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EFFICIENCY ANALYSIS OF MECHANISATION WORKING UNITS IN CROATIAN FORESTRY – DEA APPROACH

In the Republic of Croatia (RC) forests and forest land cover 2.5 million of hectares or 44% of the total area of RC. 81% of forests are owned by the state, and the remaining 19% are privately owned forests. The annual allowable cut in state-owned forests is up to 4.9 million m3. In accordance with the Forest Act the company „ Hrvatske šume“ ltd. Zagreb (Croatian Forests – CF) manage the state-owned forests. CF mostly rely on their own capacities for felling, processing, skidding/forwarding and transportation of wood, as well as for the construction of forest roads. These capacities are organised in 13 mechanisation working units (MWUs). The efficiency of MWUs was estimated by the application of ‘ Data Envelopment Analysis’ (DEA). DEA is a well-known non-parametric method for the assessment of relative efficiency of comparable decision making units with different inputs and outputs. By linear programming, DEA models determine empiric efficiency frontier based on data of used inputs and achieved outputs of all decision making units. Efficiency level is calculated for each production unit, and consequently efficient and inefficient units may be differentiated. By use of the DEA, the efficiency level was determined for 13 MWUs operating within CF, projections were made of inefficient units against the efficiency frontier, and sources and levels of inefficiency were established. The assessment of MWUs’ efficiency was carried out using the basic CCR and BCC models, which are also the most frequently applied DEA models. For every MWU, the number of employees and the number of mechanized means of work were entered into the model as inputs. Outputs were represented by the quantity of hazardous waste generated in maintenance of mechanisation and by the value of monetary gain/loss incurred by MWUs. The research shows that the working units, i.e. maintenance of forestry mechanisation, generate less than 500 tons of hazardous waste on an annual basis, which is a share lower than 0.25% of the total annual quantity of hazardous waste in RC. Per one machine that amounts up to 420 kg of tyres disposed annually, 375 kg of solid waste and 109 litres of motor and hydraulic oils. The results of the determination of MWUs’ efficiency by the basic DEA models show that the average efficiency was 0.608 (CCR model). This means that the average (assumed) MWU, if it wishes to conduct business at the efficiency frontier, has to produce 64.5% more outputs with the used input level, i.e. achieve proportionally lower quantity of waste and higher profit. According to BCC model, the efficiency was 0.792 on the average, meaning that an average MWU, if it wishes to be efficient, must produce 26.3% more outputs (increase of profit i.e. decrease of waste). Two MWUs are relatively efficient according to CCR model (15.4%), and 7 MWUs (53.8%) according to BCC model. The quantity of produced outputs has a higher impact on inefficiency than the quantity of inputs used by the MWUs (output oriented models). Considering outputs, financial result achieved by individual working units proved to be a slightly more significant source of inefficiency. It is, however, considered that special significance and attention should be given to hazardous waste as the second output compared. The research shows that the 'Data Envelopment Analysis' may be a very useful tool both at a strategic and operational level of decision making in forestry.

forestry; efficiency; Data Envelopment Analysis (DEA); environment; hazardous waste

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