ENERGY PRODUCTIVITY OF A PRODUCTION SYSTEM - ANALYSIS AND MEASUREMENT

Energy productivity has not attracted the attention it deserves in comparison to its importance to national economies. Multifactor productivity (MFP) and total factor productivity (TFP) are applicable to energy productivity measurement, but aggregation of inputs and segregation of outputs is a challenge. Concepts for aggregation (using seven different weights) of energy inputs and segregation of output have been developed so that ideas of total energy audits, capital and indices can be combined for measurement of energy productivity. A new method of segregating output based on marginal productivity from econometric estimates of production functions has been developed to calculate MFP. A case study of the US agricultural production system demonstrates the superiority of this new method of measurement of energy MFP over both TFP and the traditional method of measuring MFP. Energy productivity measured by using the new method of MFP is responsive to changes in technology and energy situations. Energy productivity of the United States' agricultural sector decreased with time until it reached its minimum level in 1979. After 1979 it again increased However, capital MFP of US agriculture remained constant over the 36 year interval 1948-83.