Assessing eco-efficiency with directional distance functions

Eco-efficiency is a matter of concern at present that is receiving increasing attention in political, academic and business circles. Broadly speaking, this concept refers to the ability to create more goods and services with less impact on the environment and less consumption of natural resources, thus involving both economic and ecological issues. In this paper we propose the use of directional distance functions and Data Envelopment Analysis techniques to assess eco-efficiency. More specifically, we show how these functions can be used to compute a range of indicators representing different objectives of policymakers and/or firm managers regarding economic and ecological performance. Our methodological approach is illustrated by an empirical application to a sample of olive-growing farmers located in Southern Spain. Our foremost finding is that eco-inefficiency is a widespread managerial practice. We also suggest further avenues to explore in this burgeoning line of research.