Untangling the Greenhouse Gas Emission – Output Dilemma in the Livestock Sector: A Group Efficiency Perspective

Future human well-being is inextricably linked to adequate food provision. As the global demand for food will rise until at least 2050, the necessity of growing food supply will become progressively imperative. The problem of climatic change complicates this food supply challenge, as agricultural production is a significant source of greenhouse gases. One should thus improve global agricultural production while taking into account its harmful effects on the environment. Agronomists and biologists, on the one hand, and economists, on the other hand, have studied this problem from the perspective of the technological possibilities of the individual farm. For agronomists and biologists, this translates into the development of new efficient technologies. For economists, this implies the comparison of the performance of farm to a hypothetical best practice benchmark. Our research intends to shift the perspective from the individual farm level to the group level and allowing for reallocation possibilities of inputs between farms. We econometrically estimate the relationship between the European livestock output and the current European greenhouse gas emissions if there is (no) improvement of technical efficiency and reallocation of inputs is (in)feasible. Our results suggest that reallocation of production factors may increase output by 15-42%.