437 Copyright © 2014, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 13 DOI: 10.4018/978-1-4666-4474-8.ch013 ABSTRACT Nitrogen, phosphate, and herbicide use are three main environmental problems caused by agriculture. Modelling these undesirable outputs and other detrimental side efects of production activities has at- tracted considerable attention and debate among production economists. A common approach is to treat detrimental variables as inputs mainly using Data Envelopment Analysis (DEA), which has enjoyed a lot of success over the years. On the other hand, Free Disposable Hull (FDH) has not enjoyed as much success as its counterpart, DEA. This chapter demonstrates how environmental efciency can be mod- elled using both DEA and FDH under strong and weak disposability assumptions. Results show that weak disposability assumption is more superior in achieving relatively high emission reductions and that FDH tends to allocate efciency to more DMUs compared to DEA. 1. INTRODUCTION: FARMING AND THE ENVIRONMENT Nitrogen, phosphate and herbicide use are three main environmental problems caused by agriculture. Nitrogen and phosphate surpluses are induced by excessive application of manure and chemical. Part of these nutrients is taken up by plants, but a part is emitted to the environment. The overuse of fertilizers on crops is typical of farming in general. In addition, increased soil acidity affects plant health and crop yield (WWF, 1986). Acidification is also more prevalent largely due to the use of inorganic nitrogenous fertilizers such as urea and ammonium sulphate. Under high rainfall conditions nitrate leaching occurs, which also promotes acidification (ibid). Non-Parametric Estimation of Environmental Effciency Using Data Envelopment Analysis and Free Disposable Hull Richard Mulwa University of Nairobi, Kenya