Environmental performance measurement with technology heterogeneity: Cross-region evidence

ABSTRACT

This paper explores the metafrontier environmental efficiency and group frontier environmental efficiency of the governments of the countries in Asia, the Americas, and Europe, adopting the directional distance function along with metafrontier analysis. The paper develops a new approach to measure technology heterogeneity between the environmental efficiency of the metafrontier and that of the group frontiers, namely technology gap. The 65 countries selected for this study include not only the countries in Annex B of the Kyoto Protocol, but also countries in Asia, the Americas, and Europe. According to the average values for environmental efficiency, based on these geographical locations, the empirical results show that European countries are superior to Asian and American countries, regardless of the environmental efficiency of the metafrontier or group frontiers. Also, the technology heterogeneity of European countries is lower than that of the other countries.

KEYWORDS:

• Carbon dioxide
• directional distance function approach
• environmental efficiency
• metafrontier approach
• technology gap

Notes

¹ This grouping method was suggested by Battese et al. (2004) for geographical location often highly correlates to technology level.