TY - JOUR

T1 - Interaction between output efficiency and environmental efficiency

T2 - evidence from the textile industry in Jiangsu Province, China

AU - Jiang, Lei

AU - Folmer, Henk

AU - Bu, Maoliang

PY - 2016/2/1

Y1 - 2016/2/1

N2 - Environmental efficiency improvement has played a crucial role in the theory and practice of stimulating clean production. This paper analyzes the interaction between environmental efficiency and output efficiency, particularly whether they reinforce each other or compete with each other, on the basis of a data set of 137 firms in the textile industry in China's Jiangsu Province. In the first stage, generalized data envelopment analysis is applied to calculate efficiency measures of energy, waste water, waste gas, soot, and output efficiency taking capital, labor, water, and energy as inputs, industrial output value as desirable output, and waste water discharges, waste gas and soot emissions as undesirable outputs. In the second stage analysis, a structural equation model with latent variables is applied to analyze the interaction between the latent variable environmental efficiency, measured by the four observed environmental indicators, and output efficiency, taking also into account the endogenous variable profit. The main outcomes of the structural equation model are the following. Firstly, environmental efficiency negatively impacts on profit while profit positively impacts on environmental efficiency. In a similar vein, output efficiency is found to depress profit while profit increases output efficiency. Thirdly, environmental efficiency has a positive impact on output efficiency while there is no effect of output efficiency on environmental efficiency. Fourthly, taxes impair a firm's output efficiency. From the findings it follows that a swap of general taxes for an energy tax is likely to improve both output efficiency and energy efficiency. The latter outcome implies a win win situation which will facilitate the further implementation and adoption of environmental policy. Finally, the paper illustrates the applicability of structural equation modeling in efficiency analysis. (C) 2015 Elsevier Ltd. All rights reserved.

AB - Environmental efficiency improvement has played a crucial role in the theory and practice of stimulating clean production. This paper analyzes the interaction between environmental efficiency and output efficiency, particularly whether they reinforce each other or compete with each other, on the basis of a data set of 137 firms in the textile industry in China's Jiangsu Province. In the first stage, generalized data envelopment analysis is applied to calculate efficiency measures of energy, waste water, waste gas, soot, and output efficiency taking capital, labor, water, and energy as inputs, industrial output value as desirable output, and waste water discharges, waste gas and soot emissions as undesirable outputs. In the second stage analysis, a structural equation model with latent variables is applied to analyze the interaction between the latent variable environmental efficiency, measured by the four observed environmental indicators, and output efficiency, taking also into account the endogenous variable profit. The main outcomes of the structural equation model are the following. Firstly, environmental efficiency negatively impacts on profit while profit positively impacts on environmental efficiency. In a similar vein, output efficiency is found to depress profit while profit increases output efficiency. Thirdly, environmental efficiency has a positive impact on output efficiency while there is no effect of output efficiency on environmental efficiency. Fourthly, taxes impair a firm's output efficiency. From the findings it follows that a swap of general taxes for an energy tax is likely to improve both output efficiency and energy efficiency. The latter outcome implies a win win situation which will facilitate the further implementation and adoption of environmental policy. Finally, the paper illustrates the applicability of structural equation modeling in efficiency analysis. (C) 2015 Elsevier Ltd. All rights reserved.

KW - Energy efficiency

KW - Output efficiency

KW - Environmental efficiency

KW - Data envelopment analysis (DEA)

KW - Structural equation model (SEM)

KW - Jiangsu Province

KW - DATA ENVELOPMENT ANALYSIS

KW - NONRADIAL DEA APPROACH

KW - MODELING UNDESIRABLE FACTORS

KW - ENERGY EFFICIENCY

KW - FRONTIER ANALYSIS

KW - RENEWABLE ENERGY

KW - REGIONAL ENERGY

KW - PERFORMANCE

KW - PRODUCTIVITY

KW - REDUCTION

U2 - 10.1016/j.jclepro.2015.11.068

DO - 10.1016/j.jclepro.2015.11.068

M3 - Article

SN - 0959-6526

VL - 113

SP - 123

EP - 132

JO - Journal of Cleaner Production

JF - Journal of Cleaner Production

ER -