Using Malmquist Indices to evaluate environmental impacts of alternative land development scenarios

The degree to which regions can produce desirable socioeconomic and environmental outcomes while consuming fewer resources and producing fewer undesirable outcomes can be viewed as measure of productivity. Economists have frequently used Malmquist Indices to evaluate intertemporal productivity changes of economic entities, such as firms and countries. We use Malmquist Indices to evaluate the predicted environmental performance of the rapidly growing Charlotte, NC, metropolitan area under alternative future land use scenarios. These scenarios project population, urban development, and environmental impacts from the base year 2000 to the year 2030 within the regionʹs 184 watersheds. The first scenario is based on a continuation of current growth trends and patterns (“Business as Usual” or BAU). The second scenario uses compact “smart growth” development (“Compact Centers” or CC). We use data envelopment analysis (DEA) to estimate Malmquist Indices, which in this case, combine multiple variables into a single indicator that measures the relative impact of different development patterns on the consumption of natural resources. The results predict that the CC scenario maintains the regionʹs current productivity, while the BAU scenario results in lower productivity. As watersheds in the study area are about the same size, weighting the results by area makes little difference. Watershed populations, however, vary greatly, and our results predict that watersheds with higher population densities also have higher Malmquist Index efficiencies. The model also predicts that low population watersheds will benefit more from the CC scenario. While the application of these analytical techniques in this case study is limited in scope, the results demonstrate that the Malmquist Index is a potentially powerful tool for interdisciplinary environmental impact analysis