The intensification of the dairy sector and the associated detrimental impacts on the environment has geared agri-environmental policies towards fulfilling environmental objectives. This study examines the impact of such policies and intensification on the hyperbolic efficiency of Dutch dairy farms which provides a measure for their joint technical and environmental performance. The results indicate that the introduction of decoupled payments reduced the hyperbolic efficiency of farms highlighting greater losses in technical than environmental performance, while agri-environmental subsidies have no impact on our efficiency measure. Finally, intensification increases hyperbolic efficiency implying that under appropriate nutrient-management practices, intensification can be sustainable.


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