Green Development Efficiency Explained 

Green development efficiency
Green development efficiency

Last Updated on December 25, 2023 by News Editor

Green tech, an abbreviation for green technology, can be called Environmental technology. It uses sustainable technology to reduce the adverse effects of human activity on the environment. Green technology uses alternative fuels and environment-friendly technologies for clean energy production and the conservation of natural resources.

Green technologies are used to reduce the emission of harmful greenhouse gases, recycling wastes, and generate power through solar panels, wind turbines, etc. Solar energy is one of the most successful green technologies. It is now cheaper than fossil fuels in various parts of the world. Green technology involves extensive scientific research in environmental science, energy production, hydrology, material science, and agriculture.

What Does Green Development Efficiency Mean?

The depletion of natural resources and environmental degradation are the major issues inhibiting the sustainability of economic development. Green development aims to promote economic, ecological, and social sustainability. Green development is a more efficient tool that reduces the persistent demand for resources and the environment in increasing economic growth. Evaluating the potential for green development and the factors linked to the economy, society, and ecological environment is an important part of green technology.

According to the OECD, green development is the pursuit of economic growth and development while ensuring that natural resources continuously provide resources and environmental services for human demands. Green development is also defined as a sustainable development model controlling the ecological and environmental potentials to achieve synchronized development among the three systems of economy, society, and nature.

Green development efficiency (GDE) is an input-output efficiency analysis considering both the environment’s advantages and the economic growth rate. Therefore, measuring the level of sustainable development can be done by evaluating the effectiveness of green development. Measuring the green development efficiency can be used to refine energy use and control pollution instead of analyzing the characteristics of the surrounding environment and industries.

Methods of Measuring Green Development Efficiency

There are two ways of measuring Green Development Efficiency (GDE). These are Data Envelopment Analysis(DEA) and Stochastic Frontier Analysis (SFA) models.

The SFA model is a parametric method of measuring GDE. The SFA can calculate statistical noise in data, deal with measurement errors, and test hypotheses concerning production structure and degree of inefficiency. The SFA model is more reliable than the DEA for conducting an efficiency analysis of terminals.

The DEA model is a non-parametric method for measuring GDE. DEA does not require estimation parameters to be set, preventing bias from irrelevant assumptions in the estimation results. This relative lack of assumption is responsible for the increasing popularity of the DEA model for evaluating GDE. Scholars have adopted other variations of DEA to improve the model by reducing its disadvantages and strengthening its advantages. These measures include the slack-based measure (SBM) model, super-efficient SBM-DEA, and the undesirable output SBM model, which measures the static efficiency of green development.

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