Environmental assessment and dealing with undesirable outputs: DEA-based approach

Abstract

This paper discusses an indirect portion oriented approach based on a traditional data envelopment analysis (DEA), requiring a proportional reduction of undesirable outputs. The proposed technique prepares an accommodation of undesirable factors in their primary form. In particular, this study is interested in the concept of weak disposability axioms. Given a decreased output vector, each decision making unit attempts to decrease a vector of desirable outputs proportionally with respect to the least wastage. These issues lead to the development of a model based on the weak disposable technology which can analyse the changeable production with reduction of both the desirable and undesirable outputs. Real-life data of 22 organisation for economic cooperation and development (OECD) countries is used in the empirical analysis. This analysis demonstrates that the proposed model is suitable for any assessment involving the proportional reduction of output indicators when undesirable outputs are presented. To achieve this aim the proposed epsilon-based model is applied to evaluate the efficiency of data for 27 Japanese electric power companies.