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Prevention or cure? Abatement efficiency in a network technology

Author

Listed:
  • Bostian, Moriah

    (Department of Economics, Lewis & Clark College)

  • Färe, Rolf

    (Department of Economics, Oregon State University)

  • Grosskopf, Shawna

    (Department of Economics, Oregon State University)

  • Lundgren, Tommy

    (CERE - the Center for Environmental and Resource Economics)

Abstract
We develop a network technology model for pollution abatement that distinguishes between the two primary forms that abatement can take: Prevention of emissions from occurring in the first place, and treatment of any emissions that are generated by the production process. Our network model separates the production process into two stages, an initial production and prevention stage and a final treatment (or cure) stage. We allow for reallocation of abatement resources across the production stages, in order to improve overall abatement and production efficiency and better understand the tradeoffs between the two forms of abatement. This framework is relevant in practice for a number of industrial production processes, including manufacturing and energy, which employ multiple abatement measures at different stages of production. To illustrate, we apply the prevention-treatment network model to estimate the production and abatement technology for firms in Sweden’s pulp and paper manufacturing sector. We find that with reallocation of prevention and treatment resources, the industry could achieve further gains to both production and emissions reductions, relative to those estimated using the more common single-stage approach to technology estimation for pollution-generating processes. In practice, these results could be used by producers for improving managerial efficiency, and by policy makers to better target abatement incentives to the most effective aspects of production.

Suggested Citation

  • Bostian, Moriah & Färe, Rolf & Grosskopf, Shawna & Lundgren, Tommy, 2019. "Prevention or cure? Abatement efficiency in a network technology," CERE Working Papers 2019:11, CERE - the Center for Environmental and Resource Economics.
    • Handle: RePEc:hhs:slucer:2019_011
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    Citations

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    Cited by:

    1. Andreas Eder, 2022. "Environmental efficiency measurement when producers control pollutants under heterogeneous conditions: a generalization of the materials balance approach," Journal of Productivity Analysis, Springer, vol. 57(2), pages 157-176, April.
    2. repec:zbw:inwedp:752021 is not listed on IDEAS
    3. Andreas Eder, 2021. "Environmental efficiency measurement when producers control pollutants under heterogeneous conditions: a generalization of the materials balance approach," Working Papers 752021, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    4. Rolf Färe & Shawna Grosskopf, 2021. "Comments: Performance measurement and joint production of intended and unintended outputs," Journal of Productivity Analysis, Springer, vol. 55(3), pages 189-193, June.

    More about this item

    Keywords

    Network DEA; Carbon Policy; Abatement Cost; Environmental Performance;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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