Efficiency and production environmental heterogeneity in aquaculture: A meta-frontier DEA approach

Aquaculture farms' efficiency may be different across regions due to spatial variation in their production environment. Thus, if efficiency is measured and compared without accounting for regional differences in the production environment, it may lead to a biased evaluation of efficiency and correspondingly erroneous policy suggestions. This paper uses the meta-frontier approach to compare efficiency among a sample of 625 farms producing pangas and tilapia located in different regions of Bangladesh and exposed to different production environments. Furthermore, Spearman correlation is employed to identify factors, such as sources of water supply, water and soil quality that influence efficiency. The results suggest that efficiency varies significantly across regions due to variation in the production environment, the individual producers' ability to manage inputs and selection of species depending on local environmental conditions. This study implies that policymakers should take into account variation of the production environment between regions and the performance of specific species within these environments when making plans for future expansion of aquaculture production to use the resources most efficiently.