Assessing the Effects of Biodiesel Production on Sustainability: A Bayesian Two‐Stage Data Envelopment Analysis Approach

ABSTRACT Sustainable development transforms production systems, requiring integrated environmental, social, and economic strategies. Energy systems are key agro‐industrial supply chains in developing countries. Brazil's soybean supply chain impacts Gross Domestic Product, mainly through exports. This study evaluates the impact of biodiesel on sustainable efficiency of Brazilian soybean‐producing municipalities, comparing those with and without biodiesel mills. Using a Data Envelopment Analysis approach with a Bayesian second stage, we estimated municipality efficiencies across three dimensions of sustainable development. Results suggest that soybean‐producing municipalities with biodiesel mills are more sustainably efficient than those without. The mean efficiency for municipalities not producing biodiesel was 0.75 on a unit scale; whereas for biodiesel‐producing municipalities, it was 0.81. This is consistent across regional clusters. Findings support that expanding the soybean supply chain by incorporating value‐added activities benefits municipalities by improving socioeconomic conditions. However, complementary policies are needed to strengthen the environmental dimension and ensure an integrated development approach.