Environment Performance Evaluation Under Emission Quota Constraint

Abstract

The primary purpose of our paper is to evaluate environmental performance as well as to model some nonseparable inputs and outputs using the data envelopment analysis (DEA) model. The efficiency analysis takes emission quota into consideration with the objectives of minimizing both total undesirable emissions and consumption of input resources. The value of emission quota that directly influences the environmental performance is obtained. The proposed model is applied to the data of power industries in 30 Chinese provinces. In addition, the sensitivity of the efficiency with respect to the value of emission quota is investigated. The results show the environmental protection in the power industry can be further improved. Our conclusion is that strict environmental regulations often enhance economic development rather than hinder it. This strongly suggests the government needs to pay more attention to pollution abatement because of its promoting effects on environmental performance.