Regional environmental efficiency in China: Analysis based on a regional slack-based measure with environmental undesirable outputs

As the largest developing country, China has been suffering from resource shortage and serious environmental pollution. Evaluation and improvement of the regional environmental efficiency is crucial to pursuing the balance between economic development and environmental protection. This paper used a regional environmental efficiency SBM (slack-based measure) (REES) model which treats environmental pollution as undesirable outputs to evaluate the environmental efficiency of 30 provincial administrative regions (PARs) in China from 2005 to 2011 and investigated the factors affecting environmental efficiency using the Tobit regression model. The results indicate that there is distinct difference in environmental efficiency amongst each PAR. The GDP per capita, industrial structure, innovation capability, environmental awareness of local government and population density have significant positive impacts, while energy intensity exerts a significantly negative effect on environmental efficiency. In order to make more effective policies for improving China's regional environmental efficiency, the hierarchical cluster analysis was applied to divide the 30 PARs into 3 sub-regions. A number of policy recommendations were provided for improving environmental efficiency according to the characteristics of each sub-region, which are helpful for the Chinese government to achieve the targets of environmental protection along with the economic development in the coming years.