Measuring Sustainability Efficiency Using a Two-Stage Data Envelopment Analysis Approach

Abstract

In this article, we apply an additive two-stage data envelopment analysis estimator on a panel of 20 countries with advanced economies for the time period 1990-2011 in order to create a composite sustainability efficiency index. We use a window-based approach in order to study the countries over the years. The sustainability efficiency index is decomposed into production efficiency and eco-efficiency indicators. The results reveal inequalities among the examined countries between the two stages. The eco-efficiency stage is characterized by large inequalities among countries and significantly lower efficiency scores than the overall sustainability efficiency and the production efficiency. Finally, it is reported that a country's high production efficiency level does not ensure a high eco-efficiency performance. © 2015, Yale University.