The governance-production nexus of eco-efficiency in Chinese resource-based cities: A two-stage network DEA approach

Abstract For decades, resource-based cities in China have significantly contributed to China's socio-economic development. The heavy resource dependence of resource-based cities inevitably leads to a series of environmental problems. Mitigating environmental impacts in an unthinking manner might be disruptive for economic development. Improving eco-efficiency has been a crucial solution for protecting the environment while mitigating its negative economic impact. However, the method commonly used to evaluate the eco-efficiency – that is, the black-box data envelopment analysis (DEA) – cannot examine the inefficiencies of the internal structure, and as a result, the underlying management defects are unclear. To open the black box, this study presents a two-stage network DEA framework incorporating government and industrial sectors and measures the eco-efficiency of 84 resource-based cities during the post-financial crisis period (2007–2015). The results indicate that the average eco-efficiency of China's resource-based cities shows a promising increase, and there is a positive relationship between governance efficiency and production efficiency. The decreasing trend of governance efficiency in the Central, Western, and Northeast regions after 2014 shows the low quality of the government sector in the usage of fiscal income. Proactive disclosure of how the government sector conducts public business and spends taxpayers' money should be made to increase transparency, attract more entrepreneurial resources to carry out production activities, and further improve sustainability. The two-stage network DEA framework helps obtain more insights into the internal management defects of the government and industrial sectors and enhance their cooperation to improve the eco-efficiency precisely.