Environmentally Adjusted Productivity Measurement of the Iranian Agricultural Sector

Document Type : Original Articles


Isfahan University


In this study, the conventional and environmentally adjusted productivity and the efficiency and technical changes of the Iranian agricultural sector are measured, using the Malmquist-Luinberger index and the panel data from 28 provinces over the period 2000-2008. Results show that the annual average of nitrogen balance index, as a proxy of nitrogen pollution, is 32.7 kilograms per hectare of agricultural land and nitrogen use efficiency is 62%. On average, the conventional total factor productivity, efficiency and technical change indices are 0.9687, 0.9610 and 1.008, respectively, while the environmentally adjusted counterpart indices are 0.9716, 0.9738 and 0.9977. Hence, by ignoring pollution, conventional measurements of productivity tend either to overestimate or to underestimate the true productivity of the agricultural sector.


  1. Aiken D. V., Pasurka Jr. C. A. Adjusting the measurement of US manufacturing productivity for air pollution emissions control. Resource and Energy Economics, 2003; 25: 329-351.
  2. Akbari N., Ranjkesh M. Survay of total factor productivity of Iranian agriculture sector: 1966-1996. Agricultural Economics and Development, 2003; 44. [In Persian]
  3. Alirezaei M. R., Abdollahzade G., Rajabi Tanha M. Analyzing regional differences in agricultural productivity with data envelopment analysis. Economics and Agriculture Journal, 2007; V.1, No.2, 241-254. [In Persian]
  4. Alvanchi M., Sabuhi M. Productivity growth in wheat production of Iran: An empirical study. Economics and Agriculture Journal, 2007; V.1, No.3, pp. 321-330. [In Persian]
  5. Ball V. E., Lovell C. A. K., Luu H., Nehring R. Incorporating environmental impacts in the measurement of agricultural productivity growth. Journal of Agricultural and Resource Economics, 2004; 29(3):436-460.
  6. Chung Y. H., Fa¨re R., Grosskopf S. Productivity and undesirable outputs: A directional distance function approach. Journal of Environmental Management, 1997; 51, 229-240.
  7. Domazlicky B. R., William L. W. Does environmental protection lead to slower productivity growth in the chemical industry?. Environmental and Resource Economics, 2004; 28, 301–324.
  8. Färe R., Grosskopf S., Noh D. W., Weber W. L. Characteristic of polluting technology: theory and practice. Journal of Econometrics, 2005; 126, 469-492.
  9. Färe R., Grosskopf S., Pasurka C. Accounting for air pollution emissions in measures of state manufacturing productivity growth. Journal of Regional Sciences, 2001; 41 (3), 381– 409.
  10. Färe, R., Grosskopf S., Weber W. L. Shadow prices and pollution costs in U.S. agriculture. Ecological Economics, 2006; 56, 89– 103.
  11. Kumar S. Environmentally sensitive productivity growth: A global analysis using Malmquist–Luenberger index. Ecological Economics, 2006; 56, 280– 293.
  12. Lee J., Park J., Kim T. Estimation of the shadow prices of pollutants with production/environment inefficiency taken into account: a nonparametric directional distance function approach. Journal of Environmental Management, 2002; 64, 365–375.
  13. Managi S., Jena P. R. Environmental productivity and kuznets curve in India. Ecological Economics, 2008; 65, 432-440.
  14. Mazhari M., Mohaddes S. A. Measuring and comparison factors productivity of strategic crops in Khorasan Razavi province. Economics and Agriculture Journal, 2007; V.1, No.2, 229-239. [In Persian]
  15. Ministry of Jihad-e-Agriculture. Production costs database. http://www.agri-jahad.ir.,(assessed 2010) [In Persian]
  16. Murty M. N., Kumar S., Paul M. Environmental regulation, productive efficiency and cost of pollution abatement: a case study of the sugar industry in India. Journal of Environmental Management, 2006; 79:1-9.
  17. Nanere, M., Frase I., Quazi A., D' Souza C. Environmentally adjusted productivity measurement: An Australian case study. Journal of Environmental Management, 2007; 85, 350-362.
  18. Natural Resources Conservation Service. Plant Nutrient Content Database. http://www.nrcs.usda.gov/technical/ecs/nutrient/tbb1.html(assessed 2010)
  19. OECD. Environmental Indicators for Agriculture. Volume 3 - Methods and Results, Publications Service, Paris, France; 2001.
  20. Rafiei, H., Mojaverian M., Kanani T. Productivity growth in Iran’s agriculture: Is there any convergance between production regions? Case study: wheat production. Economics and Agriculture Journal, 2007; V.1, No.3, 21-34. [In Persian]
  21. Shaik, S., Glenn A. Helmers, Langemeier M. R. Direct and Indirect Shadow Price and Cost Estimates of Nitrogen pollution Abatement. Journal of Agricultural and Resource Economics, 2002; 27(2), 420-432.
  22. Statistic Center of Iran. Iran statistical yearbook. Tehran(1981; 2007).
  23. Tahami Pour M., Shahmoradi M. Measuring total factor productivity growth in agricultural sector and serving it’s proportion of added value growth. Economics and Agriculture Journal, 2007; V.1, No.2, 317-332. [In Persian]
  24. Vardanyan, M., Noh D. W. Approximating pollution abatement costs via alternative specifications of a multi-output production technology: A case of the US electric utility industry. Journal of Environmental Management, 2006; 80, 177–190.
  25. Vice-Presidency for Strategic Planning and Supervision. 5th Development Plan law. Tehran; 2011. [In Persian]