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Input/Output analysis - Shortcuts to life cycle data?

13. Environmental IOA of the industrialised world - a project description

Sangwon Suh and Gjalt Huppes, CML, Leiden University

13.1 General background

Our global society has to transform its technologies in an unprecedented way, to create the environmental space for a large and affluent world population. Just following the current path of growth will be impossible or will lead to disaster. We will have to adapt our growth by consuming differently and producing differently. This adaptation is not a unitary single step. It involves creating institutions, creating policies, developing new products and technologies, and creating markets, all embedded in the cultural changes that are needed to support these interrelated processes. Guiding smaller and bigger decisions in the right direction is required for all levels of change directed at a sustainable future.

Our focus is on technology changes. We would like to assess the overall consequences of a specific technology change on global sustainable development. This comprehensive assessment of consequences cannot be straightforward, because it involves processes like research and development and the implementation of its results, which, inter alia, depend on the aims such technological developments are targeted at. It is to the latter subject that our project intends to contribute: How to evaluate technology changes in terms of their contribution to sustainable development, in order to guide these changes in the right direction.

The main difficulty in the evaluation arises from the fact that all specific technologies are embedded in larger technological systems, and in social and cultural systems which together determine the influence a technology has on environment and welfare, in the short and in the longer term. The emission free car will run, for the time being, on electricity from power stations. If adopted broadly, other technologies will come available, as for in-car electricity production in fuel cells. These in turn may revolutionise electricity production in general. Predictive models for such developments do not exist. Instead of persuing an ideal integrated solution, for which the relevant accumulated knowledge is lacking, we here go for a partial model including available knowledge in a systematic way. Such a simplified but operational diagnostic model that can "predict" the effects of specific technology change, while neglecting real dynamic developments, as in global technologies and markets, and while leaving out the complex interplay between institutions, culture and technology. There are several options for simplification. Each simplified model catches only one or two relevant aspects of reality, while the combined (but mutually not fully compatible) application of several such models supports a broader view. Our basic aim in this project is to develop one such a simplified but operational model.

The project has started at a meeting in Vienna on the 22^nd of April 1999.

13.2 Input-output models for decision support

There are several ways in which one can use available knowledge in assessing new technologies in a systematic way. These involve on the one hand an analysis of the technology itself in its specific surroundings and on the other hand an analysis of more diffuse effects at an overall systems level, here in principle the world. This second part in the analysis is to make sure that local improvements are not offset by several modes of problem shifting which may occur: to other places, to other times and to other problems. In principle, general dynamic equilibrium models, with a worked out part on environmental influences, would do the job. Neither the models nor the data to run them are available however. For the operational analysis of problem shifting, several more simple analytic tools have been developed, aiming at specifying net improvements. They are not rich in the mechanisms operant in them. Although they give an only partial view on mechanisms, they are precise and quantified, allowing for a practical comparative assessment. There are three basic types of them, all input-output (IO) models and all based on the balance principle. All these models do not involve the dynamics of change, which we think at least partially to be resulting from free decisions and are rather not to be solved in a purely objective way.

These simple IO-models specify flows between processes, for each process keeping the ratio between input and outputs constant. The process itself is a black box. A main difference between these three models is in the way the flows between processes, as black boxes, are defined. SFA (Substance Flow Analysis) defines flows in terms of substances; LCA and MPC (Material-Product Chain Analysis) in terms of products; and IOA (Input Output Analysis) in terms of money. More complex models tend to be limited in their domain of application. Simple models, like those of the IO type, can be encompassing. So the three basic models for analysing consequences of a specific technology change all analyse adjustments the IO way: in volumes of flows in the economy. The way the flows are specified differs:

The third IO type, if including additions for environmental application, we abbreviate as envIOA, still shorter: IOA. It is the core subject of this project. IOA derives its basic structure from national accounting, with the environmental aspects added as 'labels' to each cell, stating the environmental inputs and outputs from that cell as fixed to the volume of the total inflow/outflow of that cell. Environmental IOA models can have a threefold use. They can be used "stand alone", e.g. indicating the environmental consequences of quantitative sectoral developments. Their technological resolution is limited, so for analysing technology changes, they can have the function of full system back-up, on top of a more detailed analysis, in depth, of a core but partial system. Thus, they may be combined with economic models, as in micro-economic analysis in energy markets, with overall consequences specified through IOA. And they may be used as a background data set in the analysis of product systems, with central processes worked out at the product flow level and the remaining part of the economy linked through monetary relations. Possible links with substance flow models might be investigated.

13.3 State of the art

Economic IO-models with an environment extension have been developed in many countries, see the list with references below. The most detailed model to date has been developed at Carnegie-Mellon University. It combines the quite detailed IO-table for the US with a substantial amount of emission data as primarily found in the TRI (Toxic Release Inventory). This IOA model has been set up in a way that allows for its use as an "add-on" model in LCA, after first specifying the central processes related to the function analysed. In Japan, detailed systems have been developed for smaller number of substances, at different institutes. In Germany, a simpler IO-table with a somewhat smaller number of substances has been produced. In the Netherlands, both simple IOA with many data and complex IOA with limited data have been developed. Similar work is going on in many countries.

In the current situation, neither of these models can be used as a general background model. There are no models covering the whole world or at least the industrial world, while most technologies are international in nature. The methods used are different between countries and research groups, and the relation of methods to the purpose of the models has been worked out only very partially. The numbers of cells discerned is different and the definition of cells is mutually incompatible between countries and research groups. Data on emissions of activities can and have been apportioned to cells in very different ways. Available data on resource use have not been linked. There are differences in statistical basis, e.g. using firms or activities as basic units. Some methods use negative coefficients to express recycling, others not, etc.

13.4 Aim

The basic aim of this project is to set up a diagnostic IOA-model supporting the environmental analysis of technology changes. It involves the construction of an operational IOA system for the whole industrialised world, specifying a broad range of environmental inflows and outflows, which then is used as a background system to a more detailed foreground analysis of the technologies analysed.

Main applications of this global IOA model are in:

13.5 General structure

In the environmentally extended IO-table as required in applications, monetary flow data and data on resource extractions and emissions are combined. This IO-table may cover the whole world as one unit but for many applications some disaggregation in regions is desirable. Therefore the project output will cover some regionalised versions as well.

In all cases, the basic data available are transformed into the environmental IOA through a transformation model. By using an explicit transformation model, the subjectivity involved in the transformation, though unavoidable, can be objectified. The transformation thus becomes repeatable and transparent. Another advantage of this formalised way of transformation is that updates based on improved or newer data require less work. In the transformation, a first step is to normalise the data in the format as required. These data are fed into the transformation model, which "produces" the environmentally extended IO-table as required. A certain type of environmentally extended IO-table then may be used in one or more applications.

The first version of the global model will be based on data from USA, Canada, Europe, Japan, China and India. These countries/regions will sum up to 80 % of the global production.

13.6 Planning of the Dutch PhD project

Mr Sangwon Suh will start working in the project as a PhD student per 1 April 2000. The project specification depends on tasks others have in the project as a whole. It is safe to assume a limited contribution by others, with a broad set of tasks for CML. If others start contributing in the same framework subjects may be worked out in more detail.

Year 1

Inventories and rapid prototype:

Papers:

Year 2

First full version global model; options for applications detailed

Year 3

Case applications of the model; first regionalised version

Year 4

Finalisation of data set; updating structure worked out; final thesis report

13.7 References

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