Sensitivity of environmental performance index based on stochastic dominance

Abstract

The Environmental Performance Index (EPI) is a popular sustainability index. It is a composite index which ranks 180 countries based on their environmental performance in 32 indicators. Using the EPI data and stochastic dominance efficiency methodology, this paper examines the sensitivity to the subjective weights assigned to the indicators and categories of environmental performance. The findings show a remarkable variation in environmental performance based on alternative weights which are selected using Stochastic Dominance criteria. Except for 2020, the environmental health category in EPI gets relatively higher importance in the optimal scenario, and ecosystem vitality gets relatively higher weights in the inferior scenario, suggesting that the environmental health category achievements have been relatively higher for most countries over time. The ranking analysis also shows major variations in country rankings with alternative weights. Two countries, Maldives and Gabon, would have experienced more than 100 position changes in their rankings with alternative weights. Furthermore, 67 countries would have experienced 30 or more position changes in their rankings and 37 countries experienced an EPI score change of more than 50 (out of 100) with alternative weights. Overall, the results illustrate the importance of sensitivity analysis of composite indices to increase reliability and transparency.