ECO-EFFICIENCY AND SHADOW PRICE OF GREENHOUSE GAS EMISSIONS IN SWINE CULTURE IN BRAZIL

Abstract

Swine breeding has recently become an important activity for agribusiness in Brazil, with great contributions for the country´s economic development. However, the activity features immense pollution potential, with high environmental costs for the production process. Current study estimates the eco-efficiency in the production of swine, shadow price and total costs of greenhouse gas emissions (GGE) by Data Envelopment Analysis plus Directional Distance Functions. Two data standards of the municipalities with swine production in nine Brazilian states were established. In the case of Standard 1, the municipalities may have a 36.93% production rise and reduce CO2 at the same rate, with the same amount of inputs. In the case of Standard 2, production rise was 47.22%. Mean shadow prices reached R$ 3,539.81 for Standard 1 and R$ 3,677.07 for Standard 2. Estimates of total costs for CO2 emission reduction were R$ 1.37 billion, equivalent to 468% of production in 2006, for Standard 1, and R$ 1.42 billion, equivalent to 486% of production in 2006, for Standard 2. Incorporation of costs was practically unfeasible since it would lead to quittance of the activity. Research shows the need for re-designing a dissuasive system of punishments and incentives for shadow prices so that swine producers become aware of the negative externalities and seek compensations for activities that reduce emission or employ cleaner technologies. The assay´s main contribution is the inclusion of efficiency analysis with environmental variable, an issue not dealt with in the literature.