Our paper evaluates the efficiency adjusted for greenhouse gas (GHG) emissions for sheep meat breeding farms in French grassland areas during 1987–2013. The results show that by modifying the mix of polluting inputs farmers could, on average, offset more than 35% of their total inefficiency. The computation of shadow prices with an innovative approach reveals that, while prices for carbon dioxide and methane range within acceptable levels, the price of nitrous oxide is exorbitant. This suggests that, if policy-makers intend to encourage farmers to reduce this type of pollution, policy measures should be accompanied by sufficient subsidies to compensate farmers or other incentives aiming at nitrous oxide reduction.

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