Total Factor Environmental Productivity in the Mediterranean Countries: A Malmquist–Luenberger Index Approach

Abstract

This paper examines the environmental productivity in the Mediterranean countries over the period 2009-2014.We use the Malmquist-Luenberger productivity index (MLPI) that can handle undesirable outputs within Data Envelopment Analysis (DEA) approach. We decompose the MLPI index into technical efficiency, technological change and scale efficiency change in order to determine the source of productivity changes. Empirical findings indicate that the total factor environmental productivity in the Mediterranean countries have a negative developmental trend. Furthermore, we find that technological progress is the main source of productivity growth. Finally, Mediterranean countries need a considerable effort on R&D to optimize the potential for technical development and enhance the environmental efficiency levels.