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Optimal Directions for Directional Distance Functions: An Exploration of Potential Reductions of Greenhouse Gases

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  • Hampf, Benjamin
  • Krüger, Jens
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    Abstract

    This study explores the reduction potential of greenhouse gases for major pollution emitting countries of the world using nonparametric productivity measurement methods and directional distance functions. In contrast to the existing literature we apply optimization methods to endogenously determine optimal directions for the efficiency analysis. These directions represent the compromise of output enhancement and emissions reduction. The results show that for reasonable directions the adoption of best-practices would lead to sizable emission reductions in a range of about 20 percent compared to current levels.

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    File URL: http://www.download.tu-darmstadt.de/wi/vwl/ddpie/ddpie_216.pdf
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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 60952.

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    Date of creation: 12 Mar 2013
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    Publication status: Published in Darmstadt Discussion Papers in Economics . 216 (2013-03-12)
    Handle: RePEc:dar:ddpeco:60952

    Note: for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/60952/
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    Related research

    Keywords: climate policy; nonparametric frontier functions; directional distance functions;

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    1. Kumar, Surender, 2006. "Environmentally sensitive productivity growth: A global analysis using Malmquist-Luenberger index," Ecological Economics, Elsevier, vol. 56(2), pages 280-293, February.
    2. Rolf Färe & Shawna Grosskopf & Carl A Pasurka, Jr., 2001. "Accounting for Air Pollution Emissions in Measures of State Manufacturing Productivity Growth," Journal of Regional Science, Wiley Blackwell, vol. 41(3), pages 381-409.
    3. Simar, Léopold & Vanhems, Anne & Wilson, Paul W., 2012. "Statistical inference for DEA estimators of directional distances," European Journal of Operational Research, Elsevier, vol. 220(3), pages 853-864.
    4. Rolf Färe & Shawna Grosskopf & Dimitri Margaritis & William Weber, 2012. "Technological change and timing reductions in greenhouse gas emissions," Journal of Productivity Analysis, Springer, vol. 37(3), pages 205-216, June.
    5. Antonio Peyrache & Cinzia Daraio, 2012. "Empirical tools to assess the sensitivity of directional distance functions to direction selection," Applied Economics, Taylor & Francis Journals, vol. 44(8), pages 933-943, March.
    6. Aldy, Joseph E. & Krupnick, Alan J. & Newell, Richard G. & Parry, Ian W.H. & Pizer, William A., 2009. "Designing Climate Mitigation Policy," Discussion Papers dp-08-16, Resources For the Future.
    7. Lozano, Sebastián & Gutiérrez, Ester, 2008. "Non-parametric frontier approach to modelling the relationships among population, GDP, energy consumption and CO2 emissions," Ecological Economics, Elsevier, vol. 66(4), pages 687-699, July.
    8. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "Measuring environmental performance under different environmental DEA technologies," Energy Economics, Elsevier, vol. 30(1), pages 1-14, January.
    9. Jorgenson, D.W. & Timmer, Marcel, 2010. "Structural Change in Advanced Nations: A New Set of Stylised Facts," GGDC Research Memorandum GD-115, Groningen Growth and Development Centre, University of Groningen.
    10. Rolf F�re & Shawna Grosskopf, 2003. "Nonparametric Productivity Analysis with Undesirable Outputs: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 1070-1074.
    11. Simar, Leopold & Wilson, Paul W., 2002. "Non-parametric tests of returns to scale," European Journal of Operational Research, Elsevier, vol. 139(1), pages 115-132, May.
    12. Picazo-Tadeo, Andres J. & Reig-Martinez, Ernest & Hernandez-Sancho, Francesc, 2005. "Directional distance functions and environmental regulation," Resource and Energy Economics, Elsevier, vol. 27(2), pages 131-142, June.
    13. Taskin, Fatma & Zaim, Osman, 2000. "Searching for a Kuznets curve in environmental efficiency using kernel estimation," Economics Letters, Elsevier, vol. 68(2), pages 217-223, August.
    14. Byung M. Jeon & Robin C. Sickles, 2004. "The role of environmental factors in growth accounting," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 567-591.
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