Ecoefficiency: Defining a role for environmental cost management

Abstract

This study investigates the relationship between environmental performance and productive efficiency in the United States electric utility industry before and after the 1990 Clean Air Act Amendments. Using Data Envelopment Analysis (DEA), cross-sectional examinations reveal lower polluting plants are more efficient than higher polluting plants. Longitudinal analyses indicate plants can simultaneously reduce pollution and increase relative efficiency. Collectively, these results are evidence that proactive environmental management can reduce environmental costs and thus, lends support for adopting an environmental cost management system.