DEA-ENV - Environmental DEA with Undesirable Outputs (EEI model)

Overview

DEA-ENV models production systems that generate undesirable by-products (emissions, waste). The weak disposability assumption means free disposal of undesirable outputs is not possible - reducing pollutants requires sacrificing some desirable output. EEI1 measures pure environmental efficiency; EEI2 allows policy-weighted assessment of different pollutants. Use EPI for temporal performance tracking.

Output

Efficiency, higher is better

Data

Crisp

Size

5+ alternatives, N+M+J ≤ K/3 criteria works best

Used for

Environmental policy analysis, carbon emission efficiency, energy-economy-environment systems, OECD/country-level performance, industrial ecology

Look elsewhere when

Assumptions to verify

• At least one undesirable output present (e.g. CO2, NOx)
• Weak disposability appropriate: proportional reduction of good+bad is feasible
• Null-jointness: zero undesirable output implies zero desirable output
• All data strictly positive

Edge cases and pitfalls

• Using strong disposability for undesirable outputs - this incorrectly treats pollutants as freely disposable. Use equality constraint (=) for undesirable outputs in technology characterisation.

• Adding Σz_k=1 (VRS) directly to CRS environmental DEA technology creates nonlinearity. Use Kuosmanen (2005) linearised VRS form (Ch.2 Eq.2.4).

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