Agriculture Reference
In-Depth Information
country-specific, apart from the dependence on exogenous energy prices,
there is less scope for general recommendations.
There are many diverse approaches to the analysis of energy
intensity. An important body of literature is inter-sectoral as in input-output
analysis or computable general equilibrium modelling, which are not
reviewed here. Concerning partial sector analysis, there are two main,
seemingly separate, strings of studies. These are namely the intensity
approach and the demand approach. Papers on the intensity approach consist
of decomposing energy-output ratios in a variety of effects. An extension of
this kind of approach is based on index numbers or growth accounting
methodologies, combining simple measurement techniques with a formal
theoretical justification of the decompositions. Studies in the demand
approach are based on the estimation of econometric demand systems and
focus on substitution between input pairs, and output and technical change
effects. Both kinds of study indicate substantial differences in the growth of
energy inputs between, and within, countries for different periods.
The purpose of this chapter is to investigate the characteristics of
energy usage in the EU agricultural industry by estimating the effects of fixed
inputs and technical change on the composition of inputs used, and analysing
the evolution of input-output ratios, or intensities. The empirical part of the
chapter is the estimation of separate demand systems in intensity form for the
agricultural industries of the European Union countries in the 1974-96 period.
The scope of this chapter is largely determined by the availability of data.
Since there are no reliable statistics with which to characterise and aggregate
fixed inputs, such as land or agricultural labour, on a common basis over the
period analysed, the estimation of restricted cost functions is chosen for the
representation of the structure of the technology.
The generalised McFadden is used because it can be estimated on
input to output ratios or intensity form, and global concavity can be imposed
without restricting flexibility. The estimation of a correct economic structure
in the regression of intensities allows for a theoretically sound decomposition
of input intensity. This is the way of linking the two separate literatures of
energy intensity and energy demand. Intensities are studied directly in the
regression equations. This approach literally takes 'ease of interpretation of
parameters' for selecting among functional forms in Fuss
et al.
(1978).
In Section 2, the different approaches to energy intensity
measurement are presented, and the combined methodology used in this
chapter is explained. Data and results from the estimated demand systems are
presented in Section 3. The decomposition analysis of energy and energy
based inputs intensities, with comments on the main results, follows in
Section 4. The conclusions and some suggestions for further research finish
the chapter.
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