Evaluating environmental performance using data envelopment analysis: The case of European countries

Environmental efficiency is considered to be a critical pillar of sustainable development; consequently, improving environmental performance has aroused attention at both the local and global level. This study evaluated the environmental performance of European Union (EU) countries using the data envelopment analysis (DEA) approach and the global Malmquist-Luenberger index. Although literature using the DEA approach to measure environmental performance exists, this study's main contribution was considering different types of undesirable outputs and using long-term panel data on EU countries. In particular, the DEA window analysis technique was applied to evaluate the environmental performance of 27 EU countries in cross-sectional and time-varying data during the period 2000-2017. Three DEA models were examined; labor, capital, and energy were used as common inputs with a combination of different outputs, including gross domestic product, carbon dioxide and particulate matter emissions, and waste. The empirical results revealed that the trends in the environmental performance of the entire EU and its individual countries were similar under all examined models. Environmental performance was indeed negatively affected by the financial crisis of 2007-2008; this impact was mainly observed in eastern EU countries. Furthermore, both economic and environmental variables significantly influenced countries' overall efficiency. The analysis using the global Malmquist-Luenberger index elucidated that overall, EU countries experienced the efficiency improvement during the study period, although fluctuations were observed. These results enable countries and policymakers to understand their environmental performance, identify strengths and weaknesses, and set targets for further improvement based on the current best practices of comparable peers. (C) 2020 Elsevier Ltd. All rights reserved.