A New Index of Environmental Quality
AbstractAn optimal weighting scheme is proposed to construct a new index of environmental quality for different countries using an approach that relies on consistent tests for stochastic dominance efficiency. The test statistics and the estimators are computed using mixed integer programming methods. The variables that are considered include countries’ greenhouse emissions, water pollution and forest benefits, as from the dataset of the World Bank. First, the stochastic efficient weighting for each set of variables is calculated to build three sub-indices (for greenhouse emissions, water pollution and land without forests) and then an overall risk index of environmental quality is constructed. One main result is that land without forest contributes the most (with around 70%), greenhouse emissions contribute with around 20% and water pollution contributes less (with around 10%). Finally, countries are ranked according to their index of environmental quality and their rankings are compared with those of the Kyoto Protocol.
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Bibliographic InfoPaper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 31_11.
Date of creation: Jul 2011
Date of revision:
Environmental Quality; Emissions; Water Pollution; Nonparametric Stochastic Dominance; Mixed Integer Programming;
Find related papers by JEL classification:
- C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
- C5 - Mathematical and Quantitative Methods - - Econometric Modeling
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-07-21 (Agricultural Economics)
- NEP-ALL-2011-07-21 (All new papers)
- NEP-EFF-2011-07-21 (Efficiency & Productivity)
- NEP-ENE-2011-07-21 (Energy Economics)
- NEP-ENV-2011-07-21 (Environmental Economics)
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