We apply a conditional directional distance function allowing multiple exogenous factors to measure environmental performance. We evaluate the air pollution performance levels of U.S. states for the years 1998 and 2008. States’ environmental inefficiency is determined by population size and GDP per capita (GDPPC). The overall results reveal that there is much variation in environmental inefficiencies among the U.S. states. A second stage nonparametric analysis indicates a nonlinear relationship between states’ population size, GDPPC levels and states’ environmental inefficiency levels.
