Are Intensive Farms More Emission Efficient? Evidence from German Dairy Farms

This study compares the greenhouse gas (GHG) efficiency of intensive and extensive dairy farms and determines their GHG mitigation potential. We combine the concept of eco-efficiency with latent class stochastic frontier analysis and the estimation of a stochastic metafrontier. In the case of Bavaria, Germany, we find that intensive dairy farms convert GHG emissions on average more efficiently into farm economic output than their extensive counterparts. Extensive farms could, on average, reduce GHG emissions by 225 t CO2 equivalent per year while intensive farms could reduce emissions by 130 t CO2 equivalent without reducing their economic output.