Technical Efficiency Evaluation of Logging Contractors Using a Nonparametric Model

Abstract

Data Envelopment Analysis (DEA) models were used to measure the technical efficiency of a sample of logging contractors. DEA is a nonparametric efficiency measurement technique based on linear programming methods. This paper demonstrates how DEA models can be applied in a forest operations context to gain insights on the factors which affect technical efficiency and performance. Twenty-three fully mechanized loggers were compared in regards to the efficiency with which they converted inputs – dollars of capital, consumables, and labor – into output – tons of wood. Overall, for the period of 1988 to 1994, the logging contractors studied were efficient, but some were considerably less efficient than others. Low capacity utilization had a negative impact on technical efficiency. The scale of an operation also influenced technical efficiency. For the sample, the most productive scale size was estimated to be around 75,000 tons per year.