In recent years transportation policymakers have become increasingly concerned not only with providing transportation service, but also with the impact of those services on the environment. Accordingly, policymakers are often given the task of satisfying multiple goals that are frequently in conflict. The dual goals of attaining environmental standards while providing maximum transit ridership output provide a prime example of the dilemma faced by transit agencies.At the same time, there is increasing pressure on government agencies to be accountable. In the case of transit agencies, it has been frequently suggested that efficiency should be used as a criteria when allocating transit subsidies (Pucher et al., 1983) However, policymakers need to be sure that they are using a measure of efficiency that considers both the agency's effectiveness in producing good output such as passenger-miles and reducing bad output such as emissions outputs. Most previous studies have ignored the reduction in emissions, thus resulting in measures of efficiency that may be biased towards agencies that produce more emissions (the exception is Nolan et al., 2002). The contribution of our recent paper in this journal (McMullen and Noh, 2007) is to illustrate how the directional distance function methodology can be employed to produce an efficiency measure that avoids this bias, thus providing a more useful policy tool.
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