Measurement of environmentally sustainable productivity growth

This report reviews six indices of environmentally sustainable productivity growth (SPG) that integrate agricultural total factor productivity (TFP) growth and trends in four agri-environmental externalities at the national level. The findings reveal only minor differences across indices when environmental dimensions are assigned low weights, but these differences widen as weights increase. This variation reflects index-specific conditions under which SPG exceeds TFP. Some indices require externalities to grow more slowly than outputs or input (relative decoupling) while others require externalities to decrease (absolute decoupling). Three case studies (Mexico, The Netherlands and New Zealand), illustrate potential drivers of SPG. In Mexico, improved market access resulting from trade-agreements, alongside shifts in agricultural support appeared to be key factors. In the Netherlands, regulatory measures targeting ammonia, fertilisers and manure management contribute to positive SPG outcomes. In New Zealand, performance is associated with export-driven output growth, herd dynamics, and the adoption of new technologies.