For most of humankind’s history, due to the small number of people inhabiting the Earth, our environmental impact was usually local, but the fast growth of the human population observed in the 20th century changed the situation [
1]. Growing demand for food, which has been satisfied thanks to the “green revolution”, increased the pressure of agriculture on the natural environment [
2,
3,
4,
5,
6]. However, taking into account the constant growth of the human population [
7], it is not possible to reduce the negative environmental impact of agriculture through the reduction of food production. Thus, the only possible solution is to reduce the negative consequences of agricultural production through implementing more environmentally friendly production techniques, as is postulated by the promoters of sustainable agriculture [
8,
9,
10].
One of the ways to operationalize sustainability assumptions is eco-efficiency [
11,
12]. This concept searches for production solutions that will cause the highest possible reduction in use of natural resources, while maintaining or even increasing the production level. As an idea, it reflects the willingness to do “more with less: delivering more value while using fewer resources” [
13] (p. 4); on the analytical level it means using such methods of assessing the efficiency of economic processes that will also include their environmental impact. Since the 1990s the eco-efficiency concept has been used by industrial enterprises to assess the environmental impact of various economic actions and decisions [
11]. With time, the original approach has been extended to non-industrial sectors and beyond single-company scales [
14,
15,
16,
17,
18], and the concept became one of the methods used to operationalize the sustainability concept.
Taking into consideration challenges faced currently by agriculture, the necessity to reduce environmental impact on one hand [
19,
20,
21,
22], and growing world demand for food on the other [
7], we can say that the eco-efficiency concept seems very promising. Thus, the main aim of this paper was the assessment of the eco-efficiency of Polish commercial farms, considering both types of farming outcomes: positive ones (agricultural production) and negative ones (environmental impact). The analyses are based on data envelopment analysis (DEA), where the traditional set of variables (agricultural land, labor, and capital as means of production) were supplemented by variables representing the environmental pressure (nitrogen and phosphorus surplus, as well as greenhouse gas (GHG) emissions). The eco-efficiency scores were further compared with a set of farm characteristics and their sustainability assessment (in environmental, economic, and social dimensions). The novelty of the paper is the comparison of overall farm eco-efficiency (including all inputs, conventional and environmental impact) with farm sustainability level. The assessment was carried out at the farm level to show that basic farm characteristics might be used to evaluate farm eco-efficiency in a simple and robust manner. Additionally, the potential of improving efficiency in different farms was assessed and compared to reveal farm diversity regarding the use of conventional input use, and also environmental impact.
1.1. The Environmental Impact of Agriculture
Technological progress observed in agriculture in the last few decades allows the satisfaction of constantly rising demand for food, but at the same time, it increases negative impact on the natural environment [
6,
23]. Farming participates in such negative phenomenon as disturbances in the natural circulation of nutrients (nitrogen and phosphorus), soil erosion, greenhouse gasses emissions, pollution of surface and ground waters, as well as the decline in biodiversity of ecosystems [
24,
25,
26]. Liu et al. [
27] (p. 2) stressed that “reducing nutrient pollution from agriculture remains challenging due to a large number of producers and the spatially variable and temporally dynamic nature of the nutrient loading process”. Of course, these negative processes are not exclusively caused by agriculture, but surely it has a significant impact on crossing some of the nine planetary boundaries [
28,
29]. The planetary boundary concept is aimed at defining the environmental limits within which humanity can safely operate [
29]. Exceeding a certain level of impact includes, for example, pollution causing irreversible changes in the Earth ecosystems that will endanger the existence of all its inhabitants, including humankind. Steffen et al. [
29] identified “biochemical flows” (phosphorus and nitrogen) and “genetic diversity” as elements beyond the zone of uncertainty, which put a high risk of pushing the Earth system into a new state. Additionally, the risk of climate change caused by GHG emissions remains essentially important in this context. Agriculture plays a very important role in all of these processes.
The disturbance of the circulation of nitrogen in the environment occurs when large quantities of reactive nitrogen, mainly from fertilization, leak into the soils and water [
30,
31,
32,
33]. Since 1961 the global use of nitrogen fertilizers has risen from about 11 million t to over 100 million t at the beginning of the 21st century [
34]. Simultaneously, the efficiency of their use deteriorated significantly, as fertilizer consumption rises faster than the plant yields [
34,
35]. According to various sources, as much as 50–75% of nitrogen introduced into the soils by farmers can be lost to the environment [
30,
36,
37]. The main results of this process are groundwater pollution and eutrophication of water reservoirs, leading to damage both to the natural environment and human health [
38,
39,
40,
41,
42].
The second very negative impact of agriculture on the natural environment are disturbances in phosphorus circulation, resulting from its discharge into water reservoirs, due to agricultural soil erosion. According to the European Environment Agency—EEA [
43], phosphorus leaching to freshwater due to agriculture activities in most of the European territory exceeds on average 0.1 kg/ha per year; reaching, in the most vulnerable places, even 1 kg/ha per year, also polluting the sea, especially coastal, waters. The high amount of this nutrient in water causes plankton blooms that might cause the death of fish and other water animals, further causing the health problems of death of fish and other water animals [
44].
The third place in the adverse effects of agriculture on the natural environment is taken by GHG emissions. Globally, agriculture is responsible for about 11.2% of GHG emissions [
45], not only carbon dioxide but methane (with greenhouse potential 21 times higher than the one represented by CO
2) and nitrous oxide (with greenhouse potential 310 times higher than the one represented by CO
2) [
46]. According to The Food and Agriculture Organization—FAO [
47], in 2012 global GHG emissions caused by agriculture (plant cultivation and animal breeding) reached 5.4 billion t of CO
2 equivalent; which was twice as much as in 1961. Globally, the highest GHG emissions in agriculture are as a result of enteric fermentation (40%), manure left on pasture (16%), synthetic fertilizers (13%), paddy rise (7%), and burning biomass on savannahs (5%) [
47].
Agriculture is also the most important consumer of global freshwater resources, responsible for 70% of global freshwater withdrawals and more than 90% of its consumptive use [
48]. Most of the water used in agriculture comes from precipitation, however, about 15% comes from irrigation. During the last 50 years the land irrigated has doubled, and currently, about 24% of the utilized agricultural area is irrigated [
49]. Global water withdrawal for agricultural purposes is estimated at about 2469 km
3 (including 1257 km
3 used for production, of which only about 50% is used effectively) [
50]. Land irrigation might result in soil salinity. It is estimated that between 20% and 50% of irrigated land is affected by salinity [
51]. This might be a consequence of physiological drought, which means the inability to uptake the minerals from the soil by plants.
In many parts of the world, agriculture is responsible for deforestation aiming at obtaining new agricultural land. According to data gathered within the Global Carbon Project [
52], deforestation results in 10% of global GHG emissions and a cumulative 3% of GHG emissions observed in the second half of the 20th century. Cutting down forests reduces the emission of volatile organic compounds that can cool the climate by dispersing solar radiation [
53]. Moreover, according to the newest research, forests most probably play a fundamental role in water circulation, creating so-called “rivers in the sky” that transport water for long distances [
54]. Ellison [
55], as well as Wolosin and Hariss [
56], suggested that deforestation brings more serious consequences to water circulation than to GHG emission.
Agriculture is also said to be the main cause of the loss of biodiversity [
57,
58]. According to the International Union for Conservation of Nature [
59], agricultural production endangers the existence of 5407 out of 8688 species included on the “extinction red list”, including pollinators that are necessary for plant production.
This overview proves that the problem of agricultural impact on the natural environment lies not only in using natural resources, but mainly in its low efficiency: more efficient use of fertilizers could significantly reduce the scale of nitrogen and phosphorus surplus delivered to the environment; rational use of plant protection products could reduce biodiversity loss; better management of water resources and smarter crop planning could help to reduce water use by agriculture, and finally, increasing crop yields could reduce the pressure on cutting down forests to increase the agricultural area. Thus, it is necessary to look for methods to improve the efficiency of natural resource use in agriculture.
From the point of view of economics, the negative impact of agriculture on the natural environment results in negative externalities, which are a production cost paid not by the producer but by the rest of the society [
60]. The term “externalities” was used as early as in the works of Marshall (1842–1924), but his idea was significantly developed by Pigou (1877–1959); referring to the welfare theory he claimed, that the existence of externalities results from a disparity between private and public benefits on the one hand, and private and public costs on the other [
61].
The concept of externalities is most often used referring to external costs, but there are also external benefits possible [
62]. Both positive and negative externalities are a result of market failure, resulting in inefficient (in a Pareto sense) allocation of resources, which in consequence leads to a disparity between the economic and social optimum [
63]. The existence of externalities leads to the lack of equilibrium and inability to reach the Pareto optimum, and in consequence to ineffective resource allocation (too large or too small amounts of resources are assigned to particular types of activities because market signals are in such a situation imperfect) [
64].
In this context, it is worth emphasizing that the endeavor to achieve Pareto effectiveness (through eliminating market failures, seen as externalities) in the economy as a whole might simultaneously cause inefficiency on the level of a company (or a farm). For a single unit, the ability of externalization of externalities might result in a competitive advantage in comparison with other units, that do not externalize their side effects. Thus, it is important to assess the efficiency of units using not only traditional production factors but the “use of natural resources” (in the form of negative externalities) as well.
1.2. The Eco-Efficiency Concept as a Tool to Realize Sustainable Development
Scholars and policy-makers for a long time were concerned with the problems of the natural environment and quality of life, in connection with technical development and civilizational progress. Among other possible solutions, the concept of sustainable development was created. Modern discussion on this concept emerged after 1987 when the World Commission on Environment and Development (also called the “Brundtland Commission”) published its report. It contained the most often cited definition of sustainable development, according to which the main goal of sustainability is “to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs” [
65] (p. 54).
However, the resources that should be available should not be treated in the narrow sense as raw material, but also regarding their contribution to the quality of the surrounding environment (air quality, biodiversity, etc.). The key issue is to simultaneously consider three sustainability dimensions, that is economic, environmental, and social issues; which means that all actions should be environmentally rational, economically sound, and socially acceptable. What is special about the sustainable development concept in comparison with other development theories is the assumption of the complementarity of all three types of goals, which results from the belief that technological progress will enable the simultaneous realization of the goals that until recently were seen as competing with each other [
66].
Realizing the sustainability assumptions in practice requires its operationalization. Even though general assumptions of sustainability seem understandable and intuitive [
67,
68,
69,
70], since the late 1980s many interpretations and operationalizations have appeared; there is a rich body of literature covering this topic [
10,
71,
72,
73]. The essence of the various definitions of sustainable development that can be found in the literature [
70] is a postulate to care for natural resources as the basis for human existence on earth. In this context, in the 1990s the concept of eco-efficiency appeared, illustrating the economical and pragmatic approach to the management of natural resources used in economic activity.
The eco-efficiency concept emerged among other ideas aimed at operationalizing sustainable development assumptions. In the “Agenda 21” action program from the United Nations Conference in 1992, it was written that “achieving the goals of environmental quality and sustainable development will require efficiency in production and changes in consumption patterns to emphasize optimization of resource use and minimization of waste” [
74] (p. 20). The eco-efficiency concept was popularized by the World Business Council for Sustainable Development (WBCS) (earlier known as Business Council for Sustainable Development), as a method to simultaneously increase competitiveness and the environmental responsibility of enterprises [
11,
17,
75]. However, it is worth remembering that the need for including adverse production effects into efficiency assessment was raised much earlier [
76]. In the literature many differing definitions of eco-efficiency can be found, putting stress on various aspects, although all of them refer to more efficient use of natural resources [
77]. According to this concept environmental goals do not have to (or even should not) contradict economic goals [
78]. Thus, eco-efficiency can be seen as a twofold tool, relating simultaneously to environmental and economic effects. This is why Schaltegger and Burritt [
17] emphasize that the prefix “eco” refers to both “economics” and “ecology”. From a business point of view, eco-efficiency is a practical method of using resources in a way that will reduce all types of waste. In practice, eco-efficiency concerns the search for ways to achieve specific economic and production results with the minimum use of resources of the environment (with the least possible environmental damage) [
75,
79].
The eco-efficiency concept is most often mentioned in the context of its influence on the practical aspects of business, but neither production function nor efficiency analysis refers directly to the environmental issues, concentrating only on the economic side of the problem, where unnecessary waste generates costs [
80,
81].
Environmental economics (being part of the mainstream economics) sees the eco-efficiency movement as a potential possibility for economic growth, while simultaneously reducing emissions, due to scientific and technological progress. According to this approach, scientific and technological progress allows for constant efficiency improvement; this means that emission of pollution, resulting from improper resource use, converges to zero [
66,
82]. Thus, it is possible to separate economic growth from the existing material and energy base, because current limits can be moved by scientific progress.
Contrary to environmental economics, ecological economics assumes that absolute limits of efficiency improvement do exist [
83,
84], thus emissions (pollution), resulting from inefficient management, cannot be reduced to zero. According to Daly [
85] efficiency assessment requires referring human-created capital to the use of capital coming from all natural resources.
Eco-efficiency is a quantitative tool aimed at the simultaneous assessment of economic and environmental dimensions of economic systems; it allows the analysis of relations between the economic and environmental dimension for sustainable development [
16,
86,
87,
88,
89,
90,
91].
Since eco-efficiency can be understood and interpreted in a variety of ways, there are many methods to calculate it. Consequently, in the literature, many indicators can be found, which makes direct comparisons between research results very difficult (if possible at all). The EEA [
92] claims that the most general category of environmental costs (inputs) is the “use of nature”, and category of economic effects, “social welfare”. According to the Organization for Economic Co-operation and Development—OECD [
89], the easiest way to present eco-efficiency is to relate the effect (calculated as a value of products of an enterprise, sector, or economy) to the inputs (measured as an environmental pressure generated by this enterprise, sector, or economy).
A specific group of eco-efficiency indicators is formed by environmental indicators used in life-cycle assessment (LCA) [
93]. Such assessment is the most comprehensive, but at the same time very complex, which makes it difficult to carry out. The alternative method is data envelopment analysis (DEA), which allows for assessing relations between many inputs and many outputs, without the prior assigning of weights to them [
94,
95,
96]. Traditionally used DEA allows for assessment of efficiency of enterprises using only inputs and production effects of market nature. Recently there were some attempts to also include environmental variables into the DEA models [
97], however, it has rarely been used so far. Some attempts to combine DEA and LCA can also be found in the literature [
98,
99].
Summarizing the literature studies on the concept of eco-efficiency, it can be stated that this is the basic method of operationalization of sustainable development assumptions. Bearing in mind the satisfaction of current and future generations’ social needs, it emphasizes the importance of searching for the most effective ways of using natural resources in economic processes. In the practical dimension, the application of the efficiency-based approach enables the identification of solutions characterized by the best possible relation of effects to “environmental consumption”, which is necessary for the implementation of the idea of sustainable development at the enterprise level.
1.3. Eco-Efficiency in Agriculture
Similar to “sustainable development”, “sustainable agriculture” is not a clear-cut concept, and the existing body of literature contains a huge variety of definitions [
100]. Intuitively we can say that sustainable agriculture is an agricultural production carried out according to sustainability rules. Ikerd [
101] suggested defining it as a system that can sustain, in the long term, its productivity and usefulness to a society, which is possible under the following conditions: not harming the environment, caring for natural resources, maintaining economic viability, competitiveness, and social acceptance. Pretty [
8] (p. 451) claims that “the idea of agricultural sustainability, though, does not mean ruling out any technologies or practices on ideological grounds. If a technology works to improve productivity for farmers and does not cause undue harm to the environment, then it is likely to have some sustainability benefits”. While operationalizing the sustainability idea it is crucial to assess the impact of particular agricultural practices on farm sustainability. The current scientific debate on sustainable agriculture concentrates, among other things, on identifying such agricultural practices that are in line with the sustainable development paradigm [
9,
102,
103]. From the sustainability point of view, farming should consist of decisions and actions that are customized to particular conditions, limitations, and goals [
8,
104].
Implementing in practice strategic goals, such as the improvement of agricultural systems (including more rational use of natural resources), requires undertaking specific actions, chosen based on their proven environmental impact. With time, the EU farm support system has put higher pressure on farmers to limit their adverse environmental impact, thus there is a growing need for preparing tools for assessing such impact on the farm level [
32]. In this context, eco-efficiency can be seen as a useful tool that allows assessing trade-offs between production level and environmental goals [
14,
105,
106].
The main goal of realizing the eco-efficiency concept as a new paradigm for agriculture is to produce more high quality products, simultaneously reducing the use of soil, water, energy, workforce, and capital [
107]. The limited amount of agricultural land in the face of growing global food demand reminds us of the concept of “sustainable intensification”, stressing the need for intensifying agricultural production based on technological progress [
108,
109]. This approach emphasizes that agricultural intensification, understood as fuller use of the yield potential of soil, might lead to a better realization of sustainability goals: social ones (access to food as a basis for life quality) and environmental ones (lower GHG emissions and pollution per l unit of product, limiting deforestation, stimulating better use of nutrients, etc.). In this context the concept of “smart agriculture” gains more popularity; according to this approach knowledge and new technologies are crucial for implementing the economic, social, and environmental goals of sustainable development [
108,
109,
110,
111].
The assessment of eco-efficiency in agriculture was initially based on simple indicators such as units of output per unit of waste or environmental pressure [
112] (ratio analysis). The list of indicators illustrating environmental pressures might be much wider and may include, e.g., [
113] water intensity [m
3/production], energy intensity [J/production], fuel intensity [J/production], land use intensity [ha/production], CO
2 intensity [t/GDP], CH
4 intensity [t/GDP] etc. Keating et al. [
107] underlined that the easiest possible indicator of eco-efficiency is the level of production obtained per unit area, but it also requires including such inputs as water, nutrients, workforce, and capital. Apart from relatively simple indicators, however, it is possible to find more, and often more sophisticated, approaches to assessing eco-efficiency based on LCA (life cycle assessment) [
14], similarly as in industrial enterprises. It is also worth emphasizing that single indicators should be assessed in conjunction with others, as a single indicator usually measures only one aspect of the environmental impact [
114]. An alternative to ratio analysis methods is the DEA method which enables the integration of many inputs and outputs in one measure [
94,
95,
96].