Land tenure, soil conservation, and farm performance: An eco-efficiency analysis of Austrian crop farms

Highlights

• Farms' eco-efficiency in terms of soil erosion and conservation behavior is analyzed.

• Soil use efficiency is decomposed into technical efficiency and soil conservation efficiency.

• Land rental spurs technical efficiency, but is harmful to soil conservation efficiency.

• Overall, soil use efficiency is negatively related with land rental.

• Results support the view that tenancy promotes land degradation.

Abstract

We measure the eco-efficiency (EE) of agricultural production in regard to soil erosion and decompose it into technical efficiency (TE) and soil conservation efficiency (SCE). Data Envelopment Analysis is applied to a panel of 135 Austrian crop farms. As a proxy for soil conservation behavior, we estimate C- and P-factors, frequently applied in Revised Universal Soil Loss Equations, at the parcel-level and combine this with farm-level accountancy data. We investigate the impact of land tenure and other determinants on EE and its components using truncated regression and bootstrapping techniques. Results reveal that: i) the average EE, SCE, and TE is 0.16, 0.26, and 0.54, respectively, suggesting a substantial improvement potential in the soil conservation behavior of farms; ii) tenants have, on average, a significantly higher TE than landowners, but a significantly lower SCE; iii) the effect of tenancy on EE is significantly negative. Results point towards tenants maximizing short-term economic benefits leading to the overexploitation of soils. Results ask for regulations that increase the duration and security of rental contracts, and a shift in agricultural subsidies from direct payments based on area to compensations that provide public goods and internalize externalities.