China’s regional energy and environmental efficiency: A Range-Adjusted Measure based analysis

Abstract

Energy and environmental efficiency evaluation has recently attracted increasing interest in China. In this study, we utilize the Range-Adjusted Measure (RAM) based nonparametric approach to evaluate the regional energy and environmental efficiency of China over the period of 2006–2010. The desirable/good and undesirable/bad outputs, as well as the energy and non-energy inputs are considered in the efficiency evaluation so as to characterize the energy consumption, economic production, and CO2 emission process of different China’s regions. In addition, the economic concepts of natural disposability and managerial disposability are incorporated in the evaluation instead of the strong and weak disposability in conventional environmental efficiency evaluation. Therefore, the types of returns to scale and damages to scale of different China’s regions are measured and correspondingly the strategy and policy implications are proposed for guiding the future improvement of regional energy and environmental efficiency. This study finds that: (i) Beijing, Shanghai, and Guangdong had the highest integrated energy and environmental efficiency during the study period, which could be seen as the benchmarks of inefficient China’s regions. (ii) On average, east China had the highest integrated efficiency under natural disposability, and west China had the highest integrated efficiency under managerial disposability. (iii) During 2006–2010, the average production efficiency of China slightly decreased and the average emission efficiency of China slightly increased. (iv) Among China’s 30 regions, 19 regions exhibited decreasing returns to scale, 4 regions shown increasing returns to scale, and 7 regions have mixed returns to scale types under natural disposability in our study period. In addition, under managerial disposability, there are 18, 3 and 9 regions respectively exhibited increasing, decreasing and mixed damages to scale types over time. (v) For most Chinese regions, it is not recommended to simply increase or maintain their current scales of production, but alternatively, they should pay more attentions on technology innovation of energy utilization efficiency improvement, since up to 2010, China still had large energy conservation and emission reduction potentials.