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Maximizing Efficiency: Costs of Environmental Regulations

Discusses directional distance functions to evaluate efficiency and environmental costs in Swedish pulp and paper industry. Explores new statistical approaches and policy relevance. Provides insights on efficiency improvement potentials and regulatory costs.

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Maximizing Efficiency: Costs of Environmental Regulations

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  1. Discussion of Environmental efficiency and costs of environmental regulationsby Eva Alfredsson, Jonas Mansson and Peter Vikstrom Michael Polder Statistics Netherlands

  2. Comments I am on thin ice… Presentation title

  3. Comments I am on thin ice… and I’m not an ice skater Presentation title

  4. Summary of paper • Looks at efficiency taking account of desired and undesired output: production and pollution • “Directional distance function” (DDF) • Allows to study efficiency along different directions, including multiple directions • Quantifies potential for improvement for Swedish pulp and paper industry • Quantifies cost of environmental regulation Presentation title

  5. Good stuff • Topic breaks with traditional analysis looking at efficiency/productivity by comparing inputs with production • Important in the light of increasing pressure on environment and depletion of natural resources • Shift to new statistics: Stiglitz report… • Good graphical presentation • Policy relevance of quantifying cost of regulation Presentation title

  6. Some thoughts Currently three directions: • desired output (1,0) • undesired output (0,1) • and both equally important (0.5,0.5) • Would it be possible to evaluate potential for efficiency improvement for different weights? • It would be interesting to see a graph of potential efficiency improvement for both directions as a function of its “importance weight” in the trade-off Presentation title

  7. Some thoughts • The theoretical framework is unclear to me • Fare (1989) is referred to but section should be more self-contained • How are TE and DDF calculated from the data? Presentation title

  8. Some thoughts • Analysis on 31 firms • Need more details on sample selection • How many firms are deleted? • What is the effect of using balanced sample? (Industrial dynamics is rather interesting in this context!) • Is the technology homogenous? Presentation title

  9. Some thoughts • Benchmarking: are the figures good or bad? • What is good or bad in this case? • Highly competitive industry: firms try to improve efficiency (escape competition) • Relative efficiency for other firms declines, but their efficiency did not actually go down • … overall: the situation has improved..? Presentation title

  10. Some thoughts • Cost of environmental regulation is calculated; but what is the benefit? • Policy implications? Presentation title

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