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A two-stage DEA approach for environmental efficiency measurement.

Malin Song1, Shuhong Wang, Wei Liu

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Summary

This study enhances the slacks-based measure (SBM) model for environmental efficiency, enabling separate calculation of desirable and undesirable outputs to address limitations in traditional models.

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Area of Science:

  • Environmental Science
  • Operations Research
  • Economics

Background:

  • Traditional slacks-based measure (SBM) models effectively handle undesirable outputs but struggle when desirable outputs are constant.
  • Existing models face challenges in decoupling desirable outputs from undesirable ones.

Purpose of the Study:

  • To systematically research and expand the SBM model for environmental efficiency measurement.
  • To develop a new SBM model capable of handling constant desirable outputs and the "dependence" problem.
  • To provide a more profound analysis for improving the environmental efficiency of decision-making units.

Main Methods:

  • Axiomatic theory of productivity.
  • Network analysis perspective.
  • Expansion of the traditional SBM model to incorporate undesirable outputs and address output dependence.

Main Results:

  • The enhanced SBM model can evaluate environmental efficiency considering undesirable outputs.
  • The new model allows for separate calculation of desirable and undesirable outputs, solving the output "dependence" problem.
  • Efficiency values derived from the two-stage approach are lower than those from the traditional SBM model, indicating a more rigorous assessment.

Conclusions:

  • The expanded SBM model offers a more accurate and nuanced approach to environmental efficiency measurement.
  • The ability to analyze desirable and undesirable outputs separately provides critical insights for environmental management.
  • This research contributes a valuable tool for decision-making units seeking to improve their environmental performance.