Assessing sustainability performance of farms: an efficiency approach
Sustainability can be seen as a key element towards a profitable long-term future for farming and rural areas. Strong economic performance should go hand in hand with the sustainable use of natural resources. To assess sustainability, both a clear framework and empirical work measuring, explaining and evaluating contributions towards sustainability are needed. In the first part of this dissertation several existing definitions of sustainability are explained. An overview is also given of the different measurement methods of sustainability performance. Definitions of sustainability are inevitably vague but sustainability draws much of its power and creativity form this ambiguity. The second part of this dissertation presents several empirical applications of measuring farm performance. The first applications measure performance in a traditional economic way, while in the following applications environmental aspects are integrated to measure the sustainability performance of agricultural firms. As a general conclusion, we can summarize that the developed and used methodologies are useful to measure contributions of farms towards a more sustainable use of the available resources. This approach does not indicate whether the overall resource use is sustainable, but how much a company contributes to a more sustainable use of its resources. Not only traditional economic resources such as land, labor or capital are considered but also environmental resources such as direct and indirect energy use and nitrogen use. In this way, the realization of economic value of a farm using a combination of available resources can be analyzed. We can compare the performance of farms but we can also analyze the underlying determinants that can help to explain the difference in sustainable resource use between farms. Furthermore, a simple simulation shows that the approach can be used to compare policy tools or can be used to analyze the impact of certain policy measures to reallocate the resource use from farms realizing less value added to farms realizing more value added with their resources. This will be a challenging but interesting future research topic. A limitation of the current approach is that the total amount of available resources is remained constant at sector level.
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