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Measurement of Returns to Scale and Damages to Scale for DEA-based operational and environmental assessment: How to manage desirable (good) and undesirable (bad) outputs?

  • Sueyoshi, Toshiyuki
  • Goto, Mika
Registered author(s):

    Environmental assessment is increasingly important in preventing various types of pollutions. Data Envelopment Analysis (DEA) has been long used as an operational performance measure, but we have insufficiently explored the use of DEA for environmental assessment. This study explores a new use of DEA for the environmental assessment in which outputs are classified into desirable (good) and undesirable (bad) outputs. Such an output separation is important in the DEA-based environmental assessment. This study extends the use of DEA to the measurement of both Returns to Scale (RTS) for desirable outputs and Damages to Scale (DTS) for undesirable outputs. A Range-Adjusted Measure (RAM) is used as a DEA model for this study because the non-radial model can easily combine the two types of outputs in a unified treatment. All the mathematical features regarding the RAM-based RTS/DTS measurement are first discussed from the operational and environmental performance in a separate treatment. Then, this study combines the two performance measures as a unified measure. The RAM-based RTS/DTS is mathematically explored from the unified measure for operational and environmental performance.

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    Article provided by Elsevier in its journal European Journal of Operational Research.

    Volume (Year): 211 (2011)
    Issue (Month): 1 (May)
    Pages: 76-89

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    Handle: RePEc:eee:ejores:v:211:y:2011:i:1:p:76-89
    Contact details of provider: Web page: http://www.elsevier.com/locate/eor

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    1. Sueyoshi, Toshiyuki & Goto, Mika & Ueno, Takahiro, 2010. "Performance analysis of US coal-fired power plants by measuring three DEA efficiencies," Energy Policy, Elsevier, vol. 38(4), pages 1675-1688, April.
    2. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2007. "The measurement of returns to scale under a simultaneous occurrence of multiple solutions in a reference set and a supporting hyperplane," European Journal of Operational Research, Elsevier, vol. 181(2), pages 549-570, September.
    3. Watanabe, Michio & Tanaka, Katsuya, 2007. "Efficiency analysis of Chinese industry: A directional distance function approach," Energy Policy, Elsevier, vol. 35(12), pages 6323-6331, December.
    4. Sueyoshi, Toshiyuki & Goto, Mika, 2011. "DEA approach for unified efficiency measurement: Assessment of Japanese fossil fuel power generation," Energy Economics, Elsevier, vol. 33(2), pages 292-303, March.
    5. Pasurka, Carl Jr., 2006. "Decomposing electric power plant emissions within a joint production framework," Energy Economics, Elsevier, vol. 28(1), pages 26-43, January.
    6. Zhou, P. & Ang, B.W. & Poh, K.L., 2008. "A survey of data envelopment analysis in energy and environmental studies," European Journal of Operational Research, Elsevier, vol. 189(1), pages 1-18, August.
    7. Triantis, Konstantinos & Otis, Paul, 2004. "Dominance-based measurement of productive and environmental performance for manufacturing," European Journal of Operational Research, Elsevier, vol. 154(2), pages 447-464, April.
    8. Toshiyuki Sueyoshi, 1999. "DEA Duality on Returns to Scale (RTS) in Production and Cost Analyses: An Occurrence of Multiple Solutions and Differences Between Production-Based and Cost-Based RTS Estimates," Management Science, INFORMS, vol. 45(11), pages 1593-1608, November.
    9. Zhou, P. & Ang, B.W., 2008. "Linear programming models for measuring economy-wide energy efficiency performance," Energy Policy, Elsevier, vol. 36(8), pages 2901-2906, August.
    10. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2007. "Measurement of returns to scale using a non-radial DEA model: A range-adjusted measure approach," European Journal of Operational Research, Elsevier, vol. 176(3), pages 1918-1946, February.
    11. Sueyoshi, Toshiyuki & Sekitani, Kazuyuki, 2009. "An occurrence of multiple projections in DEA-based measurement of technical efficiency: Theoretical comparison among DEA models from desirable properties," European Journal of Operational Research, Elsevier, vol. 196(2), pages 764-794, July.
    12. Sueyoshi, Toshiyuki & Goto, Mika, 2009. "Can environmental investment and expenditure enhance financial performance of US electric utility firms under the clean air act amendment of 1990?," Energy Policy, Elsevier, vol. 37(11), pages 4819-4826, November.
    13. Kumar, Surender, 2006. "Environmentally sensitive productivity growth: A global analysis using Malmquist-Luenberger index," Ecological Economics, Elsevier, vol. 56(2), pages 280-293, February.
    14. Korhonen, Pekka J. & Luptacik, Mikulas, 2004. "Eco-efficiency analysis of power plants: An extension of data envelopment analysis," European Journal of Operational Research, Elsevier, vol. 154(2), pages 437-446, April.
    15. Zaim, Osman, 2004. "Measuring environmental performance of state manufacturing through changes in pollution intensities: a DEA framework," Ecological Economics, Elsevier, vol. 48(1), pages 37-47, January.
    16. Glover, Fred & Sueyoshi, Toshiyuki, 2009. "Contributions of Professor William W. Cooper in Operations Research and Management Science," European Journal of Operational Research, Elsevier, vol. 197(1), pages 1-16, August.
    17. Sueyoshi, Toshiyuki & Goto, Mika, 2010. "Should the US clean air act include CO2 emission control?: Examination by data envelopment analysis," Energy Policy, Elsevier, vol. 38(10), pages 5902-5911, October.
    18. Dyckhoff, H. & Allen, K., 2001. "Measuring ecological efficiency with data envelopment analysis (DEA)," European Journal of Operational Research, Elsevier, vol. 132(2), pages 312-325, July.
    19. Sueyoshi, Toshiyuki & Goto, Mika, 2010. "Measurement of a linkage among environmental, operational, and financial performance in Japanese manufacturing firms: A use of Data Envelopment Analysis with strong complementary slackness condition," European Journal of Operational Research, Elsevier, vol. 207(3), pages 1742-1753, December.
    20. 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.
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