Lecture 6 - Measurement of Environmental Flows & Impacts Flashcards
(36 cards)
Input-Output Analysis
The key way of analysing/measuring things in the economy; made by Leontif; adapted over last 15-20 years to include environmental issues
The System of National Accounts (SNA)
- A standardized framework used globally to measure a country’s economic activity. Provides consistent set of rules for organizing and presenting economic data like GDP, income, etc.
- Everything that happens in the economy should be recorded as a use and a resource so its designed to balance and you get GDP and then you can break down GDP by sector accounts using industrial sectors.
- Types of accounts can be: Production account, income account, expenditure account, etc.
I-O Analysis: Supply and Use Framework
-In supply tables, products may be made by different industries, then in use you can see who uses them, then there’s the combined Supply and Use framework which puts both together and will balance all numbers used and supplied
Value Added Row in I-O Table:
It’s what you as a firm are adding to what other firms have produced.
If you look at gross output (everything firms produce) then you’d be adding it twice so to prevent double counting, put it under value added.
Types of I-O Tables
Could have Product by Product (and you prefer to assume “tech assumption” that each product is produced in its own specific way, regardless of the industry)
Or Industry by Industry I-O Tables (used more often). Here you assume each industry has its own specific sales structure irrespective of product mix.
What does the a value mean in an I-O Table?
Column is buying [x amount] from the row. Row is feeding [x amount] into the column.
Types of columns in an I-O Table: Industry, Final Uses, and Total Output – What do they mean
Industry is the other industries an industry might be selling into
Final uses is the products that are going into final use
And total output is the total of Industry + Final use for the sum of the output for that industry in that row.
Leontief’s Equation
P = AP + d
where P = Total Output, AP = Output given to other sectors, and d = Final uses
A Matrix (for I-O)
How much the column industry needs to buy from row industry to make 1 unit
Leontief’s Motivation for Starting I-O Modelling:
What level of output should each industry in an economy produce to satisfy the total demand for that product?
(because can’t just say to increase demand of product by 20 you need to increase supply by 20, need to use other sectors to evaluate)
Matrix Multiplication Requirement
If multiplying A * B then A must have the same number of columns as B has rows
Matrix Inversion
Could study but don’t think needed?
Leontief’s Inverse Matrix
P = (I-A) ^-1 *d
Shows the total (direct + indirect) inputs needed across the entire economy to satisfy a given level of final demand
- I is the identity matrix (1 0 0)(0 1 0)(0 0 1) etc.
- A is the leontief matrix (direct input coefficients)
- So (I-A) reflect the net requirements.
- Taking the inverse of that gives the total interdependence
> Lets you estimate how much output each sector must produce to satisfy a certain amount of final demand (could use it to calculate carbon footprints or LCA)
Leontief Matrix
Typically denoted just as “A” shows how much input from each sector is needed to produce one unit of output in another sector.
E.g. If making 1 unit of cars requires 0.3 units of steel and 0.1 units of electronics then those are the values/elements in the Leontief matrix A
Physical Economic Accounting
Using the structure of input-output in money terms in terms of physical material
Environmental Accounting Apporaches
Model varies by purpose:
- Adjustment of national economic accounts (modify SNA) to evaluate environmental damages & services)
- Satellite accounts (complements SNA)
- Natural resource & environment accounts (physical flows and stocks of natural resources) (independent from SNA)
Physical Input-Output Table (PIOT)
- Can make the I-O table with columns for Money (MIOT) and then extra columns to look at it in million tonnes of inputs and outputs (e.g. tonnes of steel or coal)
- About material and energy flows in physical terms
Environmentally Extended Input-Output Tables (EE-IOT)
A standard monetary IO table but with environmental data attached e.g. CO2 emissions, water use, etc.
- Has money and also production of resources
Environmentally Extended Multi-Region Input Output Analysis (EE-MRIO)
This is how we produce our footprint: Calculate how much each country (region) emits, how much of their products that have emitted do we import (because emissions from those imports relate to our consumption not theirs)
- Difference between territorial emissions (that we emit) and their consumption =consumption footprint; can be diffferent
UN System of Environmental Economic Accounting: Central Framework (SEEA, 2012)
Covers measurement in 3 main areas:
1. environmental flows: the flows of natural inputs, products, and residuals b/w the environment and economy and within the economy in physical and monetary terms
2. Stocks of environmental assets: stocks of assets like water and how they change over accounting period
3. Economic activity related to the environment: monetary flows associated w economic activities related to environmnet (e.g. spending on environmental protection/resources)
For accounting, recommends structuring Stock accounts (of ecosystem, physical accounts) to Flow accounts (ecosystem services flow in physical and monetary accounts) to flow to monetary ecosystem asset? Allows you to create money value of asset in Stock Accounts.
SEEA
UN System of Environmental Economic Accounting, 2012
SEEA Ecosystem Accounting - Supply and Use Tables
Construct a supply & use table for these ecosystem services and start from ecosystem units for supply and then into use in terms of economic units
Material Flow Analysis
Measuring natural inputs and outputs
- Different way of doing things; normally used when looking at resources in the agregate
- Measure Input, Economic Processing, and Output within the Domestic Environment
- Need to measure Life Cycle of Resources
Material Flow Analysis w emphasis on materials types
(1) Substance Flow Analysis (SFA) - substances
(2) Material System Analysis (MSA) - materials
(3) Life Cycle Assessment (LCA) - products
