Sustainable production assessment of the 50 US states

Abstract

Economic production is often accompanied by the depletion of natural resources and amplified environmental concerns. Mainstream economic models usually disregard such socio-environmental consequences of economic production. Therefore, there is more need of interdisciplinary methods to evaluate the sustainable productivity of nations. In this paper, we investigate the sustainable production growth of the 50 US states from 1997 to 2018. The US, as one of the largest economies and emitters of greenhouse gases, has a significant role to play in addressing the global environmental issues. The US has numerous national and international commitments and environmental policies in place, however the role of such policies on sustainable production has mostly been overlooked. We implement Data Envelopment Analysis (DEA) models based on several economic indicators and find that most states have been efficient between 1997 and 2018. We use Slack-Based Measures (SBM) to investigate individual states' capital, labor, energy, and emission performances. According to the results, capital efficiency is high while energy and emissions efficiency is low, which results in states' eco-productivity being greater than their eco-efficiency. This highlights that, while ensuring economic efficiency, many states compromise environmental focus. We further adopt Malmquist Productivity Index (MPI) to evaluate the states' productivity, efficiency, and technological change over 22 years, and document significant adverse impact of the global financial crisis on economic efficiency. Next, we apply econometric models to evaluate the impact of renewable energy and energy efficiency policies on efficiency outcomes. The test results indicate that all policies positively affect the states’ average production efficiencies and KPI measures. Overall, the findings provide valuable insights into the sustainable production growth of the US states and the impact of renewable energy and energy efficiency policies on efficiency outcomes.