91,809 research outputs found

    Resource use efficiency of US electricity generating plants during the SO2 trading regime: A distance function approach.

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    This paper measures resource use efficiency of electricity generating plants in the United States under the SO2 trading regime. Resource use efficiency is defined as the product of technical efficiency and environmental efficiency, where the latter is the ratio of good output (electricity) to bad output (SO2) with reference to the best practice firm, i.e., one that is producing an optimal mix of good and bad outputs. This concept of environmental efficiency is similar to that of output oriented allocative efficiency. Using output distance functions we compare three methods for the calculation of resource use efficiency, namely, stochastic frontier analysis (SFA), deterministic parametric programming and nonparametric linear programming. This paper reveals the strengths and weaknesses of these methods for estimating efficiency. Both SFA and linear programming approaches can estimate the efficiency scores. For plants in the dataset the overall geometric mean of the three methods for technical efficiency, environmental efficiency and resource use efficiency is 0.737, 0.335 and 0.248, respectively. The rank correlation coefficient between technical efficiency, environmental efficiency and resource use efficiency is 0.213, 0.617 and 0.877, respectively. The regression analyses of performance across plants shows units in phase I of the SO2 trading programme are negatively related to measures of economic and environmental performance. This suggests that the market for SO2 allowances, per se, may not be minimizing compliance cost. We also find that a decrease in SO2 emission rates not only increases environmental efficiency but also leads to an increase in resource use efficiency. This finding concurs with the hypothesis that enhancement in the environmental performance of a firm leads to an increase in its overall efficiency of resource use as well.Technical efficiency ; Environmental efficiency ; Resource-use efficiency ; Distance functions ; SO2 allowance program

    Alternative efficiency measures for multiple-output production

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    This paper has two main purposes. Firstly, we develop various ways of defining efficiency in the case of multiple-output production. Our framework extends a previous model by allowing for nonseparability of inputs and outputs. We also specifically consider the case where some of the outputs are undesirable, such as pollutants. We investigate how these efficiency definitions relate to one another and to other approaches proposed in the literature. Secondly, we examine the behavior of these definitions in two examples of practically relevant size and complexity. One of these involves banking and the other agricultural data. Our main findings can be summarized as follows. For a given efficiency definition, efficiency rankings are found to be informative, despite the considerable uncertainty in the inference on efficiencies. It is, however, important for the researcher to select an efficiency concept appropriate to the particular issue under study, since different efficiency definitions can lead to quite different conclusions

    Ecological Benchmarking to Explore Alternative Fishing Schemes to Protect Endangered Species by Substitution: The Danish Demersal Fishery in the North Sea

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    The cod stock in the North Sea is threatened by overexploitation. To recover this fishing stock, pressure needs to be reduced. This implies that catch compositions with small amounts of cod are preferred by public policy makers. The present analysis assesses the technological efficiency of fishing trips in terms of the substitution possibilities away from cod by considering landings of cod as an undesirable output. A conservative non-parametric frontier technology approach imposing minimal assumptions and based on directional distance functions is applied to explore alternative fishing activities for Danish gill netters operating in the North Sea with the goal of reducing cod catches. Since performance on different fishing trips may be influenced by the operating environment, a four-stage approach is applied to correct for exogenous factors (Fried et al. (1999)). The corrected directional distance function efficiency scores reveal the behavioural inefficiencies, i.e., prospects for decreasing the catch of cod while catch of other species are increased.Capacity, Directional distance function, Fisheries, Output Substitution

    Technical and Environmental efficiencies and Best Management Practices in Agriculture

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    An input distance function (IDF) is estimated to empirically evaluate and analyze the technical and environmental efficiencies of 210 farms located in the Chaudière watershed (Quebec), where water quality problems are particularly acute because of the production of undesirable outputs that are jointly produced with agricultural products. The true IDF is approximated by a flexible translog functional form estimated using a full information maximum likelihood method. Technical and environmental efficiencies are disaggregated across farms and account for spatial variations. Our results show that there is a significant correlation between technical and environmental efficiencies. The IDF is used to compute the cumulative Malmquist productivity index and the Fisher index. The two indices are used to measure changes in technology, profitability, efficiency, and productivity in response to the adoption of 2 selected best management practices (BMPs) whose objective is to reduce water pollution. We found significant differences across BMPs regarding the direction and the magnitude of their effect on profitability, efficiency and productivity.Environmental efficiency, distance function, phosphorus runoff, productivity, profitability, technical efficiency.

    Estimation of Marginal Abatement Cost of Air Pollution in Durgapur City of West Bengal

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    Air pollution in industrial cities with emissions from firms is a growing problem in India. Durgapur, one of the growing industrial cities in eastern India, covering a host of industries, suffers from similar problems. The paper estimates the marginal abatement cost of air pollution of industries in Durgapur, West Bengal. We model the technology of a firm with output-distance function. Here the linear programming approach is adopted to estimate the shadow prices and distance values. Results reveal that there is a wide variation in shadow prices of Suspended Particulate Matter and distance values between firms under particular category of industries thus indicating the variability in the degree of compliance, use of resources and the vintages of capital. In this context the paper suggests policies for air quality management in urban industrial areas of West Bengal which will help to achieve sustainable industrial development.Output Distance Function, Shadow Prices, Distance Values

    Productivity and profitability changes in the U.S. electric power plants during SO2 trading regime.

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    We examine the productivity and profitability changes in the US electric generating plants during the SO2 trading regime. Input distance function is used to compute the cumulative Malmquist productivity and Fisher productivity indexes. By exploiting the duality between cost and input distance functions, we obtain a measure of profitability, as an approximation for the Fisher productivity index. We measure productivity and profitability changes when SO2 emissions are ignored in the production technology and when these emissions appear as bad output. We find that the productivity is higher when the bad outputs are modeled as weakly disposable in comparison to the situation when they are modeled as freely disposable. But we do not find any significant difference in profitability under these alternative methods of modeling of production technology concerning the disposability of bad outputs.Electricity generating plants ; Productivity ; Profitability ; SO2 ; Allowance program

    Measurement of environmental efficiency and productivity: A cross country analysis.

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    This paper measures environmental efficiency (EE) and environmental productivity (EP) and analyses differences in these across countries. It explores the macroeconomic factors that could explain these differences and whether these differences can be explained by income levels and by the degree of openness in these countries. The EE index is found to be almost steady over the period 1971-92 for the annex-I countries, while its value is declining for non-annex-I countries over this period. The EP index increased over this period in both groups of countries. In the annex-I countries, EE exhibits an inverted `U' shape with respect to per capita income while it is `U' shaped for the non-annex-I countries. This study also finds that while the EP index increases with income in annex-I countries it is decreasing in the non-annex-I countries. The degree of openness has a significant negative impact on EE and EP in both groups of countries.Environmental efficiency ; Environmental productivity ; Distance function ; Per capita income ; Openness

    What is Driving the EU Burden-Sharing Agreement: Efficiency or Equity?

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    Under the Kyoto Protocol the European Union (EU) agreed to reduce the emissions of greenhouse gases by 8 percent in comparison with the level in 1990. The Burden-Sharing Agreement (BSA) further redistributes the overall 8 percent reduction target among the EU Member States. The purpose of this paper is to evaluate the BSA from both an economical and a political perspective, which means performing hypothesis tests of whether cost-efficiency and equity respectively, were considered in the BSA settlement. Variables used to perform the equity tests are chosen on the basis of the Triptych study. However, the cost-efficiency test is made possible by first calculating marginal abatement costs from the directional output distance function, which is estimated on country production data for 1990-2000. The function is estimated using both corrected ordinary least squares and linear programming techniques. The main conclusion drawn from this study is that both efficiency and equity were considered important to the BSA.burden-sharing; cost-efficiency; parametric directional output distance function; equity; greenhouse gas emission control

    Environmental efficiency of small farms in selected EU NMS

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    The objective of this paper is to investigate the relationship between the environmental efficiency and farm commercialisation in selected EU NMS (Bulgaria, Romania and Poland). Using a cross- section of agricultural households, environmental technical efficiency scores are calculated using hyperbolic distance function approach. The results indicate there is a negative relation between the increase in commercialisation of small farms and the production of negative externalities, like nitrogen surplus.distance function, nitrogen surplus, market integration, stochastic frontier analysis, Community/Rural/Urban Development,
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