Profit efficiency and habitat biodiversity: The case of upland livestock farmers in Ireland

This study evaluates the private economic value of biodiversity using original farm habitat data and farm household survey data from livestock farms in the hills and uplands of Ireland. Profit efficiency and biodiversity efficiency are estimated using a stochastic translog production frontier model. Results indicate that biodiversity plays a beneficial role in farm profitability but the effect is non-linear. Stocking rate and the perimeter to area ratio are found to have a negative effect on biodiversity while the number of plots per farm has a positive effect. Biodiversity efficiency is influenced by the number of livestock, habitat quality, spatial habitat patterns and arrangement, perimeter to area ratio, the number of plots, profit efficiency and farmer's education and age.