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Justifying the incorporation of the materials balance principle into frontier-based eco-efficiency models

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  • Lauwers, Ludwig
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    Abstract

    Frontier-based models are an alternative to traditional eco-efficiency ratio indicators. This paper considers two different types, environmentally adjusted production efficiency models and frontier eco-efficiency models, and tries to find justification for incorporating the materials balance principle (MBP) in them. Similar importance is attached to the economic and environmental outcomes of a production process. Like economic outcomes can be derived from inputs and outputs and respective prices, some cases allow for deriving environmental outcomes from the production function with the MBP. After an overview of attempts to incorporate environmental issues in production efficiency models and some reflections why MBP has been neglected in environmental economics and production efficiency analysis, the paper gives basic principles to incorporate the MBP in conventional production efficiency methods and shows how this adjustment leads to a more diversified diagnosis of eco-efficiency. Finally, potentialities and bottlenecks are discussed. Exploiting the MBP in production efficiency and eco-efficiency analysis will facilitate more pro-active eco-efficiency research.

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    Bibliographic Info

    Article provided by Elsevier in its journal Ecological Economics.

    Volume (Year): 68 (2009)
    Issue (Month): 6 (April)
    Pages: 1605-1614

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    Handle: RePEc:eee:ecolec:v:68:y:2009:i:6:p:1605-1614

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    Web page: http://www.elsevier.com/locate/ecolecon

    Related research

    Keywords: Eco-efficiency Trade-offs analysis Production efficiency Mass flow;

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    Cited by:
    1. Kuosmanen, Natalia & Kuosmanen, Timo, 2013. "Modeling Cumulative Effects of Nutrient Surpluses in Agriculture: A Dynamic Approach to Material Balance Accounting," Ecological Economics, Elsevier, vol. 90(C), pages 159-167.
    2. Viet-Ngu Hoang & Mohammad Alauddin, 2012. "Input-Orientated Data Envelopment Analysis Framework for Measuring and Decomposing Economic, Environmental and Ecological Efficiency: An Application to OECD Agriculture," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 51(3), pages 431-452, March.
    3. Rødseth, Kenneth Løvold, 2013. "Capturing the least costly way of reducing pollution: A shadow price approach," Ecological Economics, Elsevier, vol. 92(C), pages 16-24.
    4. Wamisho, Kassu, 2012. "The Shadow Price of GHG Reduction in Corn Ethanol Plants," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124719, Agricultural and Applied Economics Association.
    5. Welch, Eric & Barnum, Darold, 2009. "Joint environmental and cost efficiency analysis of electricity generation," Ecological Economics, Elsevier, vol. 68(8-9), pages 2336-2343, June.
    6. Wamisho, Kassu, 2012. "The Shadow Price of GHG Reduction in Corn Ethanol Plants," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126862, International Association of Agricultural Economists.
    7. Neophyta Empora & Theofanis Mamuneas, 2011. "The Effect of Emissions on U.S. State Total Factor Productivity Growth," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 3(2), pages 149-172, October.
    8. Hampf, Benjamin, 2011. "Separating Environmental Efficiency into Production and Abatement Efficiency – A Nonparametric Model with Application to U.S. Power Plants," Darmstadt Discussion Papers in Economics 53901, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
    9. Van Meensel, Jef & Lauwers, Ludwig H. & Van Huylenbroeck, Guido & Van Passel, Steven, 2009. "Exploring production-theoretical insights for analyzing trade-offs between economic performance and environmental pressure at firm level," 2009 Conference, August 16-22, 2009, Beijing, China 51725, International Association of Agricultural Economists.

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