From Theory to Practice: Leveraging DEA and MCDA for Robust Composite Indicator Frameworks in Sustainable Development

Abstract

This study elucidates a novel methodological framework that synergizes Data Envelopment Analysis (DEA) with Multi-Criteria Decision Analysis (MCDA) to critically assess and enhance composite indicator systems in the realm of sustainable development. Through meticulous application to two pivotal sectors in Iran water resource management and renewable energy utilization we demonstrate the framework’s capacity to generate empirical insights that inform policy-making and strategic resource allocation. Utilizing DEA, we quantitatively evaluate the relative efficiencies of these sectors across various provinces, highlighting significant discrepancies in performance outcomes. The results indicate that Tehran attains the foremost efficiency score in renewable energy utilization, underscoring its effective harnessing of resources relative to other provinces. This research not only advances the theoretical discourse surrounding DEA and MCDA integration but also provides a pragmatic template for evaluating sustainability initiatives. By fostering a deeper understanding of operational efficiencies and inefficiencies, the framework developed herein has the potential to guide effective decision-making processes aimed at achieving Sustainable Development Goals (SDGs) in Iran and analogous contexts worldwide.