Methodological comparison between two unified (operational and environmental) efficiency measurements for environmental assessment

Environmental assessment recently becomes a very large-scale policy issue among corporate leaders, environmental researchers and individuals who are interested in environmental protection in the world. This study discusses how to apply Data Environment Analysis (DEA) for environmental assessment. DEA has been long utilized to measure operational performance in private and public sectors. However, previous DEA research has documented a limited use of DEA on environmental assessment. A unique feature of DEA-based environmental assessment is that it needs to classify outputs into desirable (good) and undesirable (bad) outputs because private and public entities often produce not only desirable outputs but also undesirable outputs as a result of their production activities. A methodological difficulty associated with the previous DEA-based environmental assessment is how to combine operational performance on desirable outputs and environmental performance on undesirable outputs in a unified treatment. This study proposes two types of unification for DEA-based environmental assessment within a non-radial DEA framework. Then, this study compares the two types of unification from economic and mathematical perspectives of environmental assessment. (C) 2010 Elsevier B.V. All rights reserved.