Resource and environment efficiency analysis of provinces in China: A DEA approach based on Shannon’s entropy

Abstract

Data envelopment analysis (DEA) has been widely used in energy efficiency and environment efficiency analysis in recent years. Based on the existing environment DEA technology, this paper presents several DEA models for estimating the aggregated efficiency of resource and environment. These models can evaluate DMUs’ energy efficiencies and environment efficiencies simultaneously. However, efficiency ranking results obtained from these models are not the same, and each model can provide some valuable information of DMUs’ efficiencies, which we could not ignore. Under this situation, it may be hard for us to choose a specific model in practice. To address this kind of performance evaluation problem, the current paper extends Shannon-DEA procedure to establish a comprehensive efficiency measure for appraising DMUs’ resource and environment efficiencies. In the proposed approach, the measure for evaluating a model's importance degree is provided, and the targets setting approach of inputs/outputs for DMU managers to improve DMUs’ energy and environmental efficiencies is also discussed. We illustrate the proposed approach using real data set of 30 provinces in China.