Sustainable Environmental Economics in Farmers’ Production Factors via Irrigation Resources Utilization Using Technical Efficiency and Allocative Efficiency

Abstract

This study reports the results of farmers’ production via irrigation resources utilization and efficiency parameters of technical efficiency and allocative efficiency by way of sustainable environmental economics. The hypothesis is that factors of farmers’ production affect technical efficiency and allocative efficiency in the irrigation scheme as sustainable environmental economics. Data from cross section and panel data were used and then the productivity parameters measurement of the production function are outlined in two scenarios: first, the data report that the parameters such as output elasticity determine factors of inefficiency and technical efficiency. Second, it presents the scores for the allocative efficiency to explain whether production factors (resources) are optimally, under- or over-allocated by farmers in the irrigation systems under environmental sustainability. This paper presents the productivity and efficiency parameters estimated using stochastic frontier analysis for the translog production function, which was estimated by the MLE method, and the allocative efficiency for the factor inputs allocation in the irrigation systems estimated by ordinary least square for the Cobb-Douglas production function. This study concludes that collective farmers lead into technical inefficiency and over use of factors of production.