Environmental Decision Models with Joint Outputs

Frequently undesirable outputs are produced together with desirable. This joint production of bad and good outputs in connection with environmental decision models is the subject of this paper. Recently Haynes, Ratick, Bowen and Cummings-Saxton (1993) addressed the same subject matter. They observed that: "... input resources, including the chemicals of concern, produce as joint products the saleable product and the undesired environmental residuals." (p. 271) However, rather than model the undesirable residuals as output, they view them as inputs in their DEA (= Data Envelopment Analysis) model. Building on earlier work by Shephard and Färe (1974), we show how the jointness between desirable and undesirable outputs can be incorporated into environmental decision models. We follow Färe, Grosskopf and Pasurka (1986) (1989) and Färe, Grosskopf, Lovell and Pasurka (1989), who also discuss various approaches to modeling pollution and environmental regulation. _______________