Internalizing CO₂ emissions in Spanish port efficiency analysis: A stochastic frontier approach with policy insights

Abstract

Recent regulatory changes have impacted the European Union (EU) maritime sector. This study evaluates the effect of carbon dioxide (CO2) emissions on the production frontier and Technical Efficiency (TE) of cargo handling services in Spain’s 23 largest ports. Using the Material Balance Theorem, we justify the inclusion of CO2 in a stochastic frontier model. Results show that accounting for emissions increases the weight of quasi-fixed inputs and reduces average inefficiency. These findings suggest that the new EU Maritime regulation (FuelEU and ETS) could help to internalize environmental externalities in port operations