Environmental Efficiency of Agricultural Enterprises in Serbia: A Panel Regression Approach

The agricultural sector is a cornerstone of Serbia’s economy, ensuring national food security and contributing significantly to GDP, but it also generates notable environmental pressures, particularly through air and water pollution. This paper investigates the impact of agricultural enterprises’ environmental pressures on their financial performance between 2011 and 2021. The sample comprises 52 of the 63 agricultural enterprises listed in the national PRTR register as major air polluters in Serbia. Using enterprise-level data, environmental performance is measured through air emissions relative to revenues, while profitability is captured by return on assets (ROA). Panel regression analysis is conducted with Dynamic Ordinary Least Squares (DOLS) and Fully Modified Ordinary Least Squares (FMOLS) estimators to assess the long-run relationship between eco-efficiency and financial outcomes. The results show that reductions in environmental pressure are associated with improved profitability, highlighting the trade-offs and synergies between ecological responsibility and economic performance. These findings underscore the importance of promoting eco-efficiency as both a managerial strategy and a public policy priority, offering evidence to support Serbia’s alignment with EU environmental and agricultural sustainability goals.