Total Factor Efficiency Study on China’s Industrial Coal Input and Wastewater Control with Dual Target Variables

Abstract

After decades of economic development in China, its energy consumption still relies heavily on coal, and the dominant segment of our economy-the industrial sectors with large coal input-have caused massive wastewater pollution. To provide a decision-making basis for the sustainable development of Chinese industry and economy, this paper selected 39 industrial sectors in China and studied their Total Factor Efficiency (TFE) using Dual Target Variables of coal input and wastewater control during 2003-2014. The results showed that 82.05% of the total industries within our study scope had an efficiency level below 0.5. Over the entire study period of 2003-2014, only the national monopoly industries and high and new tech industries were able to maintain the optimal efficiency level. In comparison with the existing Data Envelope Analysis (DEA) Model and studies on TFE using multi-target variables methods, this paper has probably made two improvements. First, we improved the original DEA model to calculate the TFE of two target variables (coal input and wastewater control) at the same time. Second, we developed an algorithm to calculate the TFE of industrial coal input and wastewater control from 2003 to 2014, based on the official input-output statistics of China.

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