Eva Alfredsson*, Jonas Månsson** and Peter
Vikström*
* Tillväxtanalys, Östersund
** Linnéuniversitetet, Växjö
Growth Analysis
• Swedish Agency for Growth Policy Analysis – Growth Analysis
• Under the direction of the Ministry of Enterprise, Energy and
Communications.
• Our Mission - Sustainable economic development & competetivness
using policy analysis, evaluations and policy intelligence
From Sustainable development to
green economy
Rio 1992 - Sustainable development through sustainable patterns of
producction and consumtion
Rio+20 2012 – Green economy and poverty reduction
The concept of green economy doeas not replace Sustainable development but
”rests on the recognition that achiving sustainability rests almost entirely on
getting the economy right”
UNEP 2011
Greening the economy – Adressing negative external
effects ”bads”
Peak everything, 1750 – 2000
Population - red
CO2 – blue
GDP - red
Loss of tropical rainforest and woodland – green
Water use – light blue
Paper consumption – yellow
Species extinction – green
Motor vehicles, black
Fisheries exploited
Ozone depletion – grye
Foraign investment – dark grey
Source: New Scientists
Measuring productivity accounting for
environmental efficiency
• The main objective is to apply Data Envelopment Analysis (DEA) to analyse
“eco-productivity” i .e. to account for both desired and undesired outputs
using register data
• The paper and pulp industry is a suitable case
– Several other studies
– Relatively homogenous production
– Relatively well documented (no small companies)
Modeling alternatives
• Key-figures approaches
– Ecco-efficiency is a name used for different ratios between good and
bad production
(Barba-Gutierrez et.al, 2009; Lin et.al 2010; Fernandez-Viñé, 2010; Wang et.al., 2010; van
Caneghem et.al. 2010; Whan and Côté, 2011; Wursthorn et.al 2011; Yang et.al 2011)
• Production economic approaches
– Environmental efficiency uses economic production theory
[Pittman, 1983; Färe et.al (1989); Keilback, 1995; Lovell et.al, 1995; Brännlund (1995);
Hetemäki (1996); Hailu and Veeman 2000, 2001; Bruvoll et.al (2003); Korhonen and
Luptacik, 2004; Kousmanen and Kortelainen 2005; Picazo-Tadeo, 2005; Kortelainen and
Kuosmanen 2007; Färe et.al 2007; Zhang et.al 2008; Larsson, 2008; Brännlund (2008); Bye
et.al, 2009; Färe et.al 2010, Macpherson et.al 2010; Picazo-Tadeo et.al 2011; Picazo-Tadeo,
2011]
Modeling idea - Economic production theory
• There exist a possibility to substitute between different inputs/outputs
• Efficient = units that produce most, given inputs (output based)
alternatively, units that uses the least amount of inputs to produce a
given output (input based)
• Problem in our case
– The production consist of a mixed objective function
• Maximise production/revenues/profits
• Minimise pollution
Production economic approaches
• Ignore pollution. Early studies of the industry
• Use pollution as an input rather than an output
[Pittman, 1983; Keilback, 1995; Lovell et.al, 1995; Hailu and
Veeman 2000, 2001; Korhonen and Luptacik, 2004; Kousmanen
and Kortelainen 2005; Kortelainen and Kuosmanen 2007; Zhang
et.al 2008; Larsson, 2008; Bye et.al, 2009; Picazo-Tadeo et.al
2011]
• Directional Distance Function
[Chung, Färe and Grosskopf (1995, 1997), Picazo-Tadeo, 2005; Färe et.al
2007, Färe et.al 2010, Macpherson et.al 2010, Picazo-Tadeo, 2011]
( g DY , gUDY ) = (1, 0)
DY
D
B
DY1
A**
( g DY , gUDY ) = (0, - 1)
C
A*
DY0
A
P( x)
0
UDY
UDY1
UDY0
( g DY , gUDY ) = ( DY0 , UDY0 )
DY
B
DY1
( g DY , gUDY ) = (1, - 1)
DY2
D
A*
A**
C
DY0
A
P( x)
F
0
UDY
UDY2 UDY0
UDY1
Research questions
1. How much can the pollution be reduced, given unchanged
production levels of pulp and paper?
2. How much can the production of pulp and paper increase, given
unchanged level of pollution?
3. If desired and undesired production is equally important (but
opposite direction), how large is the inefficiency in the Swedish pulp
and paper industry?
4. How much do environmental regulation cost in terms of not
produced pulp and paper. (What would the production be if it was
free and costless to get rid of pollution?)
Data
• Official statistic 2000 – 2007
• Output
•
•
Desired = Real value of pulp and paper production
Undesired = CO2 in 100 ton, SO2 in ton
• Input
•
•
•
•
•
Number of employee
Buildings and land (long run capital) (real SEK)
Machinery (medium run capital) (real SEK)
Energy (TWH)
Raw material (real SEK)
Results - How much can the pollution be reduced, given the
production of pulp and paper? (Pollution reduction perspectives)
Average potential polution reduction
1,00
0,95
0,90
0,85
0,80
0,75
0,70
2000
2001
2002
2003
2004
Year
2005
2006
2007
Results - How much can the production of pulp and paper
increase if the level of pollution is kept constant? (Growth perspective)
Average potential pulp and paper increase
0,960
0,940
0,920
0,900
0,880
0,860
0,840
0,820
2000
2001
2002
2003
2004
Year
2005
2006
2007
Results - If desired and undesired production is equally important (but
opposite direction), how large is the inefficiency in the Swedish pulp and paper
industry?
1,00
0,98
Average efficiency
0,96
0,94
0,92
0,90
0,88
0,86
2000
2001
2002
2003
2004
Year
2005
2006
2007
Q4. How much do environmental regulation cost in terms of not
produced pulp and paper. (What would the production be if it was free
and costless to get rid of pollution?)
( g DY , gUDY ) = (1, 0)
DY
DY2
D
A*** B
E
DY1
A**
C
DY0
A
P( x)
0
UDY
UDY0
Results - How much do environmental regulation cost in terms of
not produced pulp and paper. (What would the production be if it
was free and costless to get rid of pollution?)
1,00
Cost of enviromental regulation
0,98
0,96
0,94
0,92
0,90
0,88
0,86
0,84
0,82
2000
2001
2002
2003
2004
Year
2005
2006
2007
Conclusion and concluding remarks
• In this paper we present one method to study eco-efficiency taking
into account both desired output in production and negative output
• The goal is to extend and apply the model on another industry, e.g.
transport
• It is however clear that the Swedish environmental account data is
lacking in precision. Therefore development work has been initiated
with SCB
• On the agenda is also to try to measures of productivity in terms of
Malmqvist indexes that enables to distinguish between technical
progress and efficiency gains over time.
www.tillvaxtanalys.se
Eva.Alfredsson@tillvaxtanalys.se
Jonas.mansson@lnu.se