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Data Envelopment Analysis in Environmental Valuation: Environmental Performance, Eco-efficiency and Cost-Benefit Analysis

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Author Info
Timo Kuosmanen (Wageningen University)
Mika Kortelainen (University of Joensuu)

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Abstract

Data Envelopment Analysis (DEA) is a linear programming based method for evaluating performance of comparable production units such as firms. Although the method is already extensively applied in many areas of economics, its use in environmental economics and related fields remains limited. The purpose of this paper is to present basic principles of DEA and evaluate its application possibilities for a range of environmental valuation problems. We show how DEA has to be adjusted to the context of environmental performance, eco-efficiency and Cost-Benefit analysis (CBA). By modifying the traditional DEA framework to the specific features and purposes of environmental application we show that the valuation principles to which DEA is based on can offer useful insights and complement the conventional toolbox of environmental economists in valuation of the environmental services in general.

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Paper provided by EconWPA in its series Others with number 0409004.

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Date of creation: 10 Sep 2004
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Handle: RePEc:wpa:wuwpot:0409004

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Web page: http://129.3.20.41

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Related research
Keywords: Data Envelopment Analysis; performance measurement; production theory; environmental valuation; environmental performance; eco- efficiency; Cost-Benefit analysis;

Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
D24 - Microeconomics - - Production and Organizations - - - Production; Capital and Total Factor Productivity; Capacity

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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. Fare, Rolf, et al, 1993. "Derivation of Shadow Prices for Undesirable Outputs: A Distance Function Approach," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 374-80, May. [Downloadable!] (restricted)
  2. Piot-Lepetit, Isabelle & Vermersch, Dominique & Weaver, Robert D, 1997. "Agriculture's Environmental Externalities: DEA Evidence for French Agriculture," Applied Economics, Taylor and Francis Journals, vol. 29(3), pages 331-38, March. [Downloadable!] (restricted)
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(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. Timo Kuosmanen, 2006. "Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis," Working Papers 2006.96, Fondazione Eni Enrico Mattei. [Downloadable!]
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  2. Mika Kortelainen & Timo Kuosmanen, 2005. "Eco-Efficiency Analysis of Consumer Durables Using Absolute Shadow Prices," Public Economics 0511022, EconWPA. [Downloadable!]
    Other versions:
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