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Measuring Eco-efficiency of Production: A Frontier Approach

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Author Info
Mika Kortelainen (University of Joensuu, Department of Business & Economics)
Timo Kuosmanen (Wageningen University, Environmental Economics & Natural Resources Group)

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Abstract

Eco-efficiency of production is an important concept both from the viewpoint of society and business community; but as yet, there is no unambiguous way to its measurement. The purpose of this paper is to present a general measurement framework based on production theory and the activity analysis approach. Although we exploit the existing methods and techniques, our approach diverges essentially from the usual treatments of the environmental performance of firms in the productive efficiency analysis. The main difference between our approach and the earlier studies is that we build on the definition of eco-efficiency as the ratio of economic value added to the environmental damage index. Related to this orientation, we also approach eco-efficiency from a more aggregate perspective. Our general framework is illustrated by an empirical application to the evaluation of eco-efficiency of road transportation in Finland.

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Paper provided by EconWPA in its series Econometrics with number 0411006.

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Length: 23 pages
Date of creation: 10 Nov 2004
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Handle: RePEc:wpa:wuwpem:0411006

Note: Type of Document - pdf; pages: 23
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Web page: http://129.3.20.41

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Related research
Keywords: Eco-efficiency; Environmental Pressures; Aggregation; Benefit of the Doubt Weighting; Distance Function; Activity Analysis; Data Envelopment Analysis; Road transportation;

Find related papers by JEL classification:
C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Cherchye, Laurens, 2001. "Using Data Envelopment Analysis to Assess Macroeconomic Policy Performance," Applied Economics, Taylor and Francis Journals, vol. 33(3), pages 407-16, February. [Downloadable!] (restricted)
  2. Konar, Shameek & Cohen, Mark A., 1997. "Information As Regulation: The Effect of Community Right to Know Laws on Toxic Emissions," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 109-124, January. [Downloadable!] (restricted)
  3. Kerstens, K., 1996. "Technical efficiency measurement and explanation of French urban transit companies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 30(6), pages 431-452, November. [Downloadable!] (restricted)
  4. Hailu, Atakelty & Veeman, Terrence S, 2001. " Non-parametric Productivity Analysis with Undesirable Outputs: An Application to the Canadian Pulp and Paper Industry," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 83(3), pages 605-16, August. [Downloadable!] (restricted)
  5. Timo Kuosmanen & Laurens Cherchye & Timo Sipiläinen, 2003. "The Law of One Price in Data Envelopment Analysis: Restricting Weight Flexibility Across Firms," Microeconomics 0312006, EconWPA, revised 18 Dec 2003. [Downloadable!]
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  6. Ebert, Udo & Welsch, Heinz, 2004. "Meaningful environmental indices: a social choice approach," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 270-283, March. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
  8. Boyd, Gale A. & McClelland, John D., 1999. "The Impact of Environmental Constraints on Productivity Improvement in Integrated Paper Plants," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 121-142, September. [Downloadable!] (restricted)
  9. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November. [Downloadable!] (restricted)
  10. Atakelty Hailu, 2003. "Nonparametric Productivity Analysis with Undesirable Outputs: Reply," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 85(4), pages 1075-1077, November. [Downloadable!] (restricted)
  11. Laurens Cherchye & & Timo Kuosmanen, 2002. "Benchmarking Sustainable Development: A Synthetic Meta-index Approach," Others 0210001, EconWPA, revised 08 Oct 2002. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mika Kortelainen & Timo Kuosmanen, 2005. "Eco-Efficiency Analysis of Consumer Durables Using Absolute Shadow Prices," Public Economics 0511022, EconWPA. [Downloadable!]
    Other versions:
  2. Azad, Md Abdus Samad & Liem, Monica & Ancev, Tihomir & Lee, Lisa Yu-Ting, 2008. "Measuring Environmental Performance of Irrigated Cotton Enterprises," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6004, Australian Agricultural and Resource Economics Society. [Downloadable!]
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