Environmental Efficiency Evaluation with Undesirable Outputs-A Study on China´s Iron and Steel Industry

It is one of the issues for international researchers engaging in data envelopment analysis (DEA) that how to evaluate the environmental efficiency of traditional industry with high pollution, high energy consumption under the background of circular economy. In this paper, we make use of the standard BCC DEA model which treats the undesirable outputs as inputs and undesirable slacks-based measurement (SBM) model to evaluate environmental efficiency of China´s 48 iron and steel enterprises. The results indicate that BCC model overestimates efficiency and then cannot provide quantitative information accurately for company directors. So based on the undesirable-SBM model, we not only conclude that the average environmental efficiency of China´s iron and steel industry is declining over the period 2006-2010 due to the excess of energy consumption, waste water, waste gas and solid waste emission, but also we finally analyze the more accurate energy saving and the undesirable outputs reduction potential.