Toxic releases: An environmental performance index for coal-fired power plants

In order to assess the performance of electric power plants that produce both good and bad outputs, this study uses data from the toxic release inventory to construct an Environmental Performance Index (EPI). Färe, Grosskopf, and Pasurka (2006) demonstrated that for the one good output and one air pollutant case, the EPI simplifies to the ratio of good to bad output. In this paper, we extend the EPI to include an index of multiple bad outputs. After deriving the index as a Malmquist Quantity Index, we assemble data from 1998 to 2005 on releases of selected toxic chemicals and electricity generation for a sample of coal-fired power plants in the United States to demonstrate how the EPI can provide initial perspectives on trends in releases of toxic chemicals by coal-fired power plants.