Epsilon-Based Measure two-stage network examination of DEA government treatment policy and environmental efficiencies in China

Past research has tended to focus on either environmental or energy efficiency analyses but has seldom examined the combination of energy and environmental policies. Therefore, this study developed a modified EBM (Epsilon-Based Measure) two-stage network DEA model to analyze the economic, environmental, and governance efficiencies in various Chinese provinces. The first production stage of the model produces undesirable output, which is the link to the second treatment stage in which the undesirable output is removed. It was found that the production stage was more efficient than the treatment stage in most provinces in China, and there was an obvious efficiency gap in the governance treatment stage, especially in the inner Chinese provinces. Even though the governance treatment stage efficiency was poor with much-needed improvements, the local government air pollution control and treatment expenditure investment efforts have effectively reduced the SO₂ and NO₂ emissions. The government environmental policy to improve CO₂ reduction governance efficiencies varied across the provinces, with the governance efficiencies in most provinces low but improving.