Difficulties and remedies on DEA environmental assessment

This study discusses a DEA approach for environmental assessment. The proposed approach examines a level of simultaneous achievement on economic prosperity and environmental protection, so measuring the level of “sustainability.” DEA, standing for Data Envelopment Analysis, has been widely applied for performance assessment in the past five decades. A new type of methodology is referred to as “DEA environmental assessment,” and it measures the performance of various organizations that use inputs to produce not only desirable outputs (e.g., electricity) but also undesirable outputs (e.g., CO2 emission). In this study, we discuss various methodological concerns by considering theoretical and empirical difficulties related to the use of DEA environmental assessment. These difficulties include (a) how to incorporate two separated (natural and managerial) disposability concepts into a unified framework of DEA environmental assessment, (b) how to reorganize unified disposability concepts in the proposed approach, (c) how to incorporate an occurrence of undesirable congestion (e.g., a line capacity limit on transmission) and desirable congestion (e.g., possible occurrence of green technology innovation) and (d) how to manage a data set that contains zero and negative values. It is easily expected that these explorations enhance the practicality of DEA environmental assessment.