Regional sustainability efficiency index in Europe: an additive two-stage DEA approach

Abstract

In this paper we apply a relational additive two-stage data envelopment analysis model in order to create sustainability efficiency indices for European regions. The sustainability efficiency indices are decomposed into production efficiency and eco-efficiency indicators in the first and the second stage respectively. The production efficiency is defined as the ratio of the financial output over the inputs and the eco-efficiency is defined as the ratio of the bad output over the financial output which serves as an intermediate variable. We treat the heterogeneity among countries using a metafrontier framework. The results reveal inequalities among the examined regions for the eco-efficiency stage.