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Social sustainability measured by intermediate approach for DEA environmental assessment: Chinese regional planning for economic development and pollution prevention

Toshiyuki Sueyoshi and Yan Yuan

Energy Economics, 2017, vol. 66, issue C, 154-166

Abstract: This study examines the level of simultaneous achievement on economic prosperity and environmental protection, so measuring the level of sustainability by a newly proposed intermediate approach. Conventionally, DEA (Data Envelopment Analysis) for performance evaluation was used to assess various economic activities of organizations that utilized inputs (e.g., the number of employees) to yield desirable outputs (e.g., the number of products). The methodology was usually classified into radial or non-radial category. In an effort of extending it to environmental assessment, DEA needs to incorporate undesirable outputs (e.g., the amount of CO2) into the computational framework. This type of assessment is referred to as “DEA environmental assessment”. The proposed intermediate approach develops a new type of DEA environmental assessment by combining the analytical features of radial approach with those of non-radial approach. The new approach measures the level of unified inefficiency on each production factor and determines the level of total unified inefficiency from the average of the sum of these inefficiency scores. A rank sum test and a mean test are additionally incorporated into the proposed intermediate approach. Such a combination enhances the statistical capability. As an application, this study examines the level of sustainability related to 30 provinces in China from 2003 to 2014. The application finds four policy implications. First, it is important for China to allocate its resources to western provinces at a level that it has used for coastal developments. Second, the government continues to reinforce the policy making effort on environmental protection by paying attention to central and southern regions. The Chinese industries need to transfer toward “green” energy. The transfer should be efficiently executed for their future developments. Third, the government has focused on the sustainability development in urban provinces and then has gradually shifted the policy influence toward rural areas. Finally, the policy implementation needs a time lag until it becomes effective. The time lag on economic policy is longer than that of environmental policy. The economic policy has historically produced a regional imbalance, often leading to educational and income imbalances, among Chinese provinces.

Keywords: Economy; Environment; DEA; Intermediate approach; Sustainability (search for similar items in EconPapers)
JEL-codes: C18 C61 Q54 Q56 (search for similar items in EconPapers)
Date: 2017
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