Greenhouse gas emissions and the technical efficiency of Alberta dairy farms: What are the trade-offs?

• Author / Creator

  Le, Stephanie

• The dairy sector is a significant contributor to Canada's economy and the Canadian diet; however, the associated carbon footprint comprises a large portion of agricultural emissions. Anthropogenic greenhouse gas (GHG) emissions are widely accepted as a key contributor to climate change, which is predicted to have negative ecological, social, and economic effects. When considering GHG mitigation from dairy farms, in addition to environmental impact and social license, economic considerations are also necessary for lasting sustainability. The question addressed by this study is: can reducing GHG emissions be compatible with maintaining the technical efficiency of dairy farms in Alberta? As conventional production functions do not accommodate detrimental outputs, a hyperbolic distance function specification is used for this study. Results from production frontiers estimated with and without considering GHG emissions are compared. For this study, technical efficiency refers to the efficiency derived from the frontier not considering GHGs, while environmental efficiency is estimated from a frontier that includes GHGs as a “bad” output. Efficiency is measured using both stochastic frontier analysis (SFA) and data envelopment analysis (DEA). To see the effect of farm and producer characteristics on efficiency levels, inefficiency models are also estimated. The results indicate that environmental and technical efficiency estimates are highly correlated, suggesting that the objective of minimizing GHGs aligns with increasing technical efficiency. However, average technical efficiency is high, with many producers close to the frontier, and further reductions in GHGs may come at a cost to producers. This study found the average opportunity cost of foregone milk revenue per tonne of CO2 equivalent abated (calculated as a shadow price) is $308.29. It is also seen that increasing milk yield per cow, being in the Southern part of Alberta, and increasing the proportion of forage in the diet is associated with improved environmental efficiency.

• Subjects / Keywords

  • greenhouse gas
  • efficiency
  • stochastic frontier analysis
  • dairy
  • distance function
  • data envelopment analysis

• Graduation date

  Fall 2018

• Type of Item

  Thesis

• Degree

  Master of Science

• DOI

  https://doi.org/10.7939/R3WS8J27S

• License

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