A Russell Measure for Modeling Environmental Performance

Data Envelopment Analysis (DEA) has been long employed as a popular methodology to evaluate the performance of various production activities with multiple inputs and outputs. However, an important issue is that the production process in the real world inevitably generates undesirable outputs (like wastes and pollutants) along with desirable outputs. Therefore, the undesirable outputs should be included into the environmental performance evaluation. This study surveys the two technologies which is available in the DEA literature for modelling environmental performance under weak disposability assumption of good and bad outputs. Then, it attempts to present a Russell measure that incorporates both desirable and undesirable outputs. To illustrate the use of the proposed method, an empirical application corresponding to 31 administrative regions of China is provided and interpreted.