Land tenure, soil conservation, and farm performance: An eco-efficiency analysis of Austrian crop farms

We measure the eco-efficiency (EE) of agricultural production in regard to soil erosion and decompose it into technical efficiency (TE) and soil conservation efficiency (SCE). Data Envelopment Analysis is applied to a panel of 135 Austrian crop farms. As a proxy for soil conservation behavior, we estimate Cand P-factors, frequently applied in Revised Universal Soil Loss Equations, at the parcel-level and combine this with farm-level accountancy data. We investigate the impact of land tenure and other determinants on EE and its components using truncated regression and bootstrapping techniques. Results reveal that: i) the average EE, SCE, and TE is 0.16, 0.26, and 0.54, respectively, suggesting a substantial improvement potential in the soil conservation behavior of farms; ii) tenants have, on average, a significantly higher TE than landowners, but a significantly lower SCE; iii) the effect of tenancy on EE is significantly negative. Results point towards tenants maximizing short term economic benefits leading to the overexploitation of soils. Results ask for regulations that increase the duration and security of rental contracts, and a shift in agricultural subsidies from direct payments based on area to compensations that provide public goods and internalize externalities.