A Study on Energy Efficiency and Economic Productivity of New Zealand’s Agricultural Sector

Abstract

The realization of sustainable development depends on the efficient use of energy resources. Energy consumption productivity and efficiency are among important indices that play a critical role in explaining the behavior of energy consumption structure of different economic sectors, which in turn, plays a key role in policy making. From among economic sectors, the agriculture sector, as an important sector, depends on the consumption of energy as a factor underpinning agricultural production to a great extent. Thus, the present study tries to firstly calculate energy efficiency and productivity of agricultural sector, and then, investigate the relationship between production and energy consumption of New Zealand’s agricultural sector using simultaneous equations system and two-stage least squares method. The annual data of New Zealand agricultural economics are used for the period of 1990-2017. The results showed that agricultural sector’s energy consumption efficiency in New Zealand was mostly optimum according to energy efficiency index. In addition, estimation of energy equation revealed that the added value of agricultural sector had a positive influence on energy consumption growth. Among the other positively affecting variables, agricultural sector’s labour and energy consumption in the prior period could be mentioned. The negative sign of capital stock in the equation reflects the fact that the higher the investment in agricultural sector, the lower the energy consumption.