Environmental efficiency of small-scale tea processors in Kenya: an inverse data envelopment analysis (DEA) approach

  • Karambu Kiende GatimbuEmail author
  • Maurice Juma Ogada
  • Nancy L. M. Budambula


Vision 2030, Kenya’s development blueprint for the period 2008–2030, envisions transforming the country into middle-income status where citizens enjoy a high quality of life. The blueprint has three pillars: economic, political and social. The thread that binds the three pillars is the natural environment, which supplies both renewable and non-renewable resources. Unfortunately, development in the other sectors may easily compromise the conditions of the natural environment and put the supply of clean water, food and fiber in jeopardy. For example, processing of agricultural products may increase gains from agriculture and lead to rapid expansion of the sector. If this is not carefully done, it may be characterized by wastage of resources, cutting down of forests to provide fuel and more land for cultivation, disposal of raw wastes into water bodies and over-exploitation of the soils. Using the example of small-scale tea processors in the country, this study sought to understand the environmental efficiency of the small-scale agro-processors. Small-scale tea processors were chosen because they have been implementing environmental efficiency-enhancing techniques in their production, yet no study had endeavored to test whether their initiatives were yielding positive results. The study adopted the innovative inverse data envelopment analysis approach on panel data to generate environmental efficiency scores, in the first step. In the second step, it analyzed the predictors of environmental efficiency using Tobit regression. Overall, the results showed that small-scale tea processors in Kenya were still environmentally inefficient, recording a mean efficiency index of only 49%, despite previous initiatives to improve efficiency. Thus, the processors could reduce 51% of the environmentally detrimental inputs without compromising output. Environmental inefficiency could be attributed to pursuit for higher profits and higher cost of investible funds. This shows that investment in environmental conservation is expensive and eats into the profits of the processors. Therefore, the small-scale processors may lack the incentives, in the short term, to invest in environment-friendly technologies. This may be compounded by the high cost of finance to be invested in such initiatives. Policy implication is that government should intervene in terms of tax concessions for firms that invest in environmental conservation, subsidies on technologies that guarantee environmental efficiency and access to cheaper funds for purchase and maintenance of environment-friendly technologies.


Environmental efficiency DEA Tea Small-scale tea processing factories Kenya 



  1. Azapagic, A., Bore, J., Cheserek, B., Kamunya, S., & Elbehri, A. (2015). Global warming potential of production and consumption of Kenya tea. Journal of Cleaner Production, 112(5), 4031–4040.Google Scholar
  2. Basnayake, K., & Gunaratne, P. (2002). Estimation of technical efficiency and its determinants in the tea small holding sector in the mid country wet zone of Sri Lanka. Srilankan Journal of Agricultural Economics, 4(1), 15.Google Scholar
  3. Chang, Y. T. (2013). Environmental efficiency of ports: A data envelopment analysis approach. Maritime Policy & Management, 40(5), 467–478. Scholar
  4. Chang, Y. T., Zhang, N., Danao, D., & Zhang, N. (2013). Environmental efficiency analysis of transportation system in China: A non-radial DEA approach. Energy Policy, 58(2013), 277–283. Scholar
  5. Charnes, A., Cooper, W. W., & Rhodes, E. (1978). Measuring the efficiency of decision making units. European Journal of Operational Research, 2, 429–444.CrossRefGoogle Scholar
  6. Chen, J., Song, M., & Xu, L. (2015). Evaluation of environmental efficiency in China using data envelopment analysis. Ecological Indicators, 52, 577–583. Scholar
  7. Cooper, W. W. (1999). Operational research/management science—Where it’s been—Where it should be going. Journal of the Operational Research Society, 50, 3–11.Google Scholar
  8. Cooper, W. W., Seiford, L. M., & Tone, K. (2000). Data envelopment analysis, a comprehensive test with models, applications, references and DEA-solver software. Boston: Kluwer Academic Publishers.Google Scholar
  9. Dunk, A. S. (2002). Product quality, environmental accounting and quality performance. Accounting, Auditing & Accountability Journal, 15(5), 719–732. Scholar
  10. Friedman, M., (1970). The social responsibility of business is to increase its profits. The New York Times Magazine, 173–178.Google Scholar
  11. Hong, N. B., & Yabe, M. (2015a). Resource use efficiency of tea production in Vietnam: Using translog SFA model. Journal of Agricultural Science, 7(9), 160–172. Scholar
  12. Hong, N. B., & Yabe, M. (2015b). Technical efficiency analysis of tea production in the northern mountainous region of Vietnam. Global Journal of Science Frontier Research, 15(1), 30–42.Google Scholar
  13. Huang, Y., & Kao, J. (2012). Method for assessing corporate environmental performance. Inefficiency countervailed DEA (IC-DEA). The Journal of the Operational Research Society, 63(4), 470–477. Scholar
  14. Huang, Y., Wong, Y., & Yang, M. (2014). Proactive environmental management and performance. Management Research Review, 37(3), 210–240. Scholar
  15. Kamande, M. (2010). Technical and environmental efficiency of Kenya’s manufacturing sector: A stochastic frontier analysis. In The thirteen annual conference on Global Economic Analysis, United Nations Conference Centre, Bangkok, Thailand 2010, p. 33.Google Scholar
  16. KNBS. (2015). Economic survey. Nairobi: Government of Kenya.Google Scholar
  17. Long, X., Zhao, X., & Cheng, F. (2015). The comparison analysis of total factor productivity and eco-efficiency in China’s cement manufactures. Energy Policy, 81, 61–66. Scholar
  18. Maity, S. (2017). Agris on-line papers in economics and informatics reform raises efficiency of tea estates in India. Agris On-Line Papers in Economics and Informatics, IX(2), 101–116. Scholar
  19. Owuor, P. O., Kavoi, M. M., Wachira, F. N., & Ogola, S. O. (2007). Sustainability of smallholder tea growing in Kenya. International Journal of Tea Science, 6(1), 1–23.Google Scholar
  20. Reinhard, S., Lovell, C. K., & Thijssen, G. J. (2000). Environmental efficiency with multiple environmentally detrimental variables; estimated with SFA and DEA. European Journal of Operational Research, 121(2), 287–303.CrossRefGoogle Scholar
  21. Sayi, J. B. (2014). Determinants of energy efficiency in black tea processing factories: A case of Kenya Tea Development Agency. Unpublished Thesis, University of Nairobi.Google Scholar
  22. Severo, E. A., de Guimarães, J. C. F., & Dorion, E. C. H. (2017). Cleaner production and environmental management as sustainable product innovation antecedents: A survey in Brazilian industries. Journal of Cleaner Production, 142, 87–97. Scholar
  23. Song, M., An, Q., Zhang, W., Wang, Z., & Wu, J. (2012). Environmental efficiency evaluation based on data envelopment analysis: A review. Renewable and Sustainable Energy Reviews, 16(7), 4465–4469.CrossRefGoogle Scholar
  24. Song, M., Wang, S., & Liu, W. (2014). A two-stage DEA approach for environmental efficiency measurement. Environmental Monitoring and Assessment, 186(5), 3041–3051. Scholar
  25. Taulo, J. L., & Sebitosi, A. B. (2016). Material and energy flow analysis of the Malawian tea industry. Renewable and Sustainable Energy Reviews, 56, 1337–1350. Scholar
  26. Tea Board of Kenya. (2010). Opening emerging markets for Kenyan Tea, Nairobi.Google Scholar
  27. Tian, D., Zhao, F., Mu, W., Kanianska, R., & Feng, J. (2016). Environmental efficiency of Chinese open-field grape production: An evaluation using data envelopment analysis and spatial autocorrelation. Sustainability (Switzerland), 8(12), 13. Scholar
  28. van der Wal, S. (2008). Sustainability issues in the tea sector—A comparative analysis of six leading production countries (pp. 1–110). Amsterdam: SOMO Publication.Google Scholar
  29. Worrell, E., Allwood, J., & Gutowski, T. (2016). The role of material efficiency in environmental stewardship. Annual Review of Environment and Resources, 41(1), 575–598. Scholar
  30. Zhang, F., Fang, H., Wu, J., & Ward, D. (2016). Environmental efficiency analysis of listed cement enterprises in China. Sustainability (Switzerland), 8(5), 1–19. Scholar

Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.University of EmbuEmbuKenya
  2. 2.Taita Taveta UniversityVoiKenya

Personalised recommendations