Modelling regional environmental efficiency differentials of dairy farms on the island of Ireland

Environmental pressures associated with nitrogen (N) and phosphorus (P) are likely to be an important policy issue on the island of Ireland, made up of Northern Ireland and the Republic of Ireland following the abolition of the European Union (EU) milk quota system in 2015. In this study, we assessed the environmental performance of dairy farms in terms of N and P efficiency in the four regions of the island of Ireland using a novel environmental data envelopment analysis (DEA) approach. The determinants of environmental efficiency were also analysed in a second stage analysis, using a truncated linear regression model with bootstrapped non-parametric DEA environmental efficiency estimates as the dependent variable. We find regional differences in environmental performance across the four regions of Ireland with greater nutrient surpluses in Northern Ireland compared to the three regions in the Republic of Ireland. However, computed indices from the environmental DEA technology which simultaneously accounts for the expansion of desirable outputs (milk and other outputs) and reduction in undesirable outputs (N and P surpluses), showed higher environmental performance index for Northern Ireland compared to the regions of the Republic of Ireland. Utilized agricultural area, forage grazed per hectare and adoption of milk recording were found to be significant factors influencing environmental efficiency in the Republic of Ireland while only forage grazed per hectare was statistically significant for Northern Ireland.