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This paper aims to introduce the new constraints of PM2.5 into the environmental effi ciency research framework, based on the provincial panel data of China during 2001-12. The authors examine environmental effi ciency with and without consideration of PM2.5, conduct hypothesis tests on these environmental effi ciencies, and analyze the energy savings and haze reduction. The results indicate that the overall environmental effi ciency score is ineffi cient. The average environmental effi ciency scores are 0.706 and 0.867 with and without the consideration of PM2.5, respectively, and omitting PM2.5 would result in biased environmental effi ciency change. In addition, empirical analysis shows that there is an unbalanced regional development and signifi cant differences among provinces in environmental effi ciency. Last but not the least, the potential savings of energy, water, and regional haze reduction average 24.26%, 39.16%, and 26.49%, respectively.

Estimation and Comparative Analysis of Environmental Efficiency in China, with and without Consideration of Haze