A stochastic frontier model to assess agricultural eco-efficiency of European countries in 1990-2019

This paper aims at assessing agricultural eco-efficiency of 40 European countries, including non-European Union and ex-USSR ones, in the period 1990-2019 (30 years). A stochastic frontier model with a panel translog specification is employed to allow technology to change in time and across countries, and both output elasticities and returns to scale to vary with input levels and time. Our study is original compared to existing ones in the literature because it considers the almost totality of European countries and focuses on a long and recent period. As such, it is able to draw an exhaustive and updated picture of agricultural eco-efficiency in Europe that fills both temporal and spatial information gaps left by existing studies. In our results, countries with a definitely increasing eco-efficiency in the period 1990–2019 are Albania, Croatia, Iceland, Lithuania, North Macedonia, Portugal and Ukraine, while countries with a definitely decreasing eco-efficiency are Cyprus, Czechia, France, Greece, Hungary, Malta, Romania and Slovakia. All other countries have an approximately constant eco-efficiency in the period 1990–2019, ranging, in average, between 0.93 and 0.95, with the exception of two groups of countries: (i) Denmark, Italy, Serbia-Montenegro, Slovenia and Switzerland, which show a decline of eco-efficiency in recent years; (ii) Ireland and Latvia, which exhibit an upward inversion of the trend in the penultimate decade. These two groups of countries should be monitored in the near future to better establish whether the decline or the increase in eco-efficiency is temporary or permanent. Our study also provides, for the first time, evidence on agricultural eco-efficiency in non-European Union transition economies, specifically it emphasizes the promising performance of Albania, North Macedonia and Ukraine.