally adjusted elasticity measures for the period, 1936-1997 in a two-step procedure.Environmental Economics and Policy,

A material balance approach for modelling banks’ production process with non-performing loans

The aim of this to study is to examine how non-performing loans on the balance sheets of Japanese banks affect their performance by adopting a material balance principle. The paper outlines how the material balance conditions can be applied when modelling banks’ production process in the presence of non-performing loans. The paper utilizes the generalized weak G-disposability principle which accounts for the heterogeneity among banks’ input quality. We test how an input-oriented model (non-performing loans are treated as an input), the weak disposability assumption and the adopted material balance approach, affect banks’ performance levels. We apply our test on a sample of Japanese banks over the period 2013 to 2019. Our findings indicate that the input-oriented model and the material balance estimator even if they present similar distributions, they account differently the effect of non-performing loans’ fluctuations over the examined period. In addition, the results under the weak disposability assumption are found to be different compared to the material balance measures and less sensitive to banks’ non-performing loans variation levels. We also provide evidence that the generalized weak G-disposability assumption captures better banks’ performance fluctuations that has been caused by the restructuring of the Japanese banking industry

THE ROLE OF NON-PARAMETRIC APPROACH IN ADJUSTING PRODUCTIVITY MEASURES FOR ENVIRONMENTAL IMPACTS

This paper addresses the role of non-parametric analysis in adjusting agricultural productivity measures for environmental impacts. The modified Tornquist-Theil index computed using shadow prices derived from the programming procedures is compared and contrasted with a non-parametric hyperbolic graph productivity index for the case of Nebraska agriculture.Nonparametric, Shadow price, Productivity, Environmental Economics and Policy, Productivity Analysis,

Environmental efficiency, irreversibility and the shadow price of emissions

Assessing the production of goods and services while minimizing the damage to the environment is a key component to advance sustainable development at national and global levels. The nonparametric estimation of lower and upper bounds on shadow prices of pollutants is undertaken to support the design of policies promoting environmental efficiency in the presence of asymmetry in adjusting productive and abatement capital capacity. This framework is applied to the pulp and paper sector of 39 countries for 1996-2009, and finds that the USA, China and Ireland are the most environmentally inefficient countries in the pulp and paper sector. The adjustment costs associated with net investment and disinvestment are found to be asymmetric. For those nations where the shadow price of CO2 is lower than the carbon tax, there is still an opportunity to abate emissions further. Results on complementarity or substitutability between pollutants are in general inconclusive.M. Magalhães acknowledges partial financial support from the Spanish Government and FEDER Funds under projects PGC2018-093542-B-I00, PID2019-107161GB-C33, and from the Fundação para a Ciência e Tecnologia under the Project UIDB/04007/2020. Funding for open access charge: Universidad de Málaga / CBU

Calculating shadow wages for family labour in agriculture : An analysis for Spanish citrus fruit farms

This paper deals with the calculation of shadow wages for family labour in agriculture. Using the existence of a duality between input distance and cost functions, we use the former to derive individual labour shadow prices for a sample of Spanish citrus fruit producers. Our results show that the average shadow price representing the opportunity cost of family labour employed onfarm, is lower than the average market wage rate paid for hired labour. We relate this finding to a strategy of outsourcing of many growing tasks that is currently pursued by farmers to overcome the problems posed by a suboptimal farm size.shadow prices, duality, distance functions, on-farm labour opportunity cost, outsourcing