Evaluating the Relationship between Economic and Environmental Efficiency in Iranian Agriculture Sector

The goal of this study is to evaluate the relationship between economic efficiency and environmental efficiency in Iranian agriculture sector.  

For this purpose, Data Envelopment Analysis (DEA) and Toda-Yamamoto causality testing methods were used. The required data for this research were collected from the statistical Center of Iran, Central Bank as well as the Ministry of Energy during 1996-2017.  

The results showed that mean values of economic efficiency either in constant or in variable returns to scale are 71% and 92%, respectively. The average environmental efficiency using DEA was also calculated as 88%. The results of the ADF and KPSS unit root testing methods revealed that the studied variables are stationary in one-time difference. The results of the Toda-Yamamoto causality test showed a one-way causal relationship from environmental to economic efficiency. Assessing the long run equilibrium equation demonstrated that economic efficiency was increased about 0.63% in increment of environmental efficiency by 1%.  

According to the findings, it is expected to be improved the environmental efficiency with application of environmental laws. This is caused to be developed technology and to be growth total factor productivity which leads to be improved the economic efficiency of Iranian agriculture sector.