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Input/Output analysis - Shortcuts to life cycle data?

10. Literature on environmental IOA

Anne Merete Nielsen, 2.-0 LCA Consultants

In this Chapter a few Input/Output Analyses (IOAs) are presented as examples to illustrate the development of the methodology, and the scope and conclusions of studies performed up till now.

10.1 Air pollution

In 1972 Leontief and Ford presented a paper on the dependence of air pollutants and economic input-output structure. The study is limited to five air pollutants: particles, SO_x, HC, CO and NO_x. The basis for the calculations is the historic and projected IO-tables for the period 1958-1980. The source of the historic tables is the U.S. Department of Commerce, where the original 370 sectors table were aggregated into a 90-sector table. The future tables are based on already available forecasts.

The technical pollution coefficients were derived from sampling estimates, i.e. primary data on pollution from industry plants had to be collected for this study.

The results were used for estimating the price effect of four air pollution control strategies on product and services from 90 production sectors. The authors expected a better statistical basis for pollution coefficients to be compiled soon. Therefore this study is presented as a framework with empirical examples, and conclusions and recommendations are modest.

10.2 Water pollutants

In 1976, Førsund and Strøm published a study, where the generation of 35 different kinds of emissions are analysed for the Norwegian economy in 1970. The emissions are different heavy metals, acids and bases, different organic compounds, pesticides and others.

The basis for the calculations is the IO-table for the year 1964 (the latest data generally available in 1976), compiled by Central Bureau of Statistics of Norway.

Also for this study, the technical pollution coefficients could not just be found in literature or already existing statistics, so data on residual discharges are based on a questionnaire investigation of the Norwegian industry for the year 1970.

From these calculations it is seen that export from the sectors "Pulp and paper" and "Metals and minerals" are the main contributors to the flow of emissions generated each year.

The authors trust their data enough to analyse further. They estimate whether the negative effect of the pollution is bigger or smaller than the positive effect of the production. They compare the economic value of the produced goods and services to the size of the emissions multiplied by the damage and abatement costs found in litterature. From these calculations they conclude that humanity gains from the production, and if sulfur emissions must be decreased, it should be done by applying abatement technology, not by stopping production.

10.3 Area

In 1998, Bicknell and colleagues presented a new methodology for calculating ecological footprints. An "ecological footprint" is defined as the amount of productive land required to support the consumption of a given population indefinitely, i.e. to answer how much land is necessary to, in a sustainable manner, supply all resources for production of goods and services consumed by an average citizen in a given culture.

The concept was introduced by the Canadian researchers Rees and Wackernagel in 1992. They based their work on scientific results from many countries and a variety of statistics.

Bicknell and colleagues suggest an IO-methodology, because it will standardise the production and facilitate comparison of ecological footprint results. IO-tables are directly taken from Statistics New Zealand. Technical land requirement coefficients are found in different established statistics.

The authors reach two conclusions. First, it takes 3.49 hectares of ecologically productive land per year to sustain the average New Zealander's current level of consumption. Second, New Zealand is a net-exporter of land, directly and indirectly used for making products, i.e. because of international trade, consumption in other countries put claim on more New Zealand area than vice versa.

10.4 Natural resources

In 1998, Lange publishes a study aiming at giving Indonesian politicians a tool for making more informed decisions concerning future development of natural resources. He focuses on the resources receiving closest attention in Indonesian planning: preservation of arable land for food self-sufficiency, air pollution, and availability of water of sufficient quality for agriculture, industries and households.

In this study, the technical coefficients were found more easily than the data on economic input and output to and from industrial sectors.

Data on resource use in different sectors were directly found in satellite accounts to the Indonesian system of national accounts.

The IO-data, on the other hand, was forecasted until 2020 by use of a dynamic model. The model was based on the accelerator principle: investments in capacity expansion is determined by the expected growth in each sector’s output, the technologies in use, and the rates of capacity utilization.

Six different scenarios were established to mirror the uncertainty faced by politicians concerning the level of economical growth and technological change.

When it comes to conclusion, Lange wisely refrains from choosing the best policy for Indonesia. The conclusion is therefore just that such a study can provide useful information, which can form the basis for political discussions ending up in informed, democratic decisions.

10.5 References

Bicknell K.B. Ball R.J., Cullen R., Bigsby H.R. (1997). New methodology for the ecological footprint with an application to the New Zealand economy. Ecological Economics 27 (1998) 149-160.

Førsund F.R. and Strøm S. (1976). The generation of residual flows in Norway: an input-output approach. Journal of Environmental Economics and Management 3, 129-141, 1976.

Lange G.-M. (1998). Applying an integrated natural resource accounts and input-output model to development planning in Indonesia. Economic Systems Research, 10 (2), 1998.

Leontief W. and Ford D. (1972). Air pollution and the economic structure: empirical results of input-output computations. In: Input-Output Techniques (p.9-30). eds. A. Brody and A.P.Carter, North Holland Publishing Company.

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