DEA-based Research On Environmental Performance Measurement

Currently, environmental issues increasingly become an obstacle to economic and social development. It is particularly important to develop a series of effective methods to evaluate environmental efficiency. This article aims to propose such methods to provide references for policy makers when formulating environmental policies.The core of evaluating the environmental efficiency is to maximize the production of goods or services, while minimizing the impact on the environment. In the evaluation of environmental efficiency, a method named data envelopment analysis (DEA) cannot be ignored. Data envelopment analysis (DEA), developed by Charnes et al., is a linear programming technique to solve the above issues. As a purely technical analysis of non-parametric production frontier, it includes the following advantages:the input and output indicators do not require unity, which suggests that they may also include intangible indicators; the weight of an indicator does not require any prior assumption, entirely based on objective data, which avoids the subjective factors to determine the weight; In addition, it does not exist a complicated process of function analysis between inputs and outputs.An important task on environmental efficiency evaluation is how to tackle with undesirable outputs. In the presence of undesirable outputs, the assumption used by the classic DEA models that inputs have to be minimized and outputs have to be maximized is not appropriate. The undesirable outputs should be minimized to protect the environment. So, when constructing aggregated environmental performance indexes with undesirable outputs, we need to investigate nonstandard DEA models. The article aims to propose new efficiency measurements for modeling environmental performance, and detailed qualitative or quantitative suggestions for improvement are presented. The following is the research carried out in this article:(1) Based on the assumption of weak disposability, the article develops a new slacks-based efficiency measurement for modeling environmental performance. The proposed index has more theoretical justification, and distinguishes among different DMUs better in practice. Then we further extend it to the non-oriented index with double aim of increasing desirable outputs and reducing undesirable outputs. Finally, we calculate the index for each of25OECD European countries in a model of CO2emission performance from2007to2009and the results obtained are presented.(2) The article proposes a slacks-based measure based on minimum amounts of input saving and output surplus, which incorporates input saving, output surplus and slacks in a unified manner. Through a quantitative analysis to an example, the rationality and practicability of this proposed SBM measure can be verified.In the end, a summary of the paper is given, which emphasizes on the advantages and disadvantages of the evaluation. Conclusions are drawn and directions for future research are given.