An efficiency-based concept to assess potential cost and greenhouse gas savings on German dairy farms.

This article investigates potential savings of costs and greenhouse gas (GHG) emissions for a sample of 216 dairy farms in northern Germany using Data Envelopment Analysis. Tradeoffs between a cost-efficient and a GHG-efficient production are identified. For this purpose, an environmental-economic farm model is used, which allows ‘pricing’ the input with market prices and CO 2 equivalents, respectively. Uncertainty of CO 2 equivalents and volatility of input prices are taken into account and therefore efficiency scores are in the form of ranges. The results reveal that the sample farms are more GHG-efficient than cost-efficient. We estimate potential cost savings between 37.2% and 57.4% and potential savings in GHG emissions between 24.9% and 41.3%. Cost and GHG emission reductions are complementary across a wide range: by moving from the status quo to cost-efficient production, at least 87.5% of the GHG saving potential would be tapped. Unlocking the remaining reduction potential comes at a shadow price (abatement cost) of about €165/t CO 2 equivalent. From an input allocative point of view, a change from cost-efficient production to GHG-efficient production requires reductions in nitrogen use and an extension of diesel use. Compared to the sample average and the cost-efficient farms, GHG efficient dairy farms are characterized by a higher share of legumes and a longer effective lifetime of cows. [ABSTRACT FROM AUTHOR]