Environmental Efficiency Measures Research Articles

The relationship between pollution abatement costs and environmental regulation: Evidence from the Chinese industrial sector

AbstractSince the 2000s, China has been trying to strengthen emission controls in response to increasing pollution problems. However, strict implementation of emission controls generates pollution abatement costs. Using regional data for 29 provinces in the Chinese industrial sector from 1995 to 2010, this study estimated the pollution abatement costs for each province through the measurement of environmental efficiency, by applying a directional distance function approach. Moreover, using panel data analysis, this study clarified whether there is a nonlinear relationship between pollution abatement costs and environmental regulations. The empirical results are as follows. The study confirmed that the burden of abatement costs tended not only to occur in the central and western regions but also to increase in the eastern region. Moreover, the nonlinear relationship is inverted U‐shaped; thus, pollution abatement costs increase, as a negative effect of environmental regulations, until a certain inflection point, after which they decrease.

Modelling environmental technical efficiency and phosphorus pollution abatement cost in dairy farms

The dairy sector is an important sector in Northern Ireland being the single largest contributor to its agricultural economy. However, the sector contributes more to soil phosphorus (P) surplus compared to other agricultural sectors. Consequently, the goal of this research is to analyse the environmental technical efficiency of dairy farms making use of a novel parametric hyperbolic distance function approach. The model is able to internalise P surplus as undesirable output in the dairy production process by treating desirable and undesirable outputs asymmetrically. The stochastic production frontier model is analysed simultaneously with an inefficiency model to explain variability in efficiency scores assuming the existence of heteroskedasticity in the idiosyncratic error term. Additionally, we estimated the shadow price and pollution cost ratio of P surplus in dairy farms. This paper contributes to the existing literature as it provides the first attempt to empirically estimate the pollution abatement cost of P surplus in dairy farms. Besides, the hyperbolic environmental technology distance function methodology employed to achieve the study objectives is less restrictive compared to the radial output/input distance function approach employed in previous studies. This allows for the estimation of a more robust environmental efficiency measure and shadow price of P surplus that is consistent with public policy goals that seek to simultaneously reduce pollution and increase production of desirable outputs. Our results showed that the average environmental technical efficiency estimates for dairy farms in Northern Ireland is 0.93 and the shadow price (marginal abatement cost) of P surplus evaluated at the mean is £12.29/kg. Intensification resulting in increased use of concentrates feed was found to be negatively related to environmental technical efficiency. We also found that age of the farmer and share of milk output have a positive relationship with environmental technical efficiency.

Measuring output-based technical efficiency of Indian coal-based thermal power plants

PurposeThe purpose of this paper is to measure technical efficiency of Indian thermal power sector employing the recent by-production approach.Design/methodology/approachThe by-production approach is used in conjunction with data from the Central Electricity Authority (CEA) of India to compute the output-based Färe, Grosskopf, Lovell (FGL) efficiency index and its decomposition into productive and environmental efficiency indexes for the ITPPsFindingsThe authors show that given the aggregated nature of data on coal reported by CEA, CEA’s computation of CO2 emissions through a deterministic linear formula that does not distinguish between different coal types and the tiny share of oil in coal-based power plants, the computed output-based environmental efficiency indexes are no longer informative. Meaningful measurement of environmental efficiency using CEA data is possible only along the dimension of the coal input. Productive efficiency is positively associated with the engineering concept of thermodynamic/energy efficiency and is also high for power plants with high operating availabilities reflecting better management and O&M practices. Both these factors are high for private and centrally owned as opposed to state-owned power-generating companies. The example of Sipat demonstrates the importance of (ultra)supercritical technologies in increasing productive and thermodynamic efficiencies of the ITPPs, while also reducing CO2 emitted per unit of the net electricity generated.Originality/valueThis paper uses the by-production approach for the first time to measure technical efficiency of ITPPs and highlights how the nature of the Indian data impacts on efficiency measurement.

Environmental efficiency measurement with heterogeneous input quality: A nonparametric analysis of U.S. power plants

While there is an abundant theoretical and empirical literature on environmental efficiency measurement, the impacts of heterogeneous input quality on environmental efficiency remain unexplored. Failing to control for this heterogeneity may lead to performance measurement errors, i.e., fuel quality differences are confused with technical inefficiency. In this paper, we account for this problem by proposing a Materials Balance production model that accommodates heterogeneous material flow coefficients and thereby allows for heterogeneity in input quality. Based on this model, a decomposition of environmental efficiency is proposed which disentangles the contributions of fuel quality differences and technical inefficiency. We implement our approach using nonparametric methods to evaluate and decompose environmental efficiencies using panel data on U.S. coal-fired power plants. Our results show that most of the potential to improve environmental efficiency is due to fuel quality differences and that environmental regulations have had an adverse impact on fuel quality.

Assessing regional environmental efficiency in China with distinguishing weak and strong disposability of undesirable outputs

China has developed a remarkable economic growth in the past 30 years by accompanying with undesirable outputs. The assumptions of weak and strong of undesirable outputs have become the focus discussion in data envelopment analysis (DEA) models. To have a comprehensive environmental efficiency measurement, this paper proposes three DEA models considering weak disposability, strong disposability and distinguishing weak and strong disposability of undesirable outputs, respectively. We further combine with the Malmquist-Luenberger productivity index to assess the environmental efficiency and the dynamic change trend of 30 provinces in China from 2005 to 2014. The results show that distinguishing technical features of undesirable outputs makes a significant difference to final environmental efficiency score at different regions. The environmental efficiency of the whole nation, however, does not show any increasing trend during the ten years. Enhancing environmental efficiency of central and west area is an urgent task for Chinese government. The change trend of Malmquist-Luenberger productivity index and technological change shows a similar shape. Technical progress is the main driving force to enhance the environmental efficiency. Relevant suggestions are presented for improving the regional environmental efficiency in China in the future.

Environmental policy efficiency: measurement and determinants

This paper provides measurement of relative public environmental policy efficiency (EPE) at country level. We use data envelopment analysis methods to construct measures of relative efficiency, for 39 countries over the period 1995–2010. Then, we estimate a truncated regression model, using the bootstrap method of Simar and Wilson (J Econom 136(1):31–64, 2007) in order to determine the factors that affect EPE. Our findings indicate that (i) EPE is affected both by economic and political variables, (ii) the effect of the political regime on EPE depends on the level of economic development. Our results are robust across alternative specifications.

Nonradial Directional Distance Function for Measuring the Environmental Efficiency of the Chinese Iron and Steel Industry

The present article constructs nonradial directional distance function (DDF) methods to measure and contribute to improving the industrial sustainability performance of the Chinese iron and steel industry. For such an energy-intensive industry, environmental efficiency measurement is an important way to implement the “energy-saving and emission-reduction” principle. We reformulate the nonradial DDF in the form of Second-Order Cone Programming in order to transform the traditional DDF into linear programming and provide accurate efficiency results. The new approach is utilized to calculate the performance of 30 major iron and steel makers in China. Both technical efficiency and overall efficiency are calculated to help the managers of inefficient iron and steelmakers find weaknesses. We find that nearly half of the steel makers are environmental inefficient, most of which are increasing return to scale. Furthermore, specific value of desirable output increase and undesirable output reduction are calculated for achieving efficiency. The study concludes with some remarks for energy-environment policy and industrial decision makers based on the empirical analysis and makes comparison study between the policies obtained in this study and the existing government policies.

Energy and environmental efficiency measurement of China's industrial sectors: A DEA model with non-homogeneous inputs and outputs

Environmental problems brought by industry are attracting extensive attention so a comprehensive analysis of industrial environmental performance is increasingly important. However, the comparison of industrial sector efficiencies is complicated by the fact that the natural resources consumed and/or the pollutants discharged by each sector may differ. In this paper, we extend the DEA model to consider two-sided non-homogeneous problems, handling DMU sets that have non-homogeneity in both inputs and outputs. This is different from the previous researches which generally focus on regional data to avoid non-homogeneity. Today environmental reform and energy conservation in various industrial sectors are both parts of the basic state policy of China. The empirical results show that: (1) Sectors' efficiencies are still low and unbalanced. The Recycling and Disposal of Waste department achieves the best energy saving and emission reduction efficiency. (2) 38 sectors can be clustered into four groups and set new benchmark in each group. (3) The overall efficiency of 38 industrial sectors in China maintained a rising trend in five years. With this more realistic analysis of environmental efficiency, the Chinese government can make more informed decisions to realize sustainable industrial development.

Measuring Chinese Marine Environmental Efficiency: A Spatiotemporal Pattern Analysis

Environmental efficiency standards are often used to evaluate the costs of oceanic economic development. A variety of statistical analyses were applied in this study to quantify the marine environmental efficiency of 11 Chinese coastal provinces and municipalities between 2000 and 2014. Results initially reveal that environmental efficiency measures that incorporate undesirable outputs are more consistent with real production conditions and thus the use of marine economic and environmental efficiencies supplement and complement one another. Second, overall marine environmental efficiency across China tends to be low and can be spatially characterized by a transformation such that the inefficiencies noted in 2000 have subsequently been transformed to comprise a three-tiered structure that encompasses northern, central, and southern cores. Third, variation in absolute and relative marine environmental efficiency differences for the coastal regions of China have been consistent over time; values initially decreased before increasing again in a fluctuating manner over the time period of this analysis. Fourth, data show that the Pearl River Delta area has experienced the highest rate of change in marine environmental efficiency over time when economic zones are used as basic research units, although values have nevertheless fluctuated significantly. Fifth, values for total factor productivity as well as technical efficiency and change across the Chinese marine economy all fluctuated over time but increased. Data show that changes in marine environmental efficiency across China can primarily be attributed to progress in marine science and technology. Finally, levels of capital investment and marine industrial pollution intensity are not significantly correlated with marine environmental efficiency. Indeed, both marine industrial structural levels and environmental protection technologies have had a positive effect on environmental efficiency while levels of investment in marine scientific research as well as the scale of economic development, the marine economy, and the degree of external openness have all exerted negative effects on this key variable.

A two-stage network data envelopment analysis approach for measuring and decomposing environmental efficiency

Abstract To scientifically evaluate the environmental efficiency (EE) of economic development, this study develops a new two-stage network structure with undesirable intermediate elements to describe the actual production process. According to different relationships between two stages, non-cooperative and cooperative data envelopment analysis (DEA) measure methods are constructed to evaluate the EE of decision-making units (DMUs). An EE decomposition model is then proposed as the second goal to improve the coordination efficiency of DMU. Compared to conventional DEA methods, these EE measure methods not only consider the internal structure of DMUs with undesirable intermediate elements, but also can be used to obtain relatively unique and fair evaluation results for achieving different decision objectives. An empirical study on the Chinese industrial water system is taken as an example to illustrate the effectiveness of these EE measures. The results show that non-cooperative relationships may hinder the sustainable development of the economy and environment, so promoting mutual cooperation between two stages is more in line with the interests of decision makers.

Integrating the economic and environmental performance of agricultural systems: A demonstration using Farm Business Survey data and Farmscoper

There is a continued need to monitor the environmental impacts of agricultural systems while also ensuring sufficient agricultural production. However, it can be difficult to collect relevant environmental data on a large enough number of farms and studies that do so often neglect to consider the financial drivers that ultimately determine many aspects of farm management and performance. This paper outlines a methodology for generating environmental indicators from the Farm Business Survey (FBS), an extensive annual economic survey of representative farms in England and Wales. Data were extracted from the FBS for a sample of East Anglian cereal farms and south western dairy farms and converted where necessary to use as inputs in ‘Farmscoper’; farm-level estimates of nitrate, phosphorus and sediment loadings and ammonia and greenhouse gas emissions were generated using the Farmscoper model. Nitrate losses to water, ammonia and greenhouse gas emissions were positively correlated with food energy production per unit area for both farm types; phosphorus loading was also correlated with food energy on the dairy farms. Environmental efficiency indicators, as measured by either total food energy or financial output per unit of negative environmental effect, were calculated; greenhouse gas emission efficiency (using either measure of agricultural output) and nitrate loading efficiency (using financial output) were positively correlated with profitability on cereal farms. No other environmental efficiency measures were significantly associated with farm profitability and none were significant on the dairy farms. These findings suggest that an improvement in economic performance can also improve environmental efficiency, but that this depends on the farm type and negative environmental externality in question. In a wider context, the augmentation of FBS-type data to generate additional environmental indicators can provide useful insights into ongoing research and policy issues around sustainable agricultural production.

Airline environmental efficiency measures considering materials balance principles: an application of a network range-adjusted measure with weak-G disposability

In this paper, we focus on assessing airline environmental efficiency with network structure and build a three-stage efficiency production process. Then, we propose a new model, network range-adjusted measure with weak-G disposability, to measure the environmental efficiency of 29 global airlines based on the data from 2008 to 2015. Finally, a second-stage regression analysis is done to explore the important influencing factors. The main findings are as follows: (1) Eva Air is the airline with the highest efficiency among these 29 airlines; (2) Delta is at the bottom of the efficiency ranking among the 29 airlines and this result is in correlation with its old aircraft fleet; (3) the average efficiency change index in 2014 is the highest in the period 2009–2015; (4) only average fleet age has a slightly significant impact on the overall efficiency and Services efficiency.

Environmental efficiency and abatement efficiency measurements of China's thermal power industry: A data envelopment analysis based materials balance approach

Appropriate measurement of environmental and emission abatement efficiency is crucial for assisting policy making in line with constructing a more sustainable society. The majority of traditional approaches for environmental efficiency measures take pollutant emissions as either undesirable outputs or environmentally determined inputs which suffer a limitation of not satisfying the physical laws that regulate the operation of economic and environmental process. In this study, we propose a DEA based approach which is combined with the materials balance principle (MBP) that accounts for laws of thermodynamics to jointly evaluate environmental and abatement efficiency. This approach is along the line of weak G-disposability based modelling but is an extension to existing models that in our approach the identification of possible adjustments on polluting mass bound in inputs and outputs, and potential adjustments on abatement of pollutants are all included. The overall environmental efficiency measured by this approach is decomposed into the measures of technical efficiency, polluting inputs allocative efficiency, and polluting and non-polluting inputs allocative efficiency with the emphasizing of incorporating pollutant abatement activities. Accordingly, new measures of abatement efficiency are proposed which help to identify the pollutant abatement potential that can be achieved from end-of-pipe abatement technology promotion associated with polluting input quality promotion and input resources reallocation. Furthermore, several global Malmquist productivity indices for identifying the changes on environmental and abatement efficiency are proposed. This approach is applied to China's thermal power industry and some empirical results verifying the necessity of introducing the MBP are obtained.

Environmental efficiency measures for ports: an application of RAM-Tobit-RAM with undesirable outputs

ABSTRACTIn this paper, the environmental efficiency of the ports is measured. Labour, fund and infrastructure input are selected as the inputs, container throughput, cargo throughput and main business income are selected as the outputs, CO2 emission is chosen as the undesirable output. A new model—RAM-Tobit-RAM (Range Adjusted Measure) with undesirable outputs is built to evaluate the environmental efficiency. Ten Chinese ports from 2004 to 2013 are taken as the samples to verify its rationality. The results suggest that it is not necessarily beneficial for environmental efficiency to expand the port scale.

Operational and environmental performance in China's thermal power industry: Taking an effectiveness measure as complement to an efficiency measure

The trend toward a more fiercely competitive and strictly environmentally regulated electricity market in several countries, including China has led to efforts by both industry and government to develop advanced performance evaluation models that adapt to new evaluation requirements. Traditional operational and environmental efficiency measures do not fully consider the influence of market competition and environmental regulations and, thus, are not sufficient for the thermal power industry to evaluate its operational performance with respect to specific marketing goals (operational effectiveness) and its environmental performance with respect to specific emissions reduction targets (environmental effectiveness). As a complement to an operational efficiency measure, an operational effectiveness measure not only reflects the capacity of an electricity production system to increase its electricity generation through the improvement of operational efficiency, but it also reflects the system's capability to adjust its electricity generation activities to match electricity demand. In addition, as a complement to an environmental efficiency measure, an environmental effectiveness measure not only reflects the capacity of an electricity production system to decrease its pollutant emissions through the improvement of environmental efficiency, but it also reflects the system's capability to adjust its emissions abatement activities to fulfill environmental regulations. Furthermore, an environmental effectiveness measure helps the government regulator to verify the rationality of its emissions reduction targets assigned to the thermal power industry. Several newly developed effectiveness measurements based on data envelopment analysis (DEA) were utilized in this study to evaluate the operational and environmental performance of the thermal power industry in China during 2006–2013. Both efficiency and effectiveness were evaluated from the three perspectives of operational, environmental, and joint adjustments to each electricity production system. The operational and environmental performance changes over time were also captured through an effectiveness measure based on the global Malmquist productivity index. Our empirical results indicated that the performance of China's thermal power industry experienced significant progress during the study period and that policies regarding the development and regulation of the thermal power industry yielded the expected effects. However, the emissions reduction targets assigned to China's thermal power industry are loose and conservative.

Operational and Environmental Efficiencies of Japanese Electric Power Companies from 2003 to 2015: Influence of Market Reform and Fukushima Nuclear Power Accident

This study measures operational and environmental efficiencies of nine incumbent electric power companies (EPCos) in Japan and examines an influence of market reform and Fukushima nuclear power plant accident on efficiencies using a data set from 2003 to 2015. This study applies output-oriented radial data envelopment analysis (DEA) model to the measurement of efficiencies. Three inputs and three desirable outputs are used for the measurement of operational efficiency, and one undesirable output besides inputs and desirable outputs is used to measure environmental efficiency. EPCos produce not only desirable output, for example, electricity, but also undesirable output, for example, CO2, for their operations. For the measurement of environmental efficiency, this study uses a unique DEA model that assumes occurrence of ecotechnology innovation. The results reveal that environmental efficiency of EPCos is mostly invariant over the period of this study, while operational efficiency decreases in the same period. In addition, the results present that Japanese EPCos make efforts to reduce CO2 emissions by promoting ecotechnology innovation. The Kruskal–Wallis rank sum test indicates differences in operational and environmental efficiencies among EPCos. Such performance differences might become larger as market liberalization advances, which could lead to further structural changes of the industry.

Measurement of production efficiency and environmental efficiency in China’s province-level: a by-production approach

The nonconventional by-production approach with respect to the freely disposable inputs but without the weakly disposable and null-joint outputs has been proposed to describe the pollution generating technologies since 2012. To amend the contradictory trade-offs among inputs, intended and unintended outputs, which generate in the previous conventional pollution-generating technologies, the new by-production approach decomposes the general pollution generating technology as classical intended production technology and nature’s residual-generation mechanism. In this paper, some production and environmental efficiency indexes will be extended and firstly applied in the study of regional technical efficiency level with considering the energy utilization and air pollutants emission in China. Based on our calculating results, there exists the obvious variation in the regional technical efficiency level with the regional geographic separation. Eastcoast area ranks the highest in production efficiency measurement, and the West has the lowest levels in both production and environmental efficiency. Through conducting some reason discussions, our new efficiency results based on the by-production approach are consistent with the fact of Chinas unbalanced regional development pattern and also reveal the ineffectiveness of current environmental policy implementations.

Environmental Performance and Benchmarking Information for Coal-Fired Power Plants in China: A DEA Approach

The rapid economic development in China has intensified the country’s many problems, such as environmental pollution. Coal-fired power plants are a major source of environmental pollution. In order to effectively reduce environmental pollution, it is particularly important that China’s coal-fired power plants reach the best performance standards. In this paper, data envelopment analysis is used to evaluate the environmental efficiency of 27 coal-fired power plants in China. First, we develop a range adjusted measurement (RAM) efficiency measure based on farthest target which considers undesirable output to measure the environmental efficiency. Then, based on the fact that benchmarking information can offer a pivotal pathway for inefficient DMUs to achieve efficiency, another RAM environmental efficiency measure, based on closest target, is built to analyze the efficiency and give the closest benchmarking information. The empirical study shows that closest targets are more easily attainable and provide the most relevant solution to remove inefficiency.

ИНДИКАТОРНАЯ ОЦЕНКА ЭКОЛОГИЧЕСКОЙ ЭФФЕКТИВНОСТИ МЕР ОБЕСПЕЧЕНИЯ ЭКОЛОГИЧЕСКОЙ БЕЗОПАСНОСТИ

ИНДИКАТОРНАЯ ОЦЕНКА ЭКОЛОГИЧЕСКОЙ ЭФФЕКТИВНОСТИ МЕР ОБЕСПЕЧЕНИЯ ЭКОЛОГИЧЕСКОЙ БЕЗОПАСНОСТИ

Environmental efficiency measurement and the materials balance condition reconsidered

This note takes up a shortcoming of Coelli et al.’s (2007) popular environmental efficiency measure and its extension to economic-environmental trade-off analysis (see Van Meensel et al. (2010)), namely that they do not reward emission reductions by pollution control. A new environmental efficiency measure that overcomes this issue and - similar to Coelli et al.’s efficiency measure - is in line with the materials balance principle is proposed and further decomposed into “technical environmental efficiency” and “material and nonmaterial allocative environmental efficiencies”. The new efficiency measure collapses into Coelli et al.’s efficiency measure if none of the considered Decision Making Units control pollutants. A numerical example using Data Envelopment Analysis is provided to further explore the properties of the new efficiency measure.