Investment in Pollution Abatement and Productivity Change in Canadian Regional Pulp and Paper Industries

The performance of pulp and paper industries in four Canadian regions is compared based on the estimation of an input distance function both with and without pollutant outputs. The environmentally sensitive approach provides higher productivity growth estimates for all regions, indicating the need for adjusting conventional measures that ignore the non-marketed benefits of pollution abatement activities. The results also consistently indicate the presence of substantial differences in the regional levels of technical efficiency.