AGRICULTURES ENVIRONMENTAL AXTERNALITIES - DEA EVIDENCE FOR FRENCH AGRICULTURE

The existence of persistent technical inefficiency offers the opportun ity for a 'free lunch' not typically implied by the neoclassical theor y of the firm. When external effects are related to the use of particu lar inputs, reduction of persistent technically inefficient levels of input use represents a means of reducing external impacts. An importan t example is found in agriculture where substantial environmental impa cts are generated by particular inputs. Within this context, this pape r considers the usefulness of data envelopment analysis (DEA) for esti mation of potential input reductions and assessment of potential reduc tions of environmental impacts of agricultural inputs. An application for French cereal production provides estimates that indicate that sub stantial potential exists for reduction of input use and environmental impacts.