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Internalising external environmental effects in efficiency analysis

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  • Alfredsson, Eva
  • Månsson, Jonas
  • Vikström, Peter

Abstract

This paper investigates the efficiency in the Swedish pulp and paper industry using national account data. By using a directional distance function approach we are able to investigate different aspects of efficiency relating to the direction of scaling. In the first analysis, desired output (pulp and paper) and undesired output (pollution) are considered equally important. This analysis shows that there is a 12% potential to simultaneously reduce pollution and increase the production of pulp and paper. In the second analysis, only undesired output is considered. The analysis shows an average potential reduction in pollution of 22%. If, on the other hand, this potential is computed in terms of desired output, keeping undesired output constant, the average potential increase in desired output is 14%. In a fourth analysis we discuss the potential to evaluate the costs of environmental regulations using the DEA methodology. Finally, our paper demonstrates that data from national accounts can be used to investigate different aspects of environmental efficiency.

Suggested Citation

  • Alfredsson, Eva & Månsson, Jonas & Vikström, Peter, 2016. "Internalising external environmental effects in efficiency analysis," Economic Analysis and Policy, Elsevier, vol. 51(C), pages 22-31.
    • Handle: RePEc:eee:ecanpo:v:51:y:2016:i:c:p:22-31
    DOI: 10.1016/j.eap.2016.05.002
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    Cited by:

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    3. Rossato, Fabrícia Gladys F.S. & Susaeta, Andres & Adams, Damian C. & Hidalgo, Ieda Geriberto & de Araujo, Thais Duekc & de Queiroz, Adriana, 2018. "Comparison of revealed comparative advantage indexes with application to trade tendencies of cellulose production from planted forests in Brazil, Canada, China, Sweden, Finland and the United States," Forest Policy and Economics, Elsevier, vol. 97(C), pages 59-66.
    4. Liang-jun Long, 2021. "Eco-efficiency and effectiveness evaluation toward sustainable urban development in China: a super-efficiency SBM–DEA with undesirable outputs," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(10), pages 14982-14997, October.
    5. Halkos, George & Petrou, Kleoniki Natalia, 2019. "Treating undesirable outputs in DEA: A critical review," Economic Analysis and Policy, Elsevier, vol. 62(C), pages 97-104.
    6. Wu, Ge & Baležentis, Tomas & Sun, Chuanwang & Xu, Shuhua, 2019. "Source control or end-of-pipe control: Mitigating air pollution at the regional level from the perspective of the Total Factor Productivity change decomposition," Energy Policy, Elsevier, vol. 129(C), pages 1227-1239.

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    More about this item

    Keywords

    Environmental efficiency; Directional distance function; Cost of environmental regulation;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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