Environmental performance evaluation of Chinese industrial systems: a network SBM approach

In recent years, environmental problems caused by industries in China have drawn increasing attention to both academics and policy makers. This paper assesses the environmental efficiency of Chinese regional industrial systems to come up with some recommendations to policy makers. First, we divided each Chinese regional industrial system into a production process and a pollutant treatment process. Then, we built a scientific input-intermediate-output index system by introducing a new network slacks-based model (NSBM) model. This study is the first to combine NSBM with DEA window analysis to give a dynamic evaluation of the environmental efficiency. This enables us to assess the environmental efficiency of Chinese regional industrial systems considering their internal structure as well as China's policies concerning resource utilization and environmental protection. Hence, the overall efficiency of each regional industrial system is decomposed into production efficiency and pollutant treatment efficiency. Our empirical results suggest: (1) 66.7% of Chinese regional industrial systems are overall inefficient. 63.3 and of 66.7% Chinese regional industrial systems are inefficient in the production process and the pollutant treatment process, respectively. (2) The efficiency scores for the overall system and both processes are all larger in the eastern area of China than those of the central and western areas. (3) Correlation analysis indicates that SO2 generation intensity (SGI), solid waste generation intensity, COD discharge intensity, and SO2 discharge intensity have significantly negative impacts on the overall efficiency. (4) The overall inefficiency is mainly due to inefficiency of the pollutant treatment process for the majority of regional industrial systems. (5) In general, the overall efficiency was trending up from 2004 to 2010, indicating that the substantial efforts China has devoted to protecting the environment have yielded benefits.