Measuring environmental performance in China’s industrial sectors with non-radial DEA

Abstract

This paper proposes a non-radial DEA approach consisting of both a static and a dynamic environmental performance index (EPI) for measuring environmental performance. The static EPI is defined as the ratio of a non-radial efficiency measure for reducing undesirable outputs to that for increasing desirable outputs. The proposed non-radial DEA approach has been applied to model the environmental performance of industrial sectors in different provinces of China from 1998 to 2009. It has been found that the static non-radial EPI has a higher discriminating power than the EPI derived from the non-radial undesirable outputs orientation DEA models. Our empirical results also show that the environmental performance of industrial sectors in China improves by 58% in 1998–2009 that is mainly driven by the technological change.