Estimating Carbon Footprint and Environmentally Adjusted Productivity of Ontario Dairy Farms

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Dahal, Bibek
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University of Guelph

Even though the Canadian dairy industry has one of the lowest carbon footprints globally, it still comprises a significant percentage of the total emissions from agriculture. Productivity based on conventional production functions does not account for the socially undesired Greenhouse Gas emitted in dairy farming. Using the input-oriented directional distance function, I estimated the environmentally adjusted efficiency and productivity of Ontario dairy farms from 2000 to 2020. First, I estimated the annual GHG emission from each dairy farm based on the life cycle assessment methodology guidelines suggested by the International Dairy Federation. I found that the carbon footprint for Ontario dairy farms decreased by 14% over the study period. Second, I estimated the standard and environmentally adjusted efficiency and productivity. Productivity growth was decomposed into two sources: efficiency change and technical change. The results indicated that technological change had a higher contribution than efficiency change to overall productivity growth.

Environmentally Adjusted Productivity, Dairy Carbon Footprint, Directional technology distance function, Shadow Price of CO2 in dairy