Eco-Efficiency and Eco-Productivity Change Over Time in a Multisectoral Economic System
European Journal of Operational Research 234(3), 885–897, 2014
Posted: 8 Feb 2014
Date Written: May 1, 2014
We measure eco-efficiency of an economy by means of an augmented Leontief input–output model extended by constraints for primary inputs. Using a multi-objective optimisation model the eco-efficiency frontier of the economy is generated. The results of these multi-objective optimisation problems define eco-efficient virtual decision making units (DMUs). The eco-efficiency is obtained as a solution of a data envelopment analysis (DEA) model with virtual DMUs defining the potential and a DMU describing the actual performance of the economy. This procedure is then extended to an intertemporal approach in the spirit of the Luenberger productivity indicator. This indicator permits decomposing eco-productivity change into eco-efficiency change and eco-technical change. The indicator is then further decompounded in a way that enables us to examine the contributions of individual production factors, undesirable as well as desirable outputs to eco-productivity change over time. For illustration purposes the proposed model is applied to investigate eco-productivity growth of the Austrian economy.
Keywords: Data envelopment analysis, Luenberger indicator, Multi-objective optimisation, Neoclassical growth accounting
JEL Classification: C67, O47, Q53, Q57
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