Investment intensity, technical efficiency and carbon emissions under the CAP: a conditional DEA analysis of the agricultural sector

Investment is crucial for farm modernisation, production processes, and profitability in agriculture. However, farm-level evidence remains limited, mainly due to data constraints and a predominant focus on the determinants of investment adoption (an input-oriented perspective), rather than on how annual investment effort relates to output-oriented efficiency outcomes across heterogeneous farm structures. This leaves an important gap in understanding the performance implications of investment behaviour within the CAP context. This study examines the conditional association between annual new fixed investment and output-oriented technical efficiency in Italian agriculture using a conditional Data Envelopment Analysis (DEA) approach applied to farm-level data from the Italian Farm Accountancy Data Network (2011–2020). New investment effort measured the annual value of new fixed investments and reflects farms’ yearly efforts to renew and strengthen their productive capital base. Findings show that younger farm holders and larger farms invest more on average, whereas smaller farms achieve larger efficiency improvements relative to their investment levels. In addition, a descriptive assessment of carbon emission intensity suggests that farms characterised by higher conditional efficiency tend to display lower emission intensity, indicating potential environmental co-benefits associated with investment-related efficiency improvements.