Technological externalities and environmental policy: how to simulate manure management regulation within a DEA framework

The directional distance function defined in a DEA type non-parametric framework provides a highly flexible structure for modelling producer behaviour in the presence of polluting emissions and environmental regulations. This article presents five models describing different “command and control†type policy measures as an economic one about nitrogen pollution of agricultural origin. These measures concern the management of the mandatory constraint on the spreading of organic manure and the investment in manure treatment facilities. The study also simulates the use of an economic instrument by enforcing the individual manure constraint at an aggregated level. Using individual and aggregated DEA models, this paper provides insights into the impact of individual and collective management of environmental policy instruments.