Environmental Assessment on Energy and Sustainability by Data Envelopment Analysis

2OVERVIEW

2.1 INTRODUCTION

This chapter is designed to provide managers, policy makers, researchers and individuals interested in DEA with an overview on the proposed approach. DEA is a holistic methodology for evaluating performance in various organizations (decision making units: DMUs) in private and public sectors. It is indeed true that DEA is very useful in both practical and academic concerns within the context of conventional production economics. However, DEA is not a perfect methodology, in particular for environmental assessment, because the conventional framework of DEA does not fit with various pollution issues. For example, the traditional use of DEA does not consider the existence of undesirable outputs (e.g., pollution of water and air). Eco‐technology innovation was not sufficiently discussed in previous DEA studies. Research issues originating from various environmental issues will be explored both from modern business strategy and from industrial policy, including energy and environmental concerns, as discussed in the chapters of Section II.

As an initial step of this book, it is necessary for us to pay attention to the strengths and drawbacks of DEA within its conventional frameworks and usages. The review in this chapter provides an intuitive description of various DEA applications for performance assessment in public and private sectors. The description contains several illustrative examples.

The remainder of this chapter is organized as follows: Section 2.2 intuitively ...