Environmental Productivity Growth in Consumer Durables

Abstract

A large number of studies on environmental productivity have appeared across various sub-disciplines of economics as well as in other related disciplines such as operations research and engineering. In these studies, the production units of interest are usually plants or firms, sectors or industries, regions, and countries. To our knowledge, however, only one previous study considers environmental performance of consumer durables. This is somewhat surprising because, during their use phase, consumer durables such as passenger cars and home appliances are in fact production units that consume energy and resources to provide services for consumers, and hence are also contributors to various environmental pollutants. This chapter aims to develop an environmental productivity index specially designed for consumer durables. To this end, we first analyze the particular features of consumer durables compared to conventional production units. Based on these features, we elaborate how to model the production activity during the use phase of consumer durables; and then we present an overview of the existing approaches to measuring environmental productivity change and describe how they can be applied in the current context. Finally, we use a unique Finnish data set of passenger cars to illustrate the interpretation of the proposed index.