China's SO2 shadow prices and environmental technical efficiency at the province level

Abstract

This paper uses the output directional distance function to estimate the shadow prices and environmental technical efficiency of China's provincial SO2 emissions for 2001–2013. The shadow prices were regarded as the abatement cost. We found that the Chinese national average SO2 shadow price showed a fluctuating downward trend during the period of 2001–2012 and increased significantly in 2013. The results also show that the mean value of the non-efficiency of environmental technology presents a downward trend. Moreover, the values of environmental technical non-efficiency of all production units are greater than zero, which shows that there is room for improvement. Finally, the factors influencing the shadow price were analyzed using regression analysis, which revealed a negative correlation between the shadow price of CO2 and that of SO2. The shadow price of SO2 will decrease with increasing per capita GDP. The effect of capital-labor intensity is also significant, but the coefficient is positive, i.e., higher capital-labor intensity is associated with a higher SO2 abatement cost.