Efficiency measurement with carbon dioxide emissions: The case of China

This paper establishes several efficiency models based on environmental production technology, which are capable of integrating undesirable outputs into efficiency evaluation framework. With the proposed efficiency models, we estimate the environmental efficiency, economic efficiency, economic-environmental efficiency and two-stage efficiency of different provinces in China by considering carbon dioxide (CO2) emissions. Our empirical results show that the environmental and economic efficiency of China are generally low and there exist comparatively large differences in different areas. The average proportion for simultaneously reducing CO2 emissions and increasing GDP is about 36–40%. When desirable outputs are adjusted to the optimal level, some provinces have still the possibility to further reduce CO2 emissions. About half of the provinces is found to be in the status of high incoordination between environment and economy.