Environmental efficiency evaluation of industry in China based on a new fixed sum undesirable output data envelopment analysis

The rapid economic development of China has intensified the country's environmental problems such as pollution and waste. As industry is the main contributor to environmental deterioration, the development mode of industry has attracted attention from the government and the public. In this paper, we have assumed that the industry is permitted a fixed total amount of pollution in order to avoid excessive pollution. If one province shows increased pollution, other provinces are required to reduce pollution by the same amount to maintain the total level of pollution. However, so far, few studies have considered such competition over outputs. This paper presents a new data envelopment analysis approach, which considers both the fixed and the variant sum desirable outputs in the performance improvement of a decision making unit, to evaluate the environmental efficiencies of China's industry from 2007 to 2011. The analysis results demonstrate that some economically developed provinces have better performance than less developed provinces; in particular, all efficient provinces are the developed ones. The Chinese government should focus on the increasing differences in environmental efficiencies among regions and take measures to address them.