Environmental preservation costs and eco-efficiency in Amazonian agriculture: Application of hyperbolic distance functions

This paper studied agricultural eco-efficiency in the Amazon, using hyperbolic distance functions with a stochastic frontier based on the classical variables of the multi-product production function and internalization of two externalities (one positive and one negative). The study allowed the contrast among various specifications of production functions and estimation of the opportunity costs of externalities, marginal rates of substitution and transformation, as well as an index of environmental sustainability and its determinants. The main results of the study indicate that the opportunity cost of preserved areas is between US$ 82.39 and US$ 170.37 per ha/year, and it is possible to increase the desired outputs by 19.5%, simultaneously reducing the degraded areas and inputs by 16.36%, and this only referring to the best practices in the region.