Sense and sustainability revisited: the limits of total factor productivity measures of sustainable agricultural systems

Abstract

Many economists have advocated and applied total social factor productivity (TSFP) (i.e., total factor productivity estimated with both market and non-market inputs and externalities, and with all factors valued at social prices) as a single all-embracing measure of agricultural sustainability. This paper reviews the conceptual and practical issues in measuring TSFP and shows that no one measure alone will be theoretically or empirically robust as an indicator of sustainability. TSFP is a conceptually flawed measure since inclusion of non-market inputs and outputs and social price-based valuation, in most cases, violates the theoretical basis underlying those estimates. Trends in TSFP also have limited value in diagnosing the nature of sustainability problems, unless changes in productivity are related to underlying changes in technology, human and physical infrastructure, and indicators of resource quality.More attention needs to be given to defining key indicators of agro-ecosystem health and relating these measures to trends in productivity. This analysis must be sufficiently disaggregated and for a long enough time period to allow for spatial and temporal variability inherent in agricultural production. Secondary data at the district level on both conventional inputs and outputs and resource quality have recently allowed more quantitative estimates of sustainability and its causes. With limited data, yield growth decomposition analysis can often be used to provide valuable insights into sustainability problems. Meanwhile, there is a need to invest in long-term experimental and panel surveys of farmers and their fields for key production systems in order to provide long-term data that will allow full productivity accounting, using more formal statistical procedures. Regardless of the approach selected, the findings of this paper strongly suggest a need for economists, agronomists and soil scientists to collaborate in integrating approaches in order to provide more robust and informative measures of sustainability.

Environmentally adjusted productivity measurement: An Australian case study

“…This view of the reasons and rationale for undertaking TFP adjustment has more recently been supported by Byerlee and Murgai (2001) and Ali and Byerlee (2002). They take issue with the usefulness of TFP or various adjustments that have been proposed in agricultural economics literature as a single measure of sustainability, specifically the ideas proposed by Lynam and Herdt (1989).…”

Shedding light on the evidence blind spots confounding the multiple objectives of SDG 2

“…Productivity growth driven by increases in TFP can result in a reduction of agricultural input use while maintaining and augmenting output growth. While standard measures of TFP growth in agriculture do not explicitly include environmental impacts, it is considered to be associated with better environmental outcomes compared with other potential sources of productivity growth, such as the expansion of land area or increased input use [10][11][12] .…”

The Science of Impact and the Impact of Agricultural Science

“…The majority of econometric evidence is based solely on impacts within commodity markets, due to difficulties in conceptualising and measuring the other variables that might embody impact. In Europe, where environmental objectives have grown in prominence in agricultural policy objectives and measures, the impacts of research will not necessarily be reflected in productivity gains (for example, Barnes, 2002;Nanere et al, 2007; for a more qualified view see Byerlee and Murgai, 2001). Social science and policy research should also in principle be generating impacts.…”