Research On China Regional Environmental Efficiency Based On 2-Stage SBM Model

Traditional 1-stage DEA productivity models masked significant disparities of efficiency among the two stages of production activities-- production stage and pollutant abatement stage, due to the assumption of black-box. By taking the two stages of production activities into consideration, this paper adopts the 2-stage SBM productivity models to measure the environmental inefficiency of Chinese 30 provinces and municipalities from 2004 to 2013.Based on the empirical date of inefficiency, we evaluated the overall environmental inefficiency, environmental inefficiency of production stage and environmental inefficiency of pollutant abatement stage. Then, overall environmental inefficiency of China and its 3 sub regions(eastern, central and Western) was decomposed into various factors to explore the main source. Finally, we applied the continuous dynamic distribution approach to study the convergence of national overall environmental inefficiency.The empirical results of the research on environment inefficiency and its main source based on 2-stage SBM model are as follows. At the national level, overall environmental inefficiency has experienced a process from deteriorating to stable.The main source of inefficiency derived from production stage. However, the influence of pollutant abatement stage has been gradual increasing. Undesirable output is the main source of production stage and pollutant abatement stage. At region level, the overall environmental efficiency and production stage efficiency of eastern region are both far in advance of other regions. But when it comes to environmental efficiency of pollutant abatement stage, those 3 regions shows little differences between each other. Industrial SO2 and industrial smoke&dust are the main sources of all regions in production stage. In the eastern and central regions, treatment cost of waste gas plays the dominant role in deteriorating the efficiency of pollutant abatement stage. However, in the west, the influences of 3 factors in this stage seem basically the same.The main source of overall environmental inefficiency in eastern region is treatment cost of waste gas. In central and west regions, industrial SO2 and industrial smoke&dust generated in production stage exert the greatest influence on overall environmental inefficiency.The empirical results of the research on convergence of national overall environmental inefficiency based on continuous dynamic distribution approach are as follows. First, the kernel density distributions of environmental inefficiency in 2004, 2009 and 2013 shows the same feature of unimodal distribution. The peaks of those kernel density distributions move gradually from left to right, which means the overall environmental inefficiency has been keeping increasing. However, merely counting on kernel density distributions we cannot judge whether the inefficiency convergent or not. Second, with the help of net transfer probability curve, we found that those samples with inefficiency greater than 0.23 or less than 0.23 tend to move towards the inefficiency point of 0.23. Third, Ergodic distribution deriving from the continuous dynamic distribution approach shows that though most of the provinces will converge to the inefficiency of 0.23, but there is still a considerable part of the provinces will converge to 0.47. This means in the long term, the inefficiency of Chinese provinces and municipalities will divide into two groups.