Environmental efficiency of energy, materials, and emissions

Michiyuki Yagi, Hidemichi Fujii, Viet-Ngu Hoang and Shunsuke Managi

MPRA Paper from University Library of Munich, Germany

Abstract: This study estimates the environmental efficiency of international listed firms in 10 worldwide sectors from 2007-2013 by applying an order-m method, a non-parametric approach based on free disposal hull with subsampling bootstrapping. Using a conventional output of gross profit and two conventional inputs of labor and capital, this study examines the order-m environmental efficiency accounting for the presence of each of 10 undesirable inputs/outputs and measures the shadow prices of each undesirable input and output. The results show that there is greater potential for the reduction of undesirable inputs rather than bad outputs. On average, total energy, electricity, or water usage has the potential to be reduced by 50%. The median shadow prices of undesirable inputs, however, are much higher than the surveyed representative market prices. Approximately 10% of the firms in the sample appear to be potential sellers or production reducers in terms of undesirable inputs/outputs, which implies that the price of each item at the current level has little impact on most of the firms. Moreover, this study shows that the environmental, social, and governance activities of a firm do not considerably affect environmental efficiency.

Keywords: Data envelopment analysis; Environmental efficiency; Shadow price; Free disposal hull; Linear programming (search for similar items in EconPapers)
JEL-codes: C14 D24 Q50 (search for similar items in EconPapers)
Date: 2015-05-23
New Economics Papers: this item is included in nep-agr, nep-eff, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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