Cross-country comparison of the efficiency of the European forest sector and second stage DEA approach

In this paper the relative efficiency of the forest sector of 28 EU/EFTA countries during the period 2010–2015 is assessed using Data Envelopment Analysis (DEA). Three non-discretionary inputs (persons employed, forest available for wood supply and initial growing stock) are considered. The outputs are roundwood production, gross value added and final growing stock. The proposed DEA model not only computes efficiency scores but also improvement targets. The countries with the lowest efficiency scores during the period under study are Greece, Bulgaria and Italy. In the second stage, a fractional regression model is fitted and the factors that have an influence on the estimated efficiency are identified. The factors that have an influence are GDP and belonging to the NORTH Europe and CENTRAL-WEST Europe regions. Quantitative estimates of the partial effects of these factors are provided. The results can contribute in providing guidance towards the best practice in roundwood production.