Measurement of production efficiency and environmental efficiency in China’s province-level: a by-production approach

The nonconventional by-production approach with respect to the freely disposable inputs but without the weakly disposable and null-joint outputs has been proposed to describe the pollution generating technologies since 2012. To amend the contradictory trade-offs among inputs, intended and unintended outputs, which generate in the previous conventional pollution-generating technologies, the new by-production approach decomposes the general pollution generating technology as classical intended production technology and nature’s residual-generation mechanism. In this paper, some production and environmental efficiency indexes will be extended and firstly applied in the study of regional technical efficiency level with considering the energy utilization and air pollutants emission in China. Based on our calculating results, there exists the obvious variation in the regional technical efficiency level with the regional geographic separation. Eastcoast area ranks the highest in production efficiency measurement, and the West has the lowest levels in both production and environmental efficiency. Through conducting some reason discussions, our new efficiency results based on the by-production approach are consistent with the fact of Chinas unbalanced regional development pattern and also reveal the ineffectiveness of current environmental policy implementations. © 2016, Society for Environmental Economics and Policy Studies and Springer Japan.