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Separating Environmental Efficiency into Production and Abatement Efficiency – A Nonparametric Model with Application to U.S. Power Plants

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  • Hampf, Benjamin
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    Abstract

    In this paper we present a new approach to evaluate the environmental efficiency of decision making units. We propose a model that describes a two-stage process consisting of a production and an end-of-pipe abatement stage with the environmental efficiency being determined by the efficiency of both stages. Taking the dependencies between the two stages into account, we show how nonparametric methods can be used to measure environmental efficiency and to decompose it into production and abatement efficiency. For an empirical illustration we apply our model to an analysis of U.S. power plants.

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    Bibliographic Info

    Paper provided by Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL) in its series Darmstadt Discussion Papers in Economics with number 53901.

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    Date of creation: Aug 2011
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    Publication status: Published in Darmstadt Discussion Papers in Economics . 204 (2011-08)
    Handle: RePEc:dar:ddpeco:53901

    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/53901/
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    Keywords: nonparametric efficiency analysis; pollution abatement; network DEA; materials balance condition; fosil-fueled power plants;

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    1. Rüdiger Pethig, 2005. "Nonlinear Production, Abatement, Pollution and Materials Balance Reconsidered," CESifo Working Paper Series 1549, CESifo Group Munich.
    2. Fare, Rolf & Grosskopf, Shawna & Noh, Dong-Woon & Weber, William, 2005. "Characteristics of a polluting technology: theory and practice," Journal of Econometrics, Elsevier, Elsevier, vol. 126(2), pages 469-492, June.
    3. Fare, R. & Grosskopf, S. & Hernandez-Sancho, F., 2004. "Environmental performance: an index number approach," Resource and Energy Economics, Elsevier, Elsevier, vol. 26(4), pages 343-352, December.
    4. Lauwers, Ludwig, 2009. "Justifying the incorporation of the materials balance principle into frontier-based eco-efficiency models," Ecological Economics, Elsevier, Elsevier, vol. 68(6), pages 1605-1614, April.
    5. Fare, Rolf, et al, 1989. "Multilateral Productivity Comparisons When Some Outputs Are Undesirable: A Nonparametric Approach," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 90-98, February.
    6. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, Elsevier, vol. 189(1), pages 1-18, August.
    7. Murty, Sushama & Russell, R. Robert, 2010. "On modeling pollution-generating technologies," The Warwick Economics Research Paper Series (TWERPS) 931, University of Warwick, Department of Economics.
    8. Fare, Rolf & Grosskopf, Shawna & Pasurka, Carl Jr., 2007. "Pollution abatement activities and traditional productivity," Ecological Economics, Elsevier, Elsevier, vol. 62(3-4), pages 673-682, May.
    9. Sueyoshi, Toshiyuki & Goto, Mika & Ueno, Takahiro, 2010. "Performance analysis of US coal-fired power plants by measuring three DEA efficiencies," Energy Policy, Elsevier, Elsevier, vol. 38(4), pages 1675-1688, April.
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