Environmental Assessment on Energy and Sustainability by Data Envelopment Analysis

17RADIAL APPROACH FOR UNIFIED EFFICIENCY MEASURES

17.1 INTRODUCTION

As a methodological alternative to the non‐radial approach for DEA environmental assessment discussed in Chapter 16, this chapter introduces a radial approach to determine the level of unified efficiency measures. By shifting the previous formulations to the radial measurement, this chapter¹ discusses a new type of DEA environmental assessment to determine the three unified efficiency measures (i.e., UE, UEN and UEM) that may serve as our empirical basis for enhancing the level of social and corporate sustainability.

An important feature of the radial measurement is that it incorporates an inefficiency score to determine the level of unified efficiency measures, each of which is measured by subtracting the inefficiency score from unity. The analytical feature is different from the non‐radial measurement discussed in Chapter 16, which determines the level of three unified efficiencies by the total amount of slacks. Furthermore, the radial approach incorporates a very small number (ε_s) that indicates the relationship between the inefficiency score and a total amount of all slacks. The incorporation of such a small number can reduce the influence of slacks in the unified efficiency measurement and it can control the magnitude of all dual variables to be positive so that all production factors are fully utilized in the proposed environmental assessment.

To document the practicality of the proposed radial approach, this ...