Estimating Environmental Efficiency of the Agricultural Sector

Economic activity is associated with the incidence of some adverse environmental consequences such as global warming، climate change and acid rain. Therefore، it is necessary to analyze these impacts using economic-environmental theories. On this base، it is necessary to correct the efficiency models by combining good and bad outputs in efficiency calculations. In this study، environmental efficiency of agricultural sector is calculated by including data of five pollutants (،NOX، ،CO، during 1373-1390 using Data Envelopment Analysis. The results show that the efficiency scores by including bad outputs (pollutants) less than the efficiency without the inclusion of bad outputs. By inclusion of bad outputs in the process of calculating efficiency، the average efficiency has fallen from 0. 98 to 0. 72. This suggests that environmental conditions have significant impact in efficiency measures. On this base، it is proposed to include good and bad outputs in efficiency measures for achieving a realistic view of the situation of firms.