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Metafrontier Environmental Efficiency for China’s Regions: A Slack-Based Efficiency Measure

A metafrontier slack-based efficiency measure is presented to measure environmental efficiency for various regions in China. The objective of the new approach is to investigate the change of environmental efficiency while incorporating group heterogeneities and all variable slack and environmental pollutants into environmental efficiency analysis. Global production technology is used to improve the discriminating power of environmental efficiency measurement. An empirical analysis of regional environmental efficiency is carried out incorporating sulfur dioxide emissions and the chemical oxygen demand (COD) of China’s regions from 2000–2011. Results indicate that excessive emissions pollution is the major cause of environmental inefficiency. Most of the regions return environmental efficiency values. Significant regional technology gaps in environmental efficiency are found between the east, central, and west areas. Finally, some policy implications are presented from the empirical results.