Environmentally Adjusted Productivity Measurement of the Iranian Agricultural Sector

In this study, the conventional and environmentally adjusted productivity and the efficiency and technical changes of the iranian agricultural sector are measured, using the malmquist-luinberger index and the panel data from 28 provinces over the period 2000-2008. results show that theannual average of nitrogen balance index, as a proxy of nitrogen pollution, is 32.7 kilograms per hectare of agricultural land and nitrogen use efficiency is 62%. on average, the conventional total factor productivity, efficiency and technical change indices are 0.9687, 0.9610 and 1.008, respectively, while the environmentally adjusted counterpart indices are 0.9716, 0.9738 and 0.9977. hence, by ignoring pollution, conventional measurements of productivity tend either to overestimate or to underestimate the true productivity of the agricultural sector.