The Link Between Production Efficiency and Opportunity Cost of Protecting Environment in TR83 Region, Turkey

Abstract

Many nations have tended to transform their traditional growth paradigm to green growth policy paradigm to ensure environmentally sustainable development. Governments, therefore, have developed and implemented environmental protection programs to ensure environmentally sustainable development. For accelerating the transformation to green production techniques and technologies, the study aims (i) to calculate the opportunity cost of protecting environment, (ii) to estimate the production efficiency of farms, and (iii) to determine the impact of opportunity cost of protecting environment on the production efficiency in TR83 region in Turkey. Farm-level research data have been collected from totally 361 farms (334 farms participated in the environmental protection programs (EFALP) and 27 conventional farms) by using a well-structured questionnaire during the production year of 2016-2017. Minimization of total absolute deviation (MOTAD) programming model as a linearized version of QP was used to elicit the farm plans under both condition of protecting environmental and conventional farming condition. When estimating the technical, allocative, and economic efficiencies, the net farm revenue under prevailing conditions, potential net farm revenue, and optimum farm revenue were used. The net revenue difference between EFALP farm and conventional farm was attributed to the opportunity cost of protecting the environment. The impact of the opportunity cost of protecting the environment on production efficiency was explored by using two-limit Tobit model. Research results show that the opportunity cost of environmental protection is 3060 TRY per hectare and varied spatially in the research area. Government environmental support has not compensated the farmers' revenue sacrifice completely. The technical efficiency scores of EFALP farms and conventional farms are 0.77 and 0.75, while that of allocative efficiency are 0.83 and 0.86, respectively. The economic efficiency scores of the EFALP farms and conventional farms are 0.62 and 0.63, respectively. Research results further indicate that the opportunity cost of protecting the environment can be said to have a negative impact on the economic efficiency. The variables of labor and farmland have been negatively affected the economic efficiency, while the effects of operating capital, age of operators, and family size seem positive. The study suggests creating regulatory framework providing opportunity to adjust government environmental support spatially based on the farm-level opportunity cost of protecting environment. Government practices should be developed by policymakers to supervise and control the farms participated in the environmental protection programs. Eliminating the conventional decision-making approach and replacing with environmental trade-off analysis-based decision-making techniques, involving stakeholders during the designing environmental policy, and sharing outputs of environmental trade-off analysis may increase the success of the environmental policy and programs. In addition, bringing away the goal mismatch of scientist and users by establishing bridge in between knowledge and action may increase the effectiveness of environmental protection programs.