Abstract
This paper proposes an extended data envelopment analysis (DEA) model for deriving eco-efficiency. In order to derive eco-efficiency, the proposed model utilizes the concepts of operational efficiency and environmental efficiency. Since DEA can separately measure operational efficiency and environmental efficiency, the treatment for constructing the unified indicator is required to ultimately evaluate eco-efficiency through balancing operational and environmental concerns. To achieve this goal, we define the environmental stringency as the business condition reflecting the degree of enforcing environmental regulations across the firms or particular industries in different countries. The proposed model provides flexibility, as required by the pollution-intensity of industry, in that it allows the decision maker to evaluate DMU’s (decision-making unit) eco-efficiency appropriately depending on the business environment. We present a case of agricultural production systems to help readers understand what eco-efficiency becomes when we vary the stringency conditions. Through the illustrative example, this paper presents the potential application by which different environmental stringencies can successively be incorporated in DEA.
Highlights
Sustainability has become an undoubtedly critical issue, and many researchers involved in environment studies have been paying serious attention to the challenging topic in order to achieve both economic and environmental goals
In order to reflect environmental concern across business situations, we propose a new model with parametric constraints that represent the situational context of environmental concern
This model implicitly assumes that all decision-making units (DMUs) operate a constant returns to scale (CRS) transformation of the inputs into outputs
Summary
Sustainability has become an undoubtedly critical issue, and many researchers involved in environment studies have been paying serious attention to the challenging topic in order to achieve both economic and environmental goals. In the production process, traditional DEA models cannot provide accurate results if there are important variables that have a negative effect on the environment Such environmentally detrimental factors can be considered undesirable outputs, which are often produced along with desirable outputs and are expected to be minimized. A modified DEA model is suggested for taking into account the environment-related factors Along this line of research, this study attempts to determine eco-efficiency on the basis of the operational and environmental aspects without directly unifying both operational and environmental efficiency. The traditional DEA model is the basis for developing a new model for eco-efficiency This model implicitly assumes that all DMUs operate a constant returns to scale (CRS) transformation of the inputs into outputs. If the optimal value of the objective function in Model (2) equals to one, it can be said of the specific DMU o that it is on the efficient frontier
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