Eco-efficiency of HYV rice cultivation after accounting for on-farm environmental damage as an undesirable output: An empirical analysis from Bangladesh Noor-e-Sabiha Department of Economics, Rajshahi University, Rajshahi, Bangladesh

This study computes the eco-efficiency of High Yielding Variety (HYV) rice production by including an on-farm environmental damage index (OFEDI) as an undesirable output using Data Envelopment Analysis (DEA) and then identifies its determinants by applying an interval regression procedure on a sample of 317 farmers from north-western Bangladesh. Results reveal that the mean level of the OFEDI-adjusted production efficiency, (i.e., eco-efficiency) is 89 percent, whereas ignoring OFEDI adjustment (i.e., with OFEDI=0) reduces the mean level of efficiency to 69 percent, implying that the production of undesirable output or onfarm environmental damage induces an efficiency loss of 20 percent with significant differences across regions. The proportion of farmers’ income from HYV rice agriculture, land ownership, extension services and socio-environmental living standard are the significant determinants of improving eco-efficiency. Policy implications include investments in extension services and land reform measures to increase land ownership, which will synergistically improve eco-efficiency of HYV rice production in Bangladesh.