Measuring the effect of Kyoto protocol agreement on countries' environmental efficiency in CO2 emissions: an application of conditional full frontiers

Abstract

This paper applies the probabilistic approach developed by Daraio and Simar (J Prod Anal 24:93-121, 2005, Advanced robust and nonparametric methods in efficiency analysis. Springer Science, New York, 2007a, J Prod Anal 28:13-32, 2007b) in order to develop conditional and unconditional data envelopment analysis (DEA) models for the measurement of countries' environmental efficiency levels for a sample of 110 countries in 2007. In order to capture the effect of countries compliance with the Kyoto protocol agreement (KPA) policies, we condition first the years since a country has signed the KPA until 2007 and secondly the obliged percentage level of countries' emission reductions. Particularly, various DEA models have been applied alongside with bootstrap techniques in order to determine the effect of KPA on countries' environmental efficiencies. The study illustrates how the recent developments in efficiency analysis and statistical inference can be applied when evaluating environmental performance issues. The results indicate a nonlinear relationship between countries' obliged percentage levels of emission reductions and their environmental efficiency levels. Finally, a similar nonlinear relationship is also recorded between the duration which a country has signed the KPA and its environmental efficiency levels.