Exact Eco-Efficiency Measurement in the Yellow River Basin: A New Non-Parametric Approach

Abstract

Frontier-based approaches to eco-efficiency measures have long been controversial because no normative definition is provided. Previous studies have used technical efficiency, environmental efficiency, and other variables as a proxy. To standardize its definition, we propose a formal eco-efficiency indicator, the ratio of actual gross domestic product (GDP) to environmental impact to potential GDP to environmental impact. To quantify it, we develop the biennial meta-frontier non-radial directional distance function (BMNDDF), which addresses the potential threats of technology heterogeneity, the slack variable, and linear programming infeasibility. Using this new indicator, we assess the city-level eco-efficiency in the Yellow River Basin from 2008 to 2017 to identify the harmonious relationship between ecological protection and economic development. The empirical results show a 5.73% increase in eco-efficiency per year, with the technology leadership effect as the main contributor. Because the central region is defined by heavy emissions and many underdeveloped cities, it suffers from more severe conflicts between outputs and emissions than other regions.