## MCDM'05 - paper no. 8

#### Measuring eco-efficiency in a Leontief input-output model

##### Mikulaš Luptáčik, Boehm Bernhard

###### Abstract:

Eco-efficiency can be characterized as follows: goods and services can be produced with less energy
and resources and less waste emission. Let the production possibility frontier of an economy be determined
by the input-output model extended by primary inputs, pollution generation and abatement. The degree
by which a net-output vector could be extended for given primary inputs and environmental standards can
be considered as a measure of eco-inefficiency. This could equivalently be achieved by a reduction of
primary inputs for given environmental standards and given final demand. In the first part of the paper
**Measuring Eco-Efficiency in a Leontief Input-Output Model** (M. Luptáčik, B. Böhm) radial and slack
based measures of eco-efficiency are derived. In the second part the authors propose another approach
based on the construction of a production possibility frontier. For this purpose a multi-objective
optimization problem with maximization of final demand for each commodity subject to constraints on the
primary inputs is formulated. Then, using data envelopment analysis with the production possibility frontier
as the standard envelope, the eco-efficiency of an economy is estimated. The eco-efficiency values for
the radial efficiency measure and the on based on the DEA model coincide. A demonstration of the viability of
these methods and their relationship is given using input-output from Austria and MANEA data.

###### Reference index:

Mikulaš Luptáčik, Boehm Bernhard, (2006), Measuring eco-efficiency in a Leontief input-output model, *Multiple Criteria Decision Making* (1), pp.
121-136