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Open AccessArticle

Analysis of Environmental Productivity on Fossil Fuel Power Plants in the U.S.

1
Department of BioBusiness Management, National Chiayi University, Chiayi 60004, Taiwan
2
Department of Applied Economics and Management, National Ilan University, Ilan 26067, Taiwan
3
Department of Economics, Wichita State University, Wichita, KS 67260, USA
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(24), 6907; https://doi.org/10.3390/su11246907
Received: 18 November 2019 / Revised: 28 November 2019 / Accepted: 29 November 2019 / Published: 4 December 2019
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
In 2007, the Clean Air Act officially included greenhouse gases, making fossil fuel power plants the first of key industries regulated by the Environmental Protection Agency. How do we measure the impact of the regulations on these power plants’ productivity? Previous studies that attempt to answer this question have provided inadequate answers because their samples cover the periods only up to 2007, and they often use greenhouse gases as the only proxy for the undesirable output. This paper collects data from 133 fossil fuel power plants in the United States and covers 2004 to 2013. These power plants are divided into Sun Belt and Frost Belt based on their geographical locations. To measure the undesirable outputs, we used both carbon dioxide and toxic emissions as the proxies. The estimation model includes the construction of a generalized common stochastic frontier (metafrontier) and a Malmquist productivity index. We used the index to measure the change in productivity for the power plants before and after the implementation of the regulation. The results indicate that, since regulation in 2007, the overall production efficiency of the power plants has declined incessantly while productivity has seen a sustained downward trend despite two surges in growth.
Keywords: fossil fuel power plant; metafrontier; environmental efficiency fossil fuel power plant; metafrontier; environmental efficiency
MDPI and ACS Style

Lu, Y.-H.; Chen, K.-H.; Cheng, J.-C.; Chen, C.-C.; Li, S.-Y. Analysis of Environmental Productivity on Fossil Fuel Power Plants in the U.S.. Sustainability 2019, 11, 6907.

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