Eco-Efficiency and Its Determinants: The Case of the Italian Beef Cattle Sector

Abstract

In recent years, eco-efficiency assessment has proven to be an effective tool to reduce the environmental damages of agricultural activities while preserving their economic sustainability. Hence, this paper aims to assess the eco-efficiency of a sample of 148 beef cattle farms operating in the extensive livestock system of Central Italy. The analysis is based on Farm Accountancy Data Network (FADN) economic data in the year 2020 and includes, as environmental pressures, farm expenditure for the use of fuels, electricity and heating, and fertilizers. A two-stage approach was implemented: in the first stage, an input-oriented DEA model including slack variables was used to quantify farm eco-efficiency scores and determine the polluting inputs’ abatement potentials. In the second stage, the influence of possible influencing factors on eco-efficiency scores was tested using a regression model for truncated data. The analyzed farms were found to be highly eco-inefficient, as they could abate their environmental pressures, on average, in a range from 56% to 60% while keeping the value of their global production constant. Fertilizers and fuel consumption were identified as the least efficiently operating inputs, with potential reductions in terms of the related expenditures fluctuating between 9% and 42%. Farms showing a high-intensity livestock system, a low labor intensity, and a larger farm area were recognized as the most eco-efficient. Environmental and animal welfare subsidies were found to not affect eco-efficiency, while a negative influence was estimated for a single farm payment, which does not seem to be an incentive mechanism for farms to operate efficiently.