Abstract
This paper proposes the network data envelopment analysis (DEA) model accounting for negative externalities and applies it for decomposition of profit inefficiency in the biomass-agriculture circular system (Bio-AG system). A circular structure of the Bio-AG system which is different from the previously applied network structures is assumed. Since the negative externalities (i.e., pollutant emissions from the biomass industry) occur in the Bio-AG system, the property rights are taken into consideration to model the externalities-adjusted profits. Therefore, the changes in profits due to changes in the property rights (assuming no property rights, allocating property rights to agricultural sector, and allocating property rights to biomass power generation sector) are quantified. Further, the decomposition shows that the biomass power generation sector is less affected by technical inefficiency if contrasted to allocative inefficiency in terms of the profit loss. The findings suggest that the biomass power generation technology influences the profits of the biomass industry. What is more, the inefficient allocation of resources is now the key factor undermining performance of the biomass industry. Therefore, the government should adopt measures to improve the allocation of resources and prevent excessive investments or development of less efficient technologies.
Highlights
Since the Kyoto Protocol was put forward in 1997, much effort has been paid to tackle the environmental problems along with ensuring economic development worldwide
According to models (9)–(12), one can calculate the maximum profit of the biomass power generation industry and agriculture in three cases
Some experts have noted that the market of biomass industry in Jiangsu has been saturated, and the raw materials for biomass industry are in short supply
Summary
Since the Kyoto Protocol was put forward in 1997, much effort has been paid to tackle the environmental problems along with ensuring economic development worldwide. Research on climate change and climate policies has attempted to identify the consequences of climate change along with effective means for climate change mitigation (Watson [1]; Walther et al [2]; Kumar et al [3]; Wei et al [4]; Stocker [5]) Such concepts as sustainability, environmental culture, economic development, and social civilization have been considered simulatenously Of United Nations [6], Dirzyte, Rakauskiene [7]; Fuinhas et al [8]; Liobikiene et al [9]) In this context, sustainable development of energy and electric power has become an important issue as represented by the environment and energy (E&E) concept (see Noori and Chen [10]; Hwang et al [11]; Zhou et al [12]; Chen et al [13]). The renewable and sustainable energy sources (such as wind energy, hydroelectric energy, biomass energy, solar energy) have been utilized to generate electric power
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