Heterogeneous strategy and performance decomposition: Energy-economy-environment nexus in the light of natural & managerial disposability

Abstract

Properly addressing the environmental issue requires suitable treatment for energy use and capital investment. This paper links the Bounded-adjusted Measure (BAM) model to the managerial disposability model. The additive structure allows measuring inefficiency with regards to individual input/output variables and identifying whether a certain unit should follow the natural or managerial disposability to reduce the overall inefficiency. Using this BAM model, the environmentally-adjusted technical inefficiency of 30 province-level regions in China is measured during the period of 2006–2015. From the perspective of natural disposability, carbon dioxide emissions resulting from primary energy use, along with sulfur dioxide emissions, constitute the main causes of the atmospheric environmental inefficiency. From the perspective of the managerial disposability, sulfur dioxide emissions and nitrogen oxides emissions appear as the main sources of the inefficiency. From the joint perspective (in terms of disposability), carbon dioxide emissions resulting from primary energy consumption, sulfur dioxide emissions and nitrogen oxides emissions constitute the major contribution to inefficiency in China. In addition, inefficiency related to energy consumption and atmospheric emissions is higher in North China. Different province-level regions should choose appropriate energy-saving paths according to environmental inefficiency associated with different disposability assumptions.