Global Journal of HUMAN-SOCIAL SCIENCE: H Interdisciplinary Volume 20 Issue 5 Version 1.0 Year 2020 Type: Double Blind Peer Reviewed International Research Journal Publisher: Global Journals Online ISSN: 2249-460x & Print ISSN: 0975-587X
A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis By Daniel Massenfrainer, Wesley Osvaldo Prandella Rodrigues, Daniel Amorim Souza Centurião & Celso Correia De Souza Universidade Estadual do Mato Grosso do Sul Abstract- In this study we constructed the Municipal Sustainable Development Index (MSDI) with the use of Data Envelopment Analysis (DEA), considering seventeen (17) socioeconomic and environmental indicators, thus achieving the classification of towns in the state of Mato Grosso do Sul (MS), like sustainable development, local strengths, and weaknesses that may facilitate or hinder the regional sustainable development. The state of MS goes through a process of influential agro-industrial development, with powerful environmental impact, requiring measures of State Public Policymakers. The MSDI was formulated following the tripod structure of social sustainability (SDI - Social Development Index), economic (EDI – Economic Development Index) and environmental (EnDI – Environmental Development Index). Selected indicators of each structure represented each sustainability aspect, being tested separately by the models DEA-CCR and DEA-BCC to generate efficiency scores for subsequent aggregation into a synthetic index that represents the sustainable development of municipalities. Keywords: sustainability index; DEA; ecological economics. GJHSS-H Classification: JEL Code: Q01
AMethodologicalProposalfortheConstructionofMunicipalSustainableDevelopmentIndicesusingDataEnvelopmentAnalysis
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© 2020. Daniel Mass enfrainer, Wes ley Osvaldo Prandella Rodrigues, Daniel Amorim Souza Centurião & Celso Correia De Souza. This is a research/review paper, distr ibuted under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License http://creativecommons.org/licens es/by-nc/3.0/), permitting all non-commercial use, distr ibution, and reproduction in any medium, provided the original work is properly cited.
A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis
Daniel Massenfrainer ɲ, Wesley Osvaldo Prandella Rodrigues ʍ, Daniel Amorim Souza Centurião ʌ & Celso Correia De Souza ൿ
Abstract - In this study we constructed the M unicipal sustainable development indicators that could provide a Sustainable Development Index (MSDI) with the use of Data sound basis for decision-makers at all levels. Also, the
Envelopment Analysis (DEA), co nsider ing s eventeen (17) Agenda 21 draws attention to the development and 2020 socioeconomic and environmental indicators, thus achieving harmonization of the sustainable development indicators the classification of towns in the state of Mato Grosso do Sul at the regional, national, and global levels, including the ear
(MS), like s ustainable development, local strengths, and Y weaknesses that may facilitate or hinder the regional incorporation of a suitable set of these in common
39 sustainable development. The state of MS goes through a indicators (UN, 2001). process of influential agro-industrial development, with In response to Agenda 21, the Commission for powerful environmental impact, requiring measures of State Sustainable Development (CSD) approved the Work on Public Policymakers. The MSDI was formulated following the Indicators of Sustainable Development program in 1995. tripod str ucture of social s ustainability (SDI - Social The objective of this program was to create sustainable Development I ndex), eco nomic ( EDI – Economic Development development indicators accessible to decision-makers Index) and environmental (EnDI – Environmental Development at the national level (UN, 2001). Index). Selected indicators of each structure represented each sus tainability aspect, being tested separately by the models Creating a structure to organize the selection DEA-CCR and DEA-BCC to generate efficiency scores for and development of sustainability indicators is essential subs equent aggregation into a synthetic index that represents for the regionals classification in terms of sustainable the sus tainable development of municipalities. The relevance development and possible decision-making. The need of the present work cons isted of broadening the debate on to create this structure and the choice of a set of sus tainable development and identifying the local inequalities
indicators can be measured by the priority established )
and the need for targeting public policies in order that promote H
by its users, in this case: specialists, civil society and ( sus tainable and comprehensive development. In applying the decision makers, responsible for the development and Volume XX Issue V Version I methodology, DEA-BCC model fits best to the data of the use of indicators for the monitoring of the sustainable municipalities cons idered. The inefficiencies found were for the most part, related to eco nomic aspects. development process (UN, 2001). Keywords: sustainability index; DEA; ecological Based on the recent construction of sustainable economics. development indicators suggested in the literature, it is possible to assess situations and trend s, besides - I. ntroduction I comparing and classifying locations and describe their ndicators are crucial to guide decision-makers in a situation about the ideal scenario providing early variety of public policy directions. The information warning information as well as predicting future generated by them facilitates the decision-making conditions and trends. The aim of this study was to I process and can help measure the success of policies construct a methodology that would allow ranking the 78 municipalities that make up the State of Mato Grosso do aimed at sustainable development. In 1992, there was a large reorganization of the Sul (Brazil), using the Municipal Sustainable indicators list. Such reorganization allowed countries to Development Index (MSDI),as from the indicators of the create information that helps in sustainable development social, economic and environmental dimensions using decisions being articulated in the Agenda 21, that the data envelopment analysis (DEA) as a tool. Global Journal of Human Social Science contain the objective of developing and identifying Thus, this work is organized into three sections, Author ɲ: Universidade Estadual do Mato Grosso do Sul. besides thi s introduction. The first one discusses the e-mail: [email protected] emergence and applications of sustainable Authorʍ: Universidade Federal de Mato Grosso do Sul. development indices in Brazil and in the World. The e-mail: [email protected] second section discusses a methodology suggestion Authorʌ:Universidade Estadual do Oeste do Paraná. e-mail: [email protected] for the development of a Sustainable Development Author ළ: Universidade Anhanguera Uniderp. Indicator for the municipalities of Mato Grosso do Sul. e-mail: [email protected] Section three analyzes the results obtained by applying
©2020 Global Journals A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis
the proposed methodology to a set of representative To supply synthetic indicators for measuring indicators of the proposed topics, ranking the sustainable development, recently applications are municipalities of Mato Grosso do Sul on the issue of noteworthy. They are noteworthy because they deal with sustainability. the construction of these indicators, as it is desired in this work, with the approach of sustainable development II. Indices of Sustainable Development in in an integrated manner, being these the works of Brazil and in the World Ciegis, Ramanauskiene and Startiene (2009); Rinne, Lyytimäki and Kautto (2013); Hák, Janoušková and On a domestic and global scale, several indices Moldan (2015); Bravo (2013). have arisen, especially, over the past decades, These applications, besides their outstanding including: the Environmental Sustainability Index; contributions to the method, they mainly give a key Ecological-Economic Efficiency Index, Consumer design on the scale that the ecological indicators or Pressure Index; Ecological Footprint Index; Sustainable indicators of sustainability have been taking over time. Economic Welfare Index; Genuine Progress Index, Moreover, it is up to them to demand the treating of a among others (Jollands, 2006). broad and complex context of human interaction with 2020 The starting point for analysis and assessment the environment in a synthetic, simple and clear way, to of sustainable development is based on the
ear enable decision-making and policy-making. About this Y construction of proxy indicators to describe briefly the perception Zurlini and Girardin (2008) present an aspects of sustainability as in Ronchi et.al. (2002),
important reflection: “Thus, indicator s need to be 40 Nourry (2008) and Nader et al. (2008). However, there is constantly re-evaluated and re-interpreted in the li ght of no perfect or unique way of measuring the sustainable the increasing understanding of the whole organization development. There is a need to analyze different and functioning of social–ecological systems.” development, and sustainability indicators to find out the To combine mathematical, methodological and best way to assess a country's sustainable development theoretical efforts in the search for indicators that better
(Nourry, 2008). reflect the addressed reality, making it possible to review In the version of the Commission for what is laid, besides suggesting new methodologies, Sustainable Development, the set of sustainable Ciegis, Ramanauskiene and Startiene (2009), point out: development indicators developed between 1994 and “Therefore, assessment of sustainable development 2001. These developed indicators have been extensively needs integrated approach, a set of multi-dimensional tested, applied, and used by many countries as the indicators, which evaluate both separate parts of the basis for the development of national indicators of system and their relationships”. Thus, it is given the
) sustainable development (UN, 2007). The choice for a H praxis indications for the elaboration of indicators of
( set of indicators needs to take into account its efficiency Volume XX Issue V Version I this nature. regarding the interpretative process, synthesizing the complexity of the research object (MANZONI, 2006). It is a great example of the relevance theme, the Economic Commission for Latin America and the According to Roldán and Valdés (2002), who Caribbean (ECLAC), as well as the recently launched calculated Sustainable Development Indices for seven Agenda 2030 y losobjetivos de Desarrollo Sostenible
- Mexican municipalities, located within the Coatzacolcos uma oportunidade para América Latina y el Caribe River basin region, using as a reference the (2017). They make a set of actions for the intensification methodology of Agenda 21 and the Organization for of sustainable development for Latin America and the Economic Cooperation and Development OECD), the Caribbean to contribute to the public agendas selection of relevant indicators should be established formulation. according to the following criteria: The work of Henriquez and Herrera (2012)
x Availability and reliability of the data source; makes a descriptive analysis of the initiatives for
x Use of current statistical data; sustainable development in Latin America on the
x Use of data belonging to the three systems: aspects of foreign direct investment, development of economic, social and environmental of all goods and products industries, besides other factors
Global Journal of Human Social Science municipalities involved in the research; seeking to understand their influence on sustainable
x Holistic approach, which included qualitative and development in Latin America.
quantitative data in an integrated way. Also the ECLAC's report Acesso a la In the international community, researches informacíon, participacion y justicia en temas related to sustainability and sustainable development ambientales em América Latina y el Caribe: Situación are in a more advanced and in-depth rhythm. Proof of actual, perspectivas e ejemplos de buenas práticas, this are magazines, universities, and even research presents a case study perspective and highlights as one centers focused on the subject, as the work of of the challenges for the environmental i ssues in Latin Cavalcanti (2010) points out. America: the need to improve information processing
©2020 Global Journals A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis
“A fin de que la ciuda danía pueda partici par de manera b) Be relevant to the decisions that guide public informada en la toma de decisiones em materia policies, ambiental, se requiere mejorarlas capacidades de c) Reflect the temporal changes, producir, procesar y difundir información sobre el estado d) Enable an integrated and systemic approach, delmedio ambiente a nivel nacional.”. e) Use measurable indicators, In Brazil, the main official methodological f) Be easy for interpretation and communication, approach is the periodic survey of IBGE - Brazilian g) Have a well-defined, transparent and objective Institute of Statistical Geography, beginning in 2002, and methodology for research purposes. updated and revised in 2004, 2008, 2010, and 2012 and In addition to these listed criteria, the main with the latest version for 2015, with methodological reason for the choice of indicators was the availability of adjustments, but following the indications of the statistical data for all Mato Grosso do Sul municipalities. Indicators of sustainable development: guidelines and For a definition of the indicators representing aspects of methodologies, proposed by the UN CDS. economic, social and environmental development, a Some papers give prominence to the literature normalization of data was performed, to enable an historical development, to the research approaches and analysis of different units and sizes of municipalities. 2020 to the Brazilian State concerning such indicators. Also Waquil et.al.(2010), suggested the methodology they highlight the recent researches methodological ear used to define the indicators featuring the geographical Y effort to give a synthetic approach to the indicators, areas in a multidimensional way through the perception among them Souto (2013) and Malheiros, Phllipi Jr. and of their personal distinctions and identities. Moreover, 41 Coutinho (2008). An important point for the construction the publication of "Indicators of Sustainable of synthetic indices is the data availability, the critical Development: Brazil 2002," the Brazilian Institute of issue pointed out by the IBGE report itself (2015) for the Geography and Statistics (IBGE), became a guide for survey years of sustainable development indicators in preparing the set of indicators that would allow Brazil demonstrating the difficulty of adjusting some complete assessment of sustainability, considering the variables mainly with their periodic availability for data peculiarities and characteristics of the Brazilian and collection. Mato Grosso do Sul reality. Even given the efforts observed by IBGE and Casado and Souza (2008) determine the MSDI, ECLAC, it should be noted that there is a way to be researchers have used data envelopment analysis followed about to the method and concept, so that the concepts - DEA (Data Envelopment Analysis), whose indicators currently used and calculated can converge non-parametric technique uses mathematical more and more towards the direction indicated in the programming to build production efficiency frontiers of ) H international literature, observing obviously the local production units - DMUs (Decision Making Units), which ( Volume XX Issue V Version I specificities. In this context, the elaboration and use of use similar technological processes to transform municipal sustainable development indicators to carry multiple inputs into multiple products. out this study followed the development proposed by Also, according to Casado and Souza (2008), Roldán and Valdés (2002). It was taken into account the the DEA efficiency frontiers are used to evaluate the specificities of the Brazilian economy and, in particular, relative efficiency of the operational plans run by the - the state of Mato Grosso do Sul, but seeking to connect DMUs and serve as a reference for the establishment of to the broad reflection on indicators carried out by efficient goals for each production unit. The DEA assess researchers worldwide on the topic. the effectiveness of organizations whose activities are not aimed at profit or for which there are no pre-set III. Material and Methods prices for all inputs and or all products. Thus, the DEA objective is to find the best virtual The methodology prop osed in this article for DMU for each DMU in the sample. According to calculating the Municipal Sustainable Development Charnes et al. (1994), the virtual DMU is better than the Index (MSDI) considered all seventy-eight (78) original DMU for producing more with the same amount municipalities in the State of Mato Grosso do Sul of inputs, or because it produces the same quantity (Brazil), including the economic, social and Global Journal of Human Social Science using fewer inputs. The original DMU will be inefficient. environmental representativeness with the purpose of Therefore, the production efficient frontier will be the one assessing the sustainability levels, considering the that represents the assessed units can to maximize the globally used criteria for the choice of sustainability inputs used in the products produced or, still, manages indicators. According to Martins and Cândido to produce a greater quantity of products with a smaller (2008), each of the selected indicators should have the amount of inputs. following characteristics: To use the DEA in the analysi s of social, a) Be significant for the reality investigated and for the economic, and environmental indicators, some study focus, indicators were defined as inputs (inputs) and others
©2020 Global Journals A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis
such as products (outputs). Charnes et al . (1994) s emphasize the efficiency as a relative concept, that is, ur yrj the efficiency 1 (one), or 100%, is achieved by a unit ¦ r 1 ; para j = 1,..., n; (2) when compared with other units showing neither 1 t m inefficiency evidence in the input use nor the product ¦vi xij output. In other words, the units that achieve maximum i 1 performance about others will be considered technically r, i efficient. Still, it does not mean that they are necessarily Where: u v > 0; r = 1, ...,s ; i= 1, ..., m. efficient absolute terms. A DMU technical efficiency can The above model is a linear fractional range from 0 (zero) to 1 (one), so that, whenever closer programming model that can be transformed into a to 1, the higher will be the DMU efficiency degree. common linear form so that we can use conventional
There are two techniques used in DEA: the linear programming methods. This transformation takes constant return scale, also called CRR or CRS (Constant place as follows: Returns to Scale), originally developed by Charnes et al. Input-oriented (primal) CCR model: (1978) and the variable return of scale, called BCC or 2020 s VRS (Variable Returns to Scale), developed by Banker et max h0 ¦ ur yr1 (3)
ear al. (1984). The difference between one technique and r 1
Y
the other is that, in the first, the input and product subject to:
42 (output) variables undergo proportional or constant
changes, in the second technique, these changes are m
variable. ¦ vi xi1 1 (4) i 1 For Gomes et al. (2003), in the classic DEA
techniques, both in the CCR technique and in the BCC s m d technique, it is assumed total freedom of production, ¦ ur yrj ¦ i xv ij 0, todopara 1 nj .,..., (5) r 1 i 1 that is, the production of one DMU does not interfere in the production of the others. Also, according to the r d eu ,r 1 s .,..., (6) authors, how the inefficient DMUs are projected at the efficiency frontier is the way that determines the model i d 1, ,...,miev . (7) orientation. DEA models can be input or product (output) Other DEA basic model would be the DEA-BCC
) oriented, and the analyst as the starting point in the DEA that presents the frontier's surface with variable returns
H
( analysis must choose this orientation in advance. The of scale. Developed by Banker, Charnes and Rhodes Volume XX Issue V Version I input orientation indicates that it is desired to reduce (1984) this model is relevant to the study of efficiency (minimize) the inputs, keeping the products (output) because it admits that not always, the technology unchanged. On the other hand, product orientation presents constant returns to scale and this return may means that one wants to increase the products (output) decrease, grow or even getting constant as it increases without changing the input (Lins et al., 2000). or reduces the production scale. - In the present research, we used the input- In the DEA-BCC model, having in view the oriented technique, in which the resources used for frontier's surface change to the model's fractional each of the aspects were considered to evaluate the formula, the variable Z (omega) will be added to sustainability separately and to determine an average of represent that it is possible to vary the surface, resulting efficiency to create a classification of the municipalities as follows: in relation to the obtained results. Therefore, we started from the following DEA-BCC input-oriented (primal) model:
equations in a primal solution: s (8) max 0 ¦ uh r y Z s r1 r 1 ur yro Global Journal of Human Social Science ¦ subject to: r 1 (1) max 0 m h s m xv par todo nj (9) ¦ i io ¦ ur yrj ¦ i xv ij Z d 0, forall 1 .,..., i 1 r 1 i 1 (10) O 1 subject to: ¦ j
r d eu ,r ,...,1 s
vi d e , ,...,1 mi (11)
©2020 Global Journals A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis
Note that structurally the CCR and BCC models indices: SDI – (Social Development Index), EDI – are similar. In BCC, the scores can be equal to or (Economic Development Index) and EnDI – smaller than one. In the second restriction, the variable Environmental Development Index). Zwas also added. There is one more restriction for The selection of the indicators used in this convexity . article was carried out in three steps: ¦O j 1 a) Construction of a municipal database for The first procedure prior to the DEA application sustainable development issues, selecting the was to define the social, economic and environmental topics within each of the issues addressed, development indices, SDI, EDI and EnD), respectively, b) Definition of proxy variables, which would be the which would be representative of the social, economic and environmental indicators, as well as of each indicators considered within each of the topics, function (input/output) within the resource use process. c) Results obtained for the municipalities, creating a classification through the results obtained by the The inputs/outputs were defined based on the economic literature of indicators and mainly by the availability of Municipal Sustainable Development Indicator indicators that reflected in a social case. As an example (MSDI). 2020 an important social input that generated, therefore, a The first step consisted of secondary data social output, that is, for example, increases in the searches that had municipal cuts from several Brazilian ear sources, in which it was possible to select the indicators Y revenues received by the SUS–(Unified Health System,
the public health system in Brazil), can lead to a to be used in the DEA in the calculation of SDI, EDI and 43 reduction in infant mortality, thus the listed inputs and EnDI indicators. For each selected indicator it was outputs assume correspondence with each other. Thus, defined: its size, function, source used and year of the municipal sustainable development index (MSDI) collection (Chart 1). was calculated from the aggregation of the three
Chart 1: List of indicators used in the calculation of the SDI, EDI and EnDI indicators for determining the MSDI of the municipalities of Mato Grosso do Sul in 2010 Indicator Dimension Function Source Yea r Income Gini I ndex Social Input IBGE 2010 SUS Revenue Received Input National Treasury 2010 Education R evenues Input National Treasury 2010 Infant mortality Output IBGE 2010 ) Illiteracy Output IBGE 2010 H
HDI-Human Development Index - school Output IPEA 2013 ( Volume XX Issue V Version I attendance
Private investment rate Economic Input National Treasury 2010
Public investment r ate Input National Treasury 2010
Energy intensity Input ENERSUL 2010
Unemployment rate Output IBGE 2010 GDP per cap ita Output IBGE 2010 - Piped water Environment Input Sanesul 2010 Sanitation al Input IPEA 2010 Fleet vehicles Output DETRAN/MS 2010 Fuel cons umption Input Distributors 2010 Use of fertilizers Output ANDA 2008 Natural Areas Output IBGE 2010
Source: Prepared by the authors.
Some municipal indicators, in absolute values, models, it was possible to generate the three indices: were normalized, based on the population of each SDI, EDI and EnDI, of the social, economic and municipality, to facilitate the results’ comparisons. Thus, environmental development aspects, respectively, for Global Journal of Human Social Science the data compilation and the indicators development subsequent synthesis and production of the municipal that provide simple and comparable information for sustainable development index (MSDI). First, we tested different sizes of municipalities have proved to be the DEA-CCR model and, later, the DEA-BCC model. necessary. The results were compared in order to define which In the second step, the indicators were inserted model was best suited to represent the selected data in the DEA models, respecting the social, economic and sample for the municipalities of Mato Grosso do Sul. environmental dimensions. With the use of SIAD The software allows for the creation of different analysis software, which allows for the resolution of these models as from the DEA method ology.
©2020 Global Journals A Methodological Proposal for the Construction of Municipal Sustainable Development Indices using Data Envelopment Analysis
In the third step, after the decision on the DEA development from the chosen indicators based on the results, for each of the calculated SDI, EDI and EnDI theory and the recent literature on the subject. The indicators, they were aggregated to form the MSDI application of DEA method for calculating sustainability indicator. The construction of this index is an empirical indices is very little disseminated, they are used in most work based on the methodology originally proposed by of the works of national literature the Ecological Footprint Cândido and Vasconcelos (2010), by the use of indices Method, systematization and parameterization of weighted by topic to compose the Municipal representative indicators, Barometer of Sustainability, Sustainable Development Index (MSDI). In this work, SDI-IBGE among other techniques as noted in the equal weights were established for the three indicators works of Rabelo and Lima (2007), Vasconcelos (2011), generated by the DEA, so that expression (1) Guimarães and Feichas (2009). Only Macedo, Cruz and represented the simple arithmetic mean of the three Ferreira (2011) use the DEA method for this purpose, indicators, representative of each of the issues of social, but in a completely different way from the application economic and environmental development. proposed here.