Abstract We estimate the environmentally adjusted productivity growth and shadow price for Ontario dairy farms. We use an input‐oriented directional distance function and farm‐level data from 2000 to 2020. First, we find that while GHG emissions per cow increase with higher milk yields, emission intensity decreases as milk yield per cow increases. We also find that emission intensity decreased over the study period. Second, we find that environmentally adjusted productivity growth is higher than unadjusted productivity growth. Technological change contributed more to both environmentally adjusted and unadjusted productivity growth than did efficiency change. Third, the estimated shadow price for GHG emissions was CAN286 per metric ton.
Dahal et al. (Wed,) studied this question.