The MBP in Environmentally Adjusted Productive Efficiency Analysis: From Empirics to Theory and Back

The presentation gives an overview of the empirical drivers for materials balance (MB) based adjustment of traditional frontier efficiency methods, its application and theoretical refinements and current challenges for further empirical research. The idea for an MB adjustment of efficiency methods emerged from practical problems issuing from the Flemish manure problem in the nineties. Specific features of agricultural production and its externalities led to empirical evidence that efficiency improvement might be a major avenue for reducing nutrient emissions. More, such improvements can lead to economic-ecological win-wins instead of the mere trade-offs as was supposed in that period both in theory and practice. Traditional methods do not account for detecting win-win, and some of them were even not useful, because of inconsistency with the materials balance principle. A joint effort between farm management researchers (Lauwers and Van Huylenbroeck from ILVO and UGent Belgium) and a productive efficiency analysist (Coelli from Queensland University, Australia) led to publication in 2007. Since, some tenths of applications got published: they cover both macro-economic and firm-economic applications, in agriculture and other industries. The method has been criticized, in particular because of the absence of abatement options, and has been subject to various theoretical adjustments. Coming back to empirics, one observes now myriad of model alternatives from which it becomes difficult to esteem the information values. Ideas are launched to join efforts for a vast but systemic empirical analysis to unravel the potentialities of currently available models