Risk-adjusted Frontier Analysis of the Primary Sector

The frontier approach allows one to assess the technical efficiency among other measures of performance in a comprehensive manner within a neo-Walrasian framework. The use of the frontier methods, however, do not take into account production risk in case conventional approaches are used. To address this issue, various extensions have been proposed (e.g., state-contingent models). The project seeks to develop a quantitative framework for assessment of the European Union (EU) agricultural performance with respect to the underlying production technology. The non- parametric approach will be used with inclusion of the production risk. The latter can be achieved either by adjusting the outputs with regards to the downside risk measures or including risk as an undesirable output. The research will deliver policy guidelines that are topical in the light of current debate on the EU and its agricultural sector.