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Data Envelopment Analysis in Environmental Valuation: Environmental Performance, Eco-efficiency and Cost-Benefit Analysis

Timo Kuosmanen () and Mika Kortelainen

Others from University Library of Munich, Germany

Abstract: Data Envelopment Analysis (DEA) is a linear programming based method for evaluating performance of comparable production units such as firms. Although the method is already extensively applied in many areas of economics, its use in environmental economics and related fields remains limited. The purpose of this paper is to present basic principles of DEA and evaluate its application possibilities for a range of environmental valuation problems. We show how DEA has to be adjusted to the context of environmental performance, eco-efficiency and Cost-Benefit analysis (CBA). By modifying the traditional DEA framework to the specific features and purposes of environmental application we show that the valuation principles to which DEA is based on can offer useful insights and complement the conventional toolbox of environmental economists in valuation of the environmental services in general.

Keywords: Data Envelopment Analysis; performance measurement; production theory; environmental valuation; environmental performance; eco- efficiency; Cost-Benefit analysis (search for similar items in EconPapers)
JEL-codes: C61 D24 D61 (search for similar items in EconPapers)
Date: 2004-09-10
New Economics Papers: this item is included in nep-eff
Note: Type of Document - pdf
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