Abstract
In this chapter, we compare the existing non-parametric approaches that account for undesirable outputs in technology modelling. The approaches are grouped based on Lauwers’ (Ecological Economics 68:1605–1614, 2009) seminal three-group classification and extended to a fourth group of recent models grounded on the estimation of several sub-technologies depending on the type of the outputs. With this fourth group of models, we provide a new complete picture of pollution-technologies modelling in the non-parametric framework of data envelopment analysis (DEA). We undertake a numerical comparison of the most recent models – the approach based on materials balance principle and weak G-disposability and the multiple equation technologies, namely, the by-production model and its various extensions, as well as the unified framework of natural and managerial disposability. The results reveal that the weak G-disposability and the unified natural and managerial disposability perform poorly compared to the multiple equation models. In addition, simulation fails to explicitly discriminate between the various multiple equation models.
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Notes
- 1.
The free or strong disposability simply relates the classical monotonicity condition. About the other disposability assumptions, they will be explained in the next sections.
- 2.
It is worth mentioning that a first attempt in this framework of comparing several polluting technologies modelling can be found in Dakpo et al. (2014) where the authors have considered greenhouse gas emissions in livestock farming.
- 3.
LCA is a method that allows quantifying and identifying sources of environmental impacts of a product or a system from ‘cradle to grave’ (Ekvall et al. 2007). It means that these impacts are evaluated from the extraction of the natural resources till their elimination or disposal as waste.
- 4.
In the same vein, Reinhard et al. (1999) discussed an early way of treating undesirable outputs by using proxies, namely, environmentally detrimental inputs that generate pollution and need to be reduced (such as nitrogen excess). Scheel (2001) introduced ‘nonseparating efficiency measures’ where bad outputs and good outputs are considered simultaneously and bad outputs are introduced as negative outputs.
- 5.
The production technology can be described as T = {(VA, b)| b can produce VA}: alternatively b can produce p ′y − w ′x. Hence inputs are implicitly considered.
- 6.
The first law of thermodynamics gives the principle of mass/energy conservation, that is to say ‘what goes in, comes out’. The second law, also known as the law of entropy, states that using polluting inputs will inevitably result in pollution generation.
- 7.
For the FEE models, Lauwers (2009) argued that introducing the materials balance is less problematic.
- 8.
We do not consider the environmental efficiency measured by Coelli et al. (2007) using the materials balance since the estimation of the iso-environmental lines can work with only one bad output. In the case of several pollutants, it would require aggregation weights, which, as pointed out in Hoang and Rao (2010), may not meet universal acceptance.
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Acknowledgements
The authors are grateful to the European FP7 project FLINT and to the European research collaboration TRUSTEE for funding this research.
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Dakpo, K.H., Jeanneaux, P., Latruffe, L. (2020). Modelling Pollution-Generating Technologies: A Numerical Comparison of Non-parametric Approaches. In: Aparicio, J., Lovell, C., Pastor, J., Zhu, J. (eds) Advances in Efficiency and Productivity II. International Series in Operations Research & Management Science, vol 287. Springer, Cham. https://doi.org/10.1007/978-3-030-41618-8_5
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