Measuring and decomposing sustainable efficiency in agricultural production: A cumulative exergy balance approach

Environmental efficiency measures constructed using the materials balance principle have two important shortcomings: (1) the ambiguity in the treatment of immaterial inputs and the various types of energy and (2) the lack of universally accepted weights for various material inputs. These two limitations are primarily caused by the fact that the materials balance condition is strictly regulated by the law of mass/energy conservation and that mass/energy content cannot be a good physical common unit of various inputs. The use of cumulative exergy content overcomes these problems. The use of cumulative exergy content allows the inclusion of life cycle assessment; hence facilitates the analysis of the cumulative pollution and total affects on natural resources. The present study uses cumulative exergy content to construct new efficiency sustainable measures and decomposes them into technical efficiency and cumulative exergy allocative efficiency in agricultural production. Empirical applications on OECD agriculture yielded a number of important findings: (1) OECD has the potential to save 72.3% of cumulative exergy consumption and improvements can be achieved by being more technically efficient and choosing a better combination of inputs; (2) the sustainable efficiency varied enormously across countries; and (3) the efficiency levels in 2003 was lower than in 1990.