Assessing eco-efficiency through the DEA analysis and decoupling index in the Latin America countries

Abstract This study was developed according to a two-step approach. In the first step, we provide an investigation of the changes in eco-efficiency under constant and variable return to scale, while on a second step the evaluation of the decoupling elasticity will be given. The impacts of energy, economic and environmental determinants (inputs) on the performance indicators of eco-efficiency were calculated as the inverse of the carbon intensity (ratio of the GDP over the CO2 emissions, both from the World Development Indicators database), the changes in eco-efficiency and the decoupling elasticity between CO2 emissions, and economic growth changes. Data was used for 16 Latin America countries, according to five-year periods, from 1994 to 2013. For all the five-time span considered, it is worth noting, that the degree of technical efficiency for the Latin America countries is lower than the degree of technological efficiency, thus indicating that a portion of the overall inefficiency is due to the fact that these countries are producing below the production frontier rather than to an inefficient use of technology. On average, the results have confirmed that the technological scale change in energy production is the dominant factor influencing the optimal production frontier in the sample of countries under analysis. Complementarily, according to the mixed results from the decoupling analysis, we may conclude that the increase/decrease of the CO2 per capita emissions was due to other economic and environmental factors rather than to a negative/positive effect of the GDP growth rate.