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Measuring Eco-efficiency Using the Stochastic Frontier Analysis Approach

In: Advances in Efficiency and Productivity

Author

Listed:
  • Luis Orea

    (University of Oviedo)

  • Alan Wall

    (University of Oviedo)

Abstract

The concept of eco-efficiency has been receiving increasing attention in recent years in the literature on the environmental impact of economic activity. Eco-efficiency compares economic results derived from the production of goods and services with aggregate measures of the environmental impacts (or ‘pressures’) generated by the production process. The literature to date has exclusively used the Data Envelopment Analysis (DEA) approach to construct this index of environmental pressures, and determinants of eco-efficiency have typically been incorporated by carrying out bootstrapped truncated regressions in a second stage. We advocate the use of a Stochastic Frontier Analysis (SFA) approach to measuring eco-efficiency. In addition to dealing with measurement errors in the data, the stochastic frontier model we propose allows determinants of eco-efficiency to be incorporated in a one stage. Another advantage of our model is that it permits an analysis of the potential substitutability between environmental pressures. We provide an empirical application of our model to data on a sample of Spanish dairy farms which was used in a previous study of the determinants eco-efficiency that employed DEA-based truncated regression techniques and that serves as a useful benchmark for comparison.

Suggested Citation

  • Luis Orea & Alan Wall, 2016. "Measuring Eco-efficiency Using the Stochastic Frontier Analysis Approach," International Series in Operations Research & Management Science, in: Juan Aparicio & C. A. Knox Lovell & Jesus T. Pastor (ed.), Advances in Efficiency and Productivity, chapter 0, pages 275-297, Springer.
    • Handle: RePEc:spr:isochp:978-3-319-48461-7_12
    DOI: 10.1007/978-3-319-48461-7_12
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    Citations

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    Cited by:

    1. Clara Inés Pardo Martínez & Alexander Cotte Poveda, 2022. "The effects of environmental performance on competitiveness and innovation: a stochastic frontier approach for Colombia," Environment Systems and Decisions, Springer, vol. 42(1), pages 51-62, March.
    2. Quintano, Claudio & Mazzocchi, Paolo & Rocca, Antonella, 2021. "Evaluation of the eco-efficiency of territorial districts with seaport economic activities," Utilities Policy, Elsevier, vol. 71(C).
    3. Joanna Domagała, 2021. "Economic and Environmental Aspects of Agriculture in the EU Countries," Energies, MDPI, vol. 14(22), pages 1-23, November.
    4. Zaman, Kazi Arif Uz, 2022. "Regional Cooperation for Improving Agriculture Production Efficiency: A Strategic Tool for Emission Reduction," ADBI Working Papers 1301, Asian Development Bank Institute.
    5. Liangen Zeng, 2021. "China’s Eco-Efficiency: Regional Differences and Influencing Factors Based on a Spatial Panel Data Approach," Sustainability, MDPI, vol. 13(6), pages 1-19, March.
    6. Svetlana Ratner & Andrey Lychev & Aleksei Rozhnov & Igor Lobanov, 2021. "Efficiency Evaluation of Regional Environmental Management Systems in Russia Using Data Envelopment Analysis," Mathematics, MDPI, vol. 9(18), pages 1-21, September.
    7. Li Xie & Chunlin Chen & Yihua Yu, 2019. "Dynamic Assessment of Environmental Efficiency in Chinese Industry: A Multiple DEA Model with a Gini Criterion Approach," Sustainability, MDPI, vol. 11(8), pages 1-22, April.

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