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Good Modelling of Bad Outputs: Pollution and Multiple-Output Production

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  • Forsund, Finn R.

Abstract

The materials-balance principle points to the crucial role of material inputs in generating residuals in production processes. Pollution modelling must be of a multi-output nature. The most flexible transformation function in outputs and inputs used in textbooks is too general to make sense in pollution modelling. Specifying bads as if they are inputs, although may be defendable on a macro level as a reduced form, hides explicit considerations of various modification activities. Applying a non-parametric efficiency approach extended to cover bads as outputs, assuming weak disposability of the bads, has serious formal weaknesses as well as not accounting satisfactorily for abatement. Factorially determined multi-output production may be used to model generation of bads by making them being functions of the same set of inputs as in the production of good outputs. A complete taxonomy of inputs as to the impact on both residuals and marketed products as joint outputs is then derived. Factorially determined multi-output production can also be used to model end-of-pipe purification, observing the materials-balance principle, thus providing detailed information for choice of policy instruments.

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Bibliographic Info

Article provided by now publishers in its journal International Review of Environmental and Resource Economics.

Volume (Year): 3 (2009)
Issue (Month): 1 (August)
Pages: 1-38

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Handle: RePEc:now:jirere:101.00000021

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Web page: http://www.nowpublishers.com/

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Keywords: Multiple-output production; Pollution; Materials balance; Weak disposability; Purification;

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Citations

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Cited by:
  1. 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.
  2. Serra, Teresa & Chambers, Robert G. & Oude Lansink, Alfons, 2014. "Measuring technical and environmental efficiency in a state-contingent technology," European Journal of Operational Research, Elsevier, vol. 236(2), pages 706-717.
  3. Mahlberg, Bernhard & Luptacik, Mikulas, 2014. "Eco-efficiency and eco-productivity change over time in a multisectoral economic system," European Journal of Operational Research, Elsevier, vol. 234(3), pages 885-897.
  4. Yang, Fuxia & Yang, Mian & Nie, Hualin, 2013. "Productivity trends of Chinese regions: A perspective from energy saving and environmental regulations," Applied Energy, Elsevier, vol. 110(C), pages 82-89.
  5. Leleu, Hervé, 2013. "Shadow pricing of undesirable outputs in nonparametric analysis," European Journal of Operational Research, Elsevier, vol. 231(2), pages 474-480.
  6. Roberto Gómez-Calvet & David Conesa & Ana Rosa Gómez-Calvet & Emili Tortosa-Ausina, 2013. "Energy efficiency in the European Union: What can be learned from the joint application of directional distance functions and slacks-based measures?," Working Papers 2013/17, Economics Department, Universitat Jaume I, Castellón (Spain).
  7. 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.

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