Environmental productivity assessment: An illustration with the Ecuadorian oil industry

Abstract

AbstractThis paper assesses the performance of 20 Ecuadorian petroleum industry over the period 2014–2018, using the pollution‐adjusted Malmquist (PM) and Hicks–Moorsteen (PHM) productivity indices within a convex neutral analytical framework. Indeed, to the best of our knowledge, the environmental performance variation of the Ecuadorian oil industry has never been investigated hitherto in the literature. Moreover, the existing literature that analyses the environmental performance change of oil industries applied the Malmquist productivity index by considering a convex production set. However, the convexity assumption results in ignoring possible non‐linearities in the production process. Also, the performed PM and PHM in this paper are decomposed and disaggregated to provide the main drivers of both economic and polluting productivity change. Finally, the performance change assessment is carried out through a nonparametric enumerative method that is defined in the paper.