Inclusion of Environmental Goods in National Income Accounting

National income statistics take into account the values of market goods and completely ignore the environmental goods. The purpose of this paper is to suggest the integration of environmental goods into the framework of Leontiefs input–output analysis. It is suggested that environmental goods, such as clean air, fresh water, quiet, etc., be treated as sectors in the same way as market goods sectors. The final deliveries of the sectors may be positive, zero or negative, depending on the scarcity of the environ mental goods and political decisions. The paper gives a numerical illustration of how the environmental goods can be valued from an input–output analysis. It is recommended that a system should be devised to adjust the national income estimators of individual countries for the changes in the environmental goods caused by the economic activities of these countries.     

Alternative Approaches of Physical Input–Output Analysis to Estimate Primary Material Inputs of Production and Consumption Activities

In the last few years, a number of studies have been presented that link material flow accounting and input–output analysis (based on monetary input–output tables) for the calculation of direct and indirect resource inputs for production and consumption activities. The compilation of the first physical input–output tables for some European countries in the 1990s opened new possibilities for linking physical accounting and input– output analysis. Physical input–output analysis has so far only been applied for selected materials, but it has not been used for comprehensive assessments of material requirements of economic activities. In this paper, possibilities and limits of this new input–output approach are clarified. We present and discuss a procedure similar to monetary input– output analysis and develop an alternative approach to account for primary inputs and waste otherwise not included in the analysis. Based on aggregated input–output tables for Germany, we present numerical examples intended to compare the alternative approaches of physical input–output analysis.     

Environmental Management in Japan: Applications of Input–Output Analysis to the Emission of Global Warming Gases

Environmental management requires, among other things, the incorporation of environmentally friendly technologies into production processes of environmentally friendly technologies into production processes at the producer level and the adoption of energy consumption patterns which save energy use at the household level. The systemwide approach involving both technology choice and consumer preference seems particularly essential for controlling the total emission of global warming gases. CO₂ and other global warming gases, as well as certain pollution causing gases, are produced when fossil fuels are burnt; and the consumption of fossil fuels occurs in both the production and consumption of goods and services. In this paper we discuss how input–output analysis can be used to estimate the entire production and consumption of global warming gases conditional on production technology and consumer preferences. We also present estimation results and their application to some environmental management issues in Japan. © 1997 John Wiley & Sons, Ltd.     

A Simple Multi-Regional Input–Output Account for Waste Analysis

The present paper provides a simple multiregional input–output model for waste analysis with which to estimate intraregional and interregional effects of industrial wastes embodied in regional final consumptions. The empirical analyses using 1995 nine-regions input–output tables reveals the regional properties of the interregional linkage effects. The Kanto and Kinki regions remarkably control the industrial waste emissions and waste landfills within their own regions by importing waste-intensive intermediate goods and services from the other regions. The Chugoku and Shikoku regions greatly contributed to the production of the waste-intensive goods and services for the other regions, considering the waste emissions and waste landfills relative to the commodity production levels. We also find that the household consumption behaviour in other regions indirectly plays a more important role in waste emissions than the municipal waste disposal behaviour in the region in question at least in 1995.     

Estimating the Accounting Price of Foreign Exchange: An Input–Output Approach

When adjustments in the foreign exchange market involve changes in the production of marginally traded goods, the traditional formula for calculating the accounting (shadow) price of foreign exchange assumes that domestic prices and marginal costs at efficiency prices for those goods are equal. In this paper, a method is proposed for estimating an accounting price ratio of foreign exchange in a partial equilibrium framework, abandoning that assumption. For that purpose, input–output techniques are used, to take into account the effets of changes in the production of traded goods.     

SUPPLY-USE FRAMEWORK FOR INTERNATIONAL ENVIRONMENTAL POLICY ANALYSIS

The technical variation between countries in the production of goods and services, in terms of not only input coefficients, but also emission coefficients, creates scope for international trade to reduce environmental pressures. For this purpose we extend the theory of trade and the environment as to accommodate technical variation between countries in production and emissions. We use and steer close to the extended input and output tables, which include emission data. By treating environmental standards analogous to capital and labor capacity constraints, the aggregation problem for economic and environmental measures gets the same format as the well-understood aggregation problem for labor and capital. In a pilot application we determine the gains to free trade in products and emission permits.     

The opportunity costs of commuting: the value of a commuting satellite account framework with an example from Lisbon Metropolitan Area*

Commuting affects regional and urban economies. It shapes urban areas, defines their relationships with neighboring regions, intensifies economic flows and exacerbates energy consumption and greenhouse gas emissions. This paper sets out a proposal for an innovative commuting satellite account (CSA), integrated in a multi-regional input–output model. This framework combines commuting activities with regional distribution of income, distinct household consumption structures, real estate renting activities and the energy consumption and environmental flows incorporated in the different industries. To assess the opportunity costs of commuting, the CSA framework is applied to the Lisbon Metropolitan Area. The socio-economic-environmental impacts of a scenario in which commuters become non-commuters by moving their residence to the municipality in which they work are estimated. The analysis indicates that: commuting, in general, induces significant economic and environmental opportunity costs. Finally, the adoption of policy-oriented recommendations contributing to limit sprawling in metropolitan regions is discussed.     

Does urbanization boost environmental impacts in Colombia? An extended STIRPAT–LCA approach

The relationship between urbanization and technological progress on environment, mainly CO2 emissions, has been extensively studied in the last decades; however, little effort has been made to understand such a relationships in developing countries. This work focuses on understanding the effects of urbanization and some technological factors on the Colombian electricity consumption. This topic is addressed from several environmental impact dimensions rather than solely focusing on CO2 emissions. An extended STIRPAT model, in combination with LCA approaches, was applied in a balanced panel dataset of 27 states, over the period of 2003 to 2018. Our findings suggest that urbanization is the major driver of electricity consumption and climate change in Colombia. Our results address the lack of information about this topic in developing countries and also, they contribute to understand the main features of emissions in Colombia and the key driving forces behind their environmental impacts. Finally and given the current trends on population and urban growth, we conclude with some recommendations aimed to relevant stakeholders.     

Hypothesis of Price Formation in Input–Output Tables

The goal of this paper is to check if different theoretical approaches to price formation can be verified in the structure of empirical input–output tables. From a propositive point of view, the hypothesis is made of two different markets (the ‘industrial’ market of intermediate and investment goods; and the ‘commercial’ market of final consumption goods), with two different mechanisms of price formation. The consequences of this hypothesis are outlined as regards deflation procedures. An empirical test of the theories about price formation and of the method of deflation suggested by the two-market hypothesis is made using 1985 Italian input–output tables at 1980 prices.     

EFFECTS OF SECTOR AGGREGATION ON CO2 MULTIPLIERS IN MULTIREGIONAL INPUT–OUTPUT ANALYSES

The past few years have seen the emergence of several global multiregional input–output (MRIO) databases. Due to the cost and complexity of developing such extensive tables, industry sectors are generally represented at a rather aggregate level. Currently, one of the most important applications of input–output analysis is environmental assessments, for which highly aggregate sectors may not be sufficient to yield accurate results. We experiment with four of the most important global MRIO systems available, analyzing the sensitivity of a set of aggregate CO₂ multipliers to aggregations in the MRIO tables used to calculate them. Across databases, we find (a) significant sensitivity to background system detail and (b) that sub-sectors contained within the same aggregate MRIO sector may exhibit highly different carbon multipliers. We conclude that the additional information provided by the extra sector detail may warrant the additional costs of compilation, due to the heterogeneous nature of economic sectors in terms of their environmental characteristics.     

AGGREGATION VERSUS DISAGGREGATION IN INPUT–OUTPUT ANALYSIS OF THE ENVIRONMENT

Analysts carrying out input–output analyses of environmental issues are often plagued by environmental and input–output data existing in different classifications, with environmentally sensitive sectors sometimes being aggregated in the economic input–output database. In principle there are two alternatives for dealing with such misalignment: either environmental data have to be aggregated into the input–output classification, which entails an undesirable loss of information, or input–output data have to be disaggregated based on fragmentary information. In this article, I show that disaggregation of input–output data, even if based on few real data points, is superior to aggregating environmental data in determining input–output multipliers. This is especially true if the disaggregated sectors are heterogeneous with respect to their economic and environmental characteristics. The results of this work may help analysts in understanding that disaggregation based on even a small amount of proxy information can improve the accuracy of input–output multipliers significantly. Perhaps, these results will also provide encouragement for preferring model disaggregation to aggregation in future work.     

Using a Demand System to Estimate Extended Input–Output Multipliers

The interface between household income and expenditure has always been considered to be a key component in the construction of input–output models. However, it can be argued that households are too often treated as if they were just another in dustry in the input–output table. In this paper, we seek to address this problem by developing a new modelling framework in which a micro demand system is used to estim ate the relationship between income and expenditure. This demand system is conjoined with an input–output table for the UK economy, and the system as a whole is solved as a computable general equilibrium model. Comparisons are made between the Jacobian multipliers generated by this model and those derived from a more traditional input–output model in which the income-expenditure linkage is estimated using static coefficients.     

Trade Liberalization and Pollution: An Input–Output Study of Carbon Dioxide Emissions in Mexico

This paper examines the environmental effects associated with Mexico's participation in the North American Free Trade Agreement (NAFTA). The objective is to provide quantitative estimates of carbon dioxide (CO₂) emissions from changes in the level and structure of production and consumption activity in Mexico following a liberalization of trade. The quantitative analysis was performed using input–output methods with fuel use modifications to account for CO₂ emissions before and after NAFTA's implementation. As a result of NAFTA, CO₂ emissions are expected to increase from the anticipated increase in the size of the Mexican economy. While total emissions increase as a result of tariff elimination, there is also a shift in the structure of production and final consumption away from those sectors that are the most C02 intensive.     

The shared environmental responsibility principle: new developments applied to the case of marine ecosystems

Estuaries provide advantageous sites for both harbors and fish habitats. In many countries, harbor expansion in estuaries contributed to the decline of fish populations with impacts at the global scale. Restoring these habitats is important to prevent a global biodiversity crisis but is costly and potentially unaffordable for polluters under the Polluter Pays Principle. Such affordability issues prompt decision-makers to reduce environmental targets of restoration programs. Harbor infrastructures destroy fish habitats but generate benefits for society and contribute to the public interest, raising some questions on who is responsible for environmental degradations and who can afford environmental restoration costs? One way to allocate restoration costs is to analyze the amount of harbor services consumed by economic sectors. This paper addresses these questions by computing burden sharing scenarios with an input–output matrix. These scenarios are simulated under the shared responsibility principle to distribute restoration costs among stakeholders in the Seine estuary, France.     

The impact of renewable energy diffusion on European consumption-based emissions

The amount of carbon embedded in the final consumption of goods and services in a country or region depends on the amount of goods and services consumed and the emission intensity of the production processes along global production chains. A reduction of consumption-based emissions can be achieved from both sides, a reduction in total consumption and a reduction in the emission intensity of the production processes. The power sector is one of the most carbon intensive industries along global production chains and the global deployment of renewable power generation technologies (RPGTs) is one possibility to significantly reduce emissions in this industry. This paper combines three different strands of literature, multi-regional input–output analysis, dynamic energy–economy–environment models and technological change in renewable energy (RE), to model the impact of the global diffusion of renewable energies on European consumption-based emissions. The global diffusion of RE technologies (photovoltaic and wind) depends on the development of technology costs, which are modeled using learning curves. With increasing deployment of renewables within the EU as well as increasing RD&D efforts, the EU can achieve an accelerated costs decrease for these technologies, thus fostering deployment of RPGTs at a global scale through the effect of decreasing costs. This behavior indirectly influences the electricity mix abroad, making it less carbon intensive, so that consumption-based emissions of the EU decrease.     

Factors driving embodied carbon in international trade: a multiregional input–output gravity model

ABSTRACT

Concerns about the effects and consequences of climate change have notably increased in recent decades. Despite large advances in the understanding of this phenomenon, further research into the determinants of gas emissions is necessary, to shed light on the responsibilities of producers and consumers, and their potential contribution to mitigation strategies. This paper studies the trajectories and determinants of carbon embodied in world trade during a period of 15 years. Our methodology relies on a multiregional input–output model, environmentally extended. Drawing on data from the World Input–Output Database, we estimate embodied emissions in bilateral flows. Then, we assess the determinants of CO₂ emissions embodied in trade, combining input–output modelling with trade gravity panel data analysis. This paper offers a methodological approach that explains and quantifies the underlying factors of carbon trade, integrating the production and consumption perspectives and considering the geographical, structural and institutional context of countries.     

Banks' environmental policy and business outcomes: The role of competition

By integrating the two areas of competition–performance and environment–performance, this research explores if competition matters in the relationship between environmental practices and interest margins in the market. A panel of 458 banks from 74 countries for the period of 2006–2016 is used, and the sample is further divided into developed and developing countries. This paper uses the system Generalized Method of Moments estimator to tackle potential omitted variable bias, endogeneity, and simultaneity issues. Without competition, environmental practices only affect banks in developing countries; however, the results show a significant impact for the full sample, including developed countries, when the competition is taken into consideration, suggesting that competition might play a role in the relationship of environmental practices and interest margins. In the full sample, competition impacts the relationship negatively after a moderate level of competition is reached in the market. The environmental practices in developing countries are prone to competition in the market. In developed countries, the competition is found to be lightly positively moderating the impact of environmental practices on interest margins. Based on these findings, it is recommended that developing countries should have a low or moderate level of competition to encourage environmental practices. For developed countries, however, high competition should be preferred to encourage banks to consider environmental practices as one of their core business strategies. These findings are found robust to different statistical estimators.     

Production Prices of Human Capital and Human Time

It follows from the definition of production as a circular process that human capital and human time are also products. Production prices calculated as the balanced growth price vector of the dynamic input–output model provide a consistent basis of valuation. For the inclusion of the production of heterogeneous human capital and human time in the dynamic input–output model the production of human capi tal is partitioned into phases and special non-linear coefficients, applicable to a variety of different human careers, are derived to take care of the replacement of human capital as well as of the consumption of persons in retirement.     

A Multiplicative Decomposition Method to Identify the Sectoral Changes in Various Developmental Stages: Taiwan, 1966–91

This paper examines the structural changes and identifies sources of sectoral growth in Taiwan, which is an open but rapidly developing economy. A multiplicative version of a decomposition based on the Leontief input–output model is proposed. Empirical results based on deflated data using the shifting base technique show that average changes in final demand coefficients, mainly in household consumption and exports, account for a large portion of sectoral change in most industries. Extensive variations in industrial structure are detected in various developmental stages.     

THE ‘REST OF THE WORLD’ – ESTIMATING THE ECONOMIC STRUCTURE OF MISSING REGIONS IN GLOBAL MULTI-REGIONAL INPUT–OUTPUT TABLES

Incomplete data for the economic structure of numerous countries hamper the compilation of global multi-regional input–output (MRIO) tables. By themselves, most of these countries are of only limited importance for the global economy and incumbent environmental issues. Hence, in most recent global MRIO tables these countries are either roughly estimated or summarised in one rest of the world (RoW) region. Combining a wide range of countries, this RoW region may play a significant role in global economic and environmental accounts. We conceptualise the importance of RoW in several environmental footprint accounts and present algorithms to estimate the structure of RoW. The approach utilises the information of the economic structure within known parts of the MRIO table to estimate the unknown structure. Using this method, global warming potential and employment footprints remain stable irrespective of the chosen initial estimates, whereas natural land use footprints and individual product impacts vary significantly.