The farm-by-farm relationship among carbon productivity and economic performance of agriculture

Abstract

The mitigation of agricultural greenhouse gases emissions is a globally relevant environmental and policy issue. For efficient mitigation, it is important to appraise whether and how much these emissions are linked to the economic performance of farms. This study aims to reconstruct a Carbon Productivity (CP) indicator at the farm level to analyse its eventual relationship with the farm's economic performance as measured by its Farm Net Value Added (FNVA). This assessment could allow emerging win-win situations where more emission-efficient farms are also more economically viable. This study is conducted at the micro-level using individual farm data extracted from the Italian Farm Accountancy Data Network from 2008 to 2017. The estimation procedure is based on a dynamic panel model that exploits the wide heterogeneity of farms using structural and policy variables. Results show that the relationship between CP and FNVA is non-linear and changes among farm types. Overall, absolute higher levels of CP seem to be associated with better economic performance, suggesting a double-dividend path of green growth for agricultural production. Policy implications drawn suggest tailored intervention according to farm type.

Keywords: Dynamic panel models; Farm net value added; Farm-level data; GHG emissions; Green growth indicator.