Economic Evaluation of Safety Input-Output Efficiency of Arctic Ship Operators Based on the DEA Model

Abstract

Ship operations in the Arctic region require shipowners to increase specific safety investments due to the area's unique characteristics, such as extreme climate, remoteness, and fragile environment. From an economic perspective, shipowners must provide enhanced safety capacities through higher safety budgets while maintaining the profitability of ship operations. Therefore, economic assessments are necessary for decision-makers to determine whether safety investments are effectively allocated and to verify their adequacy. In this context, assessing safety input-output efficiency can help managers measure the efficiency of safety investments in terms of economic benefits and optimize resource allocation. This study uses Data Envelopment Analysis (DEA) to measure efficiencies over a selected period, using safety investments as inputs and economic benefits as outputs in the DEA models. The results of the empirical analysis of an Arctic ship operator indicate that safety investments were not effectively utilized in some years and show projected output targets for improvement. Additionally, recommendations for safety improvements are provided based on the DEA results and accident data. The approach in this study offers a practical tool for decision-makers to invest in Arctic shipping safety.