Journal of Forest Economics > Vol 29 > Issue 1

Agricultural biodiversity and farm level technical efficiency: An empirical investigation

Muditha Karunarathna, Department of Economics and Statistics, Faculty of Arts, University of Peradeniya, Sri Lanka, , Clevo Wilson, School of Economics and Finance, Queensland University of Technology, Australia,
Suggested Citation
Muditha Karunarathna and Clevo Wilson (2017), "Agricultural biodiversity and farm level technical efficiency: An empirical investigation", Journal of Forest Economics: Vol. 29: No. 1, pp 38-46.

Publication Date: 0/12/2017
© 0 2017 Muditha Karunarathna, Clevo Wilson
Technical efficiencyAgricultural biodiversitySubsistence agriculture


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In this article:
Literature review 
Research method and data collection 
Stochastic frontier production function 
Results of the study 
Conclusions and policy implications 


Land degradation with deforestation and loss of biodiversity has been considered one of the most serious environmental problems for developing countries. The lower level of agricultural productivity resulting in the inability to obtain a sufficient level of production in agriculture leads rural communities to exert pressure on forest resources while damaging the ecological services provided by them. Promotion of economic efficiency as well as achieving environmentally sustainable farming practices can help maintain a sustainable agricultural sector while reducing land degradation and pressure on forests in rural communities. In this context this study investigates the relationships between different indicators of agricultural biodiversity (crop diversity, livestock diversity and agro-diversity) and farm level technical efficiency (TE). A survey conducted covering 723 farms in Sri Lanka is used for the analysis. The results show that crop diversity, livestock diversity and agro diversity are positively related with farm level TE. Hence, it is clear that maintaining more diverse farming systems is crucial to reducing farm level inefficiency and thereby improving the welfare of rural households while reducing the pressure on extensive agricultural practices which has increased global deforestation. Such diversity is especially important for subsistence agricultural practices which are still widespread in most Asian countries.