IMPACT OF URBAN AND RURAL HOUSEHOLD CONSUMPTION ON CARBON EMISSIONS IN CHINA

In this paper, we utilize input–output analysis and decomposition techniques to examine the direct and indirect urban and rural per-capita carbon emissions generated by household consumption in China from 1987 to 2007. The results show that indirect emissions are considerably larger than direct emissions due to households in urban and rural areas. Indirect urban emissions increase significantly because of growing expenditures, but indirect rural emissions do not register the same increase. Direct urban emissions decrease significantly because of changes in the energy mix, but direct rural emissions show only a slight decrease. The increase in the disparity of indirect urban–rural emissions and the decrease in the disparity in direct urban–rural emissions are evident. These findings imply that both energy-saving behavior in the production sector and residential lifestyle transition – particularly in the urban areas – are significant in mitigating carbon emissions in China.     

UNDERSTANDING ENVIRONMENTAL RESPONSIBILITY OF CITIES AND EMISSIONS EMBODIED IN TRADE

The attribution of greenhouse gas (GHG) emissions embedded in interregionally traded products to either production or consumption regions is a key issue to the understanding of the global environmental responsibility of metropolitan areas. In this paper we identify GHG emissions for which metropolitan areas assume responsibility by allocating emissions embodied in import and export products to regions of either consumption or production in the cases of three US metropolitan areas. The case studies show that embodied emissions in both export and import products accounted for 63–73% of total GHG emissions directly and indirectly pertaining to these metropolitan economies. These findings suggest that an accounting method that incorporates emissions embodied in product trade has relevance to the development of local policies that govern actions ranging from redirecting metropolitan development patterns toward low carbon emissions to promoting sustainable consumption behavior, particularly those involving the collaboration of cities.     

FINANCIAL DISTRESS AND INDUSTRY STRUCTURE: AN INTER-INDUSTRY APPROACH TO THE LOST DECADE IN JAPAN

This paper proposes a novel approach to investigating the propagation mechanism of balance sheet deterioration in financial institutions and firms, by extending the input–output analysis. First, we use a unique input–output table augmented by firm size dimension. Second, we link the input–output table with the balance sheet conditions of financial institutions and firms. Based on Japanese input–output tables, we find that the lending attitude of financial institutions affected firms’ input decision in the late 1990s and the early 2000s. Simulation exercises are conducted to evaluate the effects of changes in the lending attitude toward small firms as favorable as that toward large firms on sectoral allocations. We find that output was increased for small firms and reduced for large firms. The change in output was non-negligible, about 5.5% of the initial output of each sector. In particular, it exceeded 20% in textile, iron and steel and fabricated metal products.     

Reducing Brazilian greenhouse gas emissions: scenario simulations of targets and policies

This paper aims to evaluate the economic impacts of greenhouse gas emission reduction on the Brazilian economy. To this end, we developed an integrated input–output linear programming model for 2009 using the Supply and Use Tables and emissions data of the Brazilian Ministry of Science and Technology and Innovation. We simulated emissions targets for various potential scenarios in which the adopted policy design took account of sectoral composition in terms of emissions and available production technology. The results were directly affected by the high level of livestock emissions, counterbalancing this sector’s economic importance for Brazil. In the short term, sectoral emissions targets associated with taxation policy or emission permits could be developed in order to create private incentives to mitigate emissions. In this sense, the results also show that different sectoral targets may be able to balance environmental benefits with the possible economic losses incurred by such policies.     

STRUCTURAL DECOMPOSITION ANALYSIS APPLIED TO ENERGY AND EMISSIONS: AGGREGATION ISSUES

With the introduction of the environmentally extended input–output (I–O) framework, traditional economic I–O modeling and analysis can be conveniently adopted in energy and emission studies. Based on such an extended framework, many empirical studies investigating the driving forces of energy consumption and emission changes using structural decomposition analysis have been reported. Three aggregation issues are inherent in such decomposition studies, namely sector aggregation, spatial aggregation and temporal aggregation. This study, as an extension of our previous work on the first two issues, focuses on the third or temporal aggregation. An empirical study using the emission data of China from 1997 to 2007 is presented to illustrate the problems involved. How to deal with temporal aggregation and its possible interactions with the other two aggregations is also discussed.     

ON THE PARAMETERIZATION OF TECHNIQUES FOR REPRESENTING REGIONAL ECONOMIC STRUCTURES

This paper is concerned with two parameterized methods of regionalising input–output coefficients: the Flegg et al. Location Quotient (FLQ) and its augmented version (AFLQ). For applying the two techniques, a parameter δ has to be estimated. In this regard, the paper faces two matters that are still open in the literature: the existence of a range of δ that can be used in different regions and the estimation of the most appropriate value of δ. For this aim, a Monte Carlo simulation has been carried out in order to generate ‘true’ multiregional I-O tables randomly. From the simulation, analyses based on probability distributions and regression were also carried out. Finally, these simulation results have been compared with those of an empirical case. Results confirm that there is actually a range of values of δ within which the best δ is more likely to fall. For the FLQ, this range is centred on 0.3 with an associated probability of 33% (if the width of the range is set at 0.1), whereas, for the AFLQ, the relevant range is between 0.3 and 0.4 with a probability by 38%. Finally, this paper provided a way to estimate the best δ for a given region, without knowing the relevant and detailed economic structure at sectoral level.     

TRADE INTEGRATION,OUTSOURCING AND EMPLOYMENT IN AUSTRIA: A DECOMPOSITION APPROACH

Outsourcing and trade integration of advanced countries is debated with respect to employment effects, in particular for low educated workers – at least in relative terms. We study the employment effects – differentiated by educational attainment levels – of changes in the patterns of trade integration and outsourcing in the Austrian economy over the periods 1995–2000 and 2000–2005 using hierarchical decomposition analysis based on deflated input–output tables. Outsourcing is modeled as changes in the shares of domestically produced intermediates in total intermediates. A similar decomposition of the final demand vector allows us to draw conclusions on the overall employment effects of trade integration. The results suggest that the expected negative employment effects of outsourcing and rising import penetration have been overcompensated by increasing exports. Thus, the overall employment effects of Austrian trade integration have been positive for all educational attainment groups. However, whereas the total effects have been strongest for medium and high educated workers over the period 1995–2000, employment of low educated workers have been strongest and positively affected over the period 2000–2005. This pattern can be explained by a more sluggish export performance together with stronger negative effects of outsourcing and import penetration in medium and high-skill intensive products.     

A Fuzzy clustering approach to the key sectors of the Spanish economy

The search for key sectors in an economy has been and still is one of the more recurrent themes in input–output analysis. When using clustering techniques, sectors can only belong to a group, having a particular performance. But, actually, the same sector could be important from different perspectives at the same time, to a different degree. So, a fuzzy clustering approach is needed. In this work we propose a multidimensional approach to classify the productive sectors of the Spanish input–output table for 1995, based on three groups of variables: those related to their productive integration, others measuring their specific weight in the economy and finally some showing their economic dynamic. We also incorporate into the analysis the technological level, which being a categorical variable presents special methodological problems. All these questions are tackled applying a robust and fuzzy clustering analysis, which gives as a result a classification of sectors illustrating the role that each one plays in the Spanish economy.     

ECONOMETRIC ANALYSIS OF EUROPEAN CARBON DIOXIDE EMISSIONS BASED ON RECTANGULAR SUPPLY-USE TABLES

This paper formalises the so-called Supply-Use Based Econometric (SUBE) approach that allows for the introduction of econometric analysis in the calculation of backward input–output multipliers of the Leontief-type quantity model, using rectangular supply and use tables. The SUBE approach does not require any kind of inverse matrix and incorporates the traditional approach (with square supply-use tables) as a particular case. The empirical analysis shows that the SUBE carbon dioxide multipliers for the EU27 are considerably lower than those obtained by the traditional Leontief inverse. In an application of the SUBE approach, the European economy appears to emit about 10% less carbon dioxide than in a situation in which it would not import any intermediate inputs from outside the EU27.     

OPTIMIZING PRODUCTION IN THE GREEK ECONOMY: EXPLORING THE INTERACTION BETWEEN GREENHOUSE GAS EMISSIONS AND SOLID WASTE VIA INPUT–OUTPUT ANALYSIS

We explore an input–output based framework for optimizing production in the Greek economy, under constraints relating to energy use, final demand, greenhouse gas emissions and solid waste. Using empirical data, we consider the effects on the maximum attainable gross value of production when imposing various pollution abatement targets. Our results quantify those effects as well as the magnitude of economic sacrifices required to achieve environmental goals, in a series of policy scenarios of practical importance. Because air pollution and solid waste are not produced independently of one another, we identify the settings in which it is meaningful to institute a separate policy for mitigating each pollutant, versus those in which only one pollutant needs to be actively addressed. The scenarios considered here represent a range of options that could be available to policy makers, depending on the country's international commitments and the effects on economic and environmental variables.     

IMPLICIT ELASTICITIES AND PRICE EFFECTS: AN UPDATED PROCEDURE

Based on the general procedure described by Casler [(2011) Coefficient Change, Price Effects, and Implicit Elasticities: Estimating Microeconomic Determinants over Two Time Periods. Economic Systems Research, 23, 153–174], this paper presents an updated approach to the estimation of input coefficient changes as functions of changing prices. The procedure makes direct use of relationships that emerge from the model of cost minimization subject to producing a desired level of output. Based on an initial specification of constant cross-price derivatives, the imposition of adding up and symmetry conditions allows the actual price and coefficient changes that occur between periods to identify implicit own and cross-price derivatives and corresponding elasticities, using data for only two time periods. With this updated approach, the calculation of derivatives is far simpler and leads to far more accurate measures of price-induced input–output coefficient changes than the original version.     

THE CHOICE OF MODEL IN THE CONSTRUCTION OF INDUSTRY COEFFICIENTS MATRICES

Kop Jansen and ten Raa's (1990) characterization of product-by-product input–output tables was adopted by the United Nations (1993). Recent OECD and several EU funded projects, however, used industry-by-industry tables, which raises comparable issues concerning their construction. We show how their two main construction models are instances of the transfer principle, with alternative assumptions on the variation of input–output coefficients across product markets. We augment the theory by formulating desirable properties for industry tables and investigate the so-called fixed product and fixed industry sales structure models, which are used by statistical institutes. The fixed industry sales structure model is shown to be superior from an axiomatic point of view.     

ESTIMATING THE ECONOMIC CONSEQUENCES OF A PORT SHUTDOWN: THE SPECIAL ROLE OF RESILIENCE

This paper develops a methodology for the estimation of the total economic consequences of a seaport disruption, factoring in the major types of resilience. The foundation of the methodology is a combination of demand-driven and supply-driven input–output analyses. Resilience is included through a series of ad hoc adjustments based on various formal models and expert judgment. Moreover, we have designed the methodology in a manner that overcomes the major shortcomings of the supply-driven approach. We apply the methodology to a 90-day disruption at the twin seaports of Beaumont and Port Arthur, Texas, which is a major port area that includes a petrochemical manufacturing complex. We find that regional gross output could decline by as much as $13 billion at the port region level, but that resilience can reduce these impacts by nearly 70%.     

Key Sectors,Industrial Clustering and Multivariate Outliers

In this paper a reflection is made on the problems that can arise in key sector analysis and industrial clustering, due to the usual presence of outliers when using multidimensional data related to the sectors in an input–output table. Multidimensional outliers are considered as being not only linked to the low number of clusters usually observed in this kind of study, but probably causing invalid results in most of the works involving multivariate statistical techniques, such as cluster and factor analysis. Actually, by comparing the key sectors of the Spanish economy obtained in Díaz et al. (2006) Díaz, B., Moniche, L. and Morillas, A. 2006. A fuzzy clustering approach to the key sectors of the Spanish economy. Economic Systems Research, 18: 299–318. [Taylor & Francis Online] [Google Scholar] to the ones we get taking into account the problem the outliers pose, one can realize they greatly distort the results. On the other hand, it is shown that identification of outliers can be considered as a good and new procedure to help select the most important sectors in an economy.     

PROCESSING TRADE BIASES THE MEASUREMENT OF VERTICAL SPECIALIZATION IN CHINA

Vertical specialization (VS) is often measured by the import contents of the exports, using an input–output (I–O) framework. Half of China's exports are processing exports, which largely depend on imported intermediate inputs and tie up upstream as well as downstream trade partners. Thus, one would expect to find strong VS for China. Using the ‘ordinary’ I–O tables, however, this is not the case. Because the production of processing exports is only a small part of total production, the average input structure in the I–O table hides the typical features of processing exports. Using adapted, tripartite I–O tables (for 2002 and 2007) in which the processing exports have been singled out, indeed reveals the expected strong VS in China.     

LABOUR PRODUCTIVITY CHANGES AND WORKING TIME: THE CASE OF GREECE

In terms of the annual hours worked per employee, Greece ranks first among EU-15 countries and second among OECD countries. In this context, the austerity measures it adopted (as suggested by the EU and IMF) imply, among other things, a reduction in the over-hours. If such reductions were not to be accompanied by increases in labour productivity, output would be reduced considerably. This paper therefore addresses the question: “What change in sectoral labour productivity levels would have been required to deliver the actual change in final demands in Greece between 1995 and 2005, if working hours in each sector had been reduced to their EU averages?” In this framework, we develop a methodology for calculating labour productivity change by sector of economic activity in an input–output context. Next, we apply it to the Greek economy for the time period 1995–2005, the most recent period for which the required data are available. We find that the required productivity changes are the most substantial for the hotels and restaurants sector, followed by machinery manufacturing and the trade sectors.     

THE LABOUR FOOTPRINT: A FRAMEWORK TO ASSESS LABOUR IN A COMPLEX ECONOMY

As addressing labour becomes crucial in the move towards sustainability, there is the need for assessment tools suitable for current complex economic systems. This article presents an input–output based framework (‘labour footprint’) for evaluating labour issues behind the production of different economic commodities, including entire supply chains. In line with the guidelines of the International Labour Organization, six labour issues are considered: collective bargaining, forced labour, child labour, gender inequality, hazardous work, and social security. This conceptual article sets to (a) define this footprint's labour dimensions, (b) cite relevant data sources, (c) describe its calculation, (d) illustrate its application through a case study, and (e) discuss this framework's relevance from ‘conscious consumption’, ‘supply chain responsibility’, and regulators' standpoints. Since it advances the evaluation of fundamental labour issues and the scope of multi-criteria analyses, this footprint may be a valuable tool for sustainability assessments.     

ECONOMIC IMPLICATIONS OF POLICY RESTRICTIONS ON WATER WITHDRAWALS FROM SURFACE AND UNDERGROUND SOURCES

The appropriation of water for economic activities is limited by regional surface and underground endowments, and symptoms of environmentally unsustainable withdrawals are already visible in many regions of the world. In this paper we investigate the economic implications of water policy imposing source- and region-specific restrictions on water withdrawals taking the Mexican economy as a case study. We use an inter-regional input–output model of Mexico's hydro-economic regions to allocate production subject to the availability of water and other factors of production. Water sustainability requires a reduction of 7.5?km³/yr of groundwater withdrawals, which is compensated by an increase of 3.4?km³/yr of surface water, an expansion onto an additional 1.4 million hectares of rainfed land, and modifications in subnational patterns of food trade. This framework for evaluating scenarios describing sustainability-oriented water policies is readily applicable to other regions.     

EXPANDING EXTRACTIONS

In this paper, we generalize hypothetical extraction techniques. We suggest that the effect of certain economic phenomena can be measured by removing them from an input–output (I–O) table and by rebalancing the set of I–O accounts. The difference between the two sets of accounts yields the phenomenon's effect (or importance). We suggest that the approach can be used to measure the effect of changes in intermediate output, which are otherwise not easily rationalized within a Leontief framework. Of course, it can also be used to estimate the possible effects of the shutdown of a particular establishment or other identifiable segment of an economy. We demonstrate some properties and potential of the approach using the annual 2006 US I–O accounts.     

A CARBON FOOTPRINT TIME SERIES OF THE UK – RESULTS FROM A MULTI-REGION INPUT–OUTPUT MODEL

The framework and results of an international multi-region input–output (MRIO) model for the UK are presented. A time series of balanced input–output tables for the UK was constructed for the period 1992 to 2004 by using a matrix balancing procedure that is able to handle conflicting external data and inconsistent constraints. Detailed sectoral and country-specific trade data for the UK were compiled and reconciled with the UK input–output data, and economic and environmental accounts for three world regions were integrated in a UK-specific MRIO model. This was subsequently used to calculate a time series of national carbon footprints for the UK from 1992 to 2004. Greenhouse gas emissions embedded in UK trade are distinguished by destination of imports to intermediate and final demand. Most greenhouse gases show a significant increase over time in consumer emissions and a widening gap between producer and consumer emissions. Net CO₂ emissions embedded in UK imports increased from 4.3% of producer emissions in 1992 to a maximum of 20% in 2002. The total estimated UK carbon footprint in 2004 was 730 Mt for CO₂ and 934 Mt CO₂ equivalents for all greenhouse gases.