Prevention or Cure? Abatement Efficiency in a Network Technology

CERE Working Paper, 2019:11

45 Pages Posted: 23 Aug 2019 Last revised: 3 Oct 2019

See all articles by Moriah Bostian

Moriah Bostian

Lewis & Clark College - Department of Economics

Rolf Färe

Oregon State University - Department of Economics

Shawna Grosskopf

Oregon State University

Tommy Lundgren

Umea School of Business and Economics

Date Written: August 20, 2019

Abstract

We develop a network technology model for pollution abatement that distinguishes between the two primary forms that abatement can take: Prevention of emissions from occurring in the first place, and treatment of any emissions that are generated by the production process. Our network model separates the production process into two stages, an initial production and prevention stage and a final treatment (or cure) stage. We allow for reallocation of abatement resources across the production stages, in order to improve overall abatement and production efficiency and better understand the tradeoffs between the two forms of abatement. This framework is relevant in practice for a number of industrial production processes, including manufacturing and energy, which employ multiple abatement measures at different stages of production. To illustrate, we apply the prevention-treatment network model to estimate the production and abatement technology for firms in Sweden’s pulp and paper manufacturing sector. We find that with reallocation of prevention and treatment resources, the industry could achieve further gains to both production and emissions reductions, relative to those estimated using the more common single-stage approach to technology estimation for pollution-generating processes. In practice, these results could be used by producers for improving managerial efficiency, and by policy makers to better target abatement incentives to the most effective aspects of production.

Keywords: Network DEA, Carbon Policy, Abatement Cost, Environmental Performance

JEL Classification: D21, D22, D24

Suggested Citation

Bostian, Moriah and Färe, Rolf and Grosskopf, Shawna and Lundgren, Tommy, Prevention or Cure? Abatement Efficiency in a Network Technology (August 20, 2019). CERE Working Paper, 2019:11 . Available at SSRN: https://ssrn.com/abstract=3440289 or http://dx.doi.org/10.2139/ssrn.3440289

Moriah Bostian (Contact Author)

Lewis & Clark College - Department of Economics ( email )

Portland, OR 97204
United States

Rolf Färe

Oregon State University - Department of Economics ( email )

303 Ballard Extension Hall
Corvallis, OR 97331
United States
541-737-8184 (Phone)
541-737-5917 (Fax)

Shawna Grosskopf

Oregon State University ( email )

303 Ballard Extension Hall
Corvallis, OR 97331
United States
541-737-8184 (Phone)

Tommy Lundgren

Umea School of Business and Economics ( email )

Biblioteksgränd 6
Umea, 901 87
Sweden

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