Exploring production-theoretical insights for analyzing trade-offs between economic performance and environmental pressure at firm level
The objective of this paper is to construct a framework for analyzing trade-offs between economic performance and environmental pressure at firm level. Based on a literature review, partially conflicting economic-environmental trade-off paradigms are structured and five necessary conditions for adequate trade-off analysis are put forward. These conditions are delimitating a clear system for which trade-offs are analyzed, assessing the direction of causality between economic performance and environmental pressure, allowing for firm-specific trade-off differences, comprehensiveness with respect to management activities that can be evaluated and flexibility to analyze trade-offs under different market and environmental regulation conditions. To deal with the causality condition, theoretically consistent production, cost, revenue and emission functions are constructed, taking into account the materials balance principle for emission. The linkage between production, economic performance and environmental pressure is then used to construct a framework that integrates the five necessary conditions for trade-off analysis. Our theoretical elaboration shows that economic-environmental implications are firm-specific and depend on the management activity that is applied, on market conditions and on environmental regulation conditions. Theoretically, both pollution prevention and end-of-pipe measures may yield positive or negative economic-environmental trade-offs. Economic-environmental implications of different management activities represent different stages in the trade-off curve. In fact, the partially conflicting trade-off paradigms in literature are also different stages in the trade-off curve. At the end of this paper, some recommendations are given for making the framework operational.
|Date of creation:||2009|
|Contact details of provider:|| Web page: http://www.iaae-agecon.org/|
More information through EDIRC
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.:
- Wossink, Ada & Denaux, Zulal Sogutlu, 2002. "Environmental Efficiency, Separability And Abatement Costs Of Non-Point Source Pollution," 2002 Annual meeting, July 28-31, Long Beach, CA 19884, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Sarkis, Joseph & Cordeiro, James J., 2001. "An empirical evaluation of environmental efficiencies and firm performance: Pollution prevention versus end-of-pipe practice," European Journal of Operational Research, Elsevier, vol. 135(1), pages 102-113, November.
- Galdeano-Gómez, Emilio & Céspedes-Lorente, José, 2008. "Environmental spillover effects on firm productivity and efficiency: An analysis of agri-food business in Southeast Spain," Ecological Economics, Elsevier, vol. 67(1), pages 131-139, August.
- Mazzanti, Massimiliano & Zoboli, Roberto, 2009. "Environmental efficiency and labour productivity: Trade-off or joint dynamics? A theoretical investigation and empirical evidence from Italy using NAMEA," Ecological Economics, Elsevier, vol. 68(4), pages 1182-1194, February.
- Rüdiger Pethig, 2005.
"Nonlinear Production, Abatement, Pollution and Materials Balance Reconsidered,"
CESifo Working Paper Series
1549, CESifo Group Munich.
- Pethig, Rudiger, 2006. "Non-linear production, abatement, pollution and materials balance reconsidered," Journal of Environmental Economics and Management, Elsevier, vol. 51(2), pages 185-204, March.
- Cormier, Denis & Magnan, Michel & Morard, Bernard, 1993. "The impact of corporate pollution on market valuation: some empirical evidence," Ecological Economics, Elsevier, vol. 8(2), pages 135-155, October.
- Karvonen, Minna-Maari, 2001. "Natural versus manufactured capital: win-lose or win-win? A case study of the Finnish pulp and paper industry," Ecological Economics, Elsevier, vol. 37(1), pages 71-85, April.
- de Koeijer, T. J. & Wossink, G. A. A. & van Ittersum, M. K. & Struik, P. C. & Renkema, J. A., 1999. "A conceptual model for analysing input-output coefficients in arable farming systems: from diagnosis towards design," Agricultural Systems, Elsevier, vol. 61(1), pages 33-44, July.
- Necmi Karagozoglu & Martin Lindell, 2000. "Environmental Management: Testing the Win-Win Model," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 43(6), pages 817-829.
- Elsayed, Khaled & Paton, David, 2005. "The impact of environmental performance on firm performance: static and dynamic panel data evidence," Structural Change and Economic Dynamics, Elsevier, vol. 16(3), pages 395-412, September.
- Wossink, G. A. A. & Oude Lansink, A. G. J. M. & Struik, P. C., 2001. "Non-separability and heterogeneity in integrated agronomic-economic analysis of nonpoint-source pollution," Ecological Economics, Elsevier, vol. 38(3), pages 345-357, September.
- Karen Palmer & Wallace E. Oates & Paul R. Portney, 1995. "Tightening Environmental Standards: The Benefit-Cost or the No-Cost Paradigm?," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 119-132, Fall.
- Figge, Frank & Hahn, Tobias, 2004. "Sustainable Value Added--measuring corporate contributions to sustainability beyond eco-efficiency," Ecological Economics, Elsevier, vol. 48(2), pages 173-187, February.
- Baumgartner, Stefan & Dyckhoff, Harald & Faber, Malte & Proops, John & Schiller, Johannes, 2001. "The concept of joint production and ecological economics," Ecological Economics, Elsevier, vol. 36(3), pages 365-372, March.
- Catherine M. Paul & Donald Siegel, 2006.
"Corporate social responsibility and economic performance,"
Journal of Productivity Analysis,
Springer, vol. 26(3), pages 207-211, December.
- Catherine J. Morrison-Paul & Donald S. Siegel, 2006. "Corporate Social Responsibility and Economic Performance," Rensselaer Working Papers in Economics 0605, Rensselaer Polytechnic Institute, Department of Economics.
- Gene M. Grossman & Alan B. Krueger, 1991.
"Environmental Impacts of a North American Free Trade Agreement,"
NBER Working Papers
3914, National Bureau of Economic Research, Inc.
- Grossman, Gene & Krueger, Alan B, 1992. "Environmental Impacts of a North American Free Trade Agreement," CEPR Discussion Papers 644, C.E.P.R. Discussion Papers.
- Grossman, G.M & Krueger, A.B., 1991. "Environmental Impacts of a North American Free Trade Agreement," Papers 158, Princeton, Woodrow Wilson School - Public and International Affairs.
- Mazzanti Massimiliano & Zoboli Roberto, 2005. "The Drivers of Environmental Innovation in Local Manufacturing Systems," Economia politica, Società editrice il Mulino, issue 3, pages 399-438.
- Scheel, Holger, 2001. "Undesirable outputs in efficiency valuations," European Journal of Operational Research, Elsevier, vol. 132(2), pages 400-410, July.
- Shafik, Nemat, 1994. "Economic Development and Environmental Quality: An Econometric Analysis," Oxford Economic Papers, Oxford University Press, vol. 46(0), pages 757-773, Supplemen.
- Shameek Konar & Mark A. Cohen, 2001. "Does The Market Value Environmental Performance?," The Review of Economics and Statistics, MIT Press, vol. 83(2), pages 281-289, May.
- Tim Coelli & Ludwig Lauwers & Guido Huylenbroeck, 2007. "Environmental efficiency measurement and the materials balance condition," Journal of Productivity Analysis, Springer, vol. 28(1), pages 3-12, October.
- Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
- Henriques, Irene & Sadorsky, Perry, 1996. "The Determinants of an Environmentally Responsive Firm: An Empirical Approach," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 381-395, May.
- Rennings, Klaus, 2000. "Redefining innovation -- eco-innovation research and the contribution from ecological economics," Ecological Economics, Elsevier, vol. 32(2), pages 319-332, February.
- Frondel, Manuel & Horbach, Jens & Rennings, Klaus, 2008.
"What triggers environmental management and innovation? Empirical evidence for Germany,"
Elsevier, vol. 66(1), pages 153-160, May.
- Rennings, Klaus & Horbach, Jens & Frondel, Manuel, 2004. "What Triggers Environmental Management and Innovation? - Empirical Evidence for Germany," RWI Discussion Papers 15, RWI - Leibniz-Institut für Wirtschaftsforschung.
- Robert D. Klassen & Curtis P. McLaughlin, 1996. "The Impact of Environmental Management on Firm Performance," Management Science, INFORMS, vol. 42(8), pages 1199-1214, August.
- Udo Ebert & Heinz Welsch, 2007. "Environmental Emissions and Production Economics: Implications of the Materials Balance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(2), pages 287-293.
- Lauwers, Ludwig, 2009. "Justifying the incorporation of the materials balance principle into frontier-based eco-efficiency models," Ecological Economics, Elsevier, vol. 68(6), pages 1605-1614, April.
- Xepapadeas, Anastasios, 1997. "Economic development and environmental pollution: traps and growth," Structural Change and Economic Dynamics, Elsevier, vol. 8(3), pages 327-350, August.
When requesting a correction, please mention this item's handle: RePEc:ags:iaae09:51725. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.