A two-stage DEA model for resource allocation in industrial pollution treatment and its application in China

Abstract

An increasing amount of resources is being utilized to combat the pollution problem in China. Measuring and improving the efficiency of this resource allocation is an effective way to promote pollution treatment at the present technical level. This paper utilizes a two-stage data envelopment analysis (DEA) model to attain allocation results based on the zero-sum gain and fixed-sum gain assumptions. We divide all the inputs into discretionary and non-discretionary inputs and construct two models for allocating resources based on the environmental efficiency scores. The new models are applied to calculate the performance and resource allocation scheme of 30 Chinese provinces from 2011 to 2015. Most provinces are inefficient at controlling pollution emission or treating pollution while using the given level of input resources. Based on the production possibility set of each province in 2015, the processing capacity of wastewater and gas could be increased by 1% and 3%, respectively, by reallocating resources for pollution treatment among different provinces. Environmental efficiency scores and resource allocation plans based on various assumptions are obtained in this paper to enlighten the corresponding decision-makers.