Environmentally extended input-output analysis - Novinky · Structural decomposition analysis It is...

Environmentally extended

input-output analysis

Jan Weinzettel

jan.weinzettel@czp.cuni.cz

9th April 2014 IES, CUNI

Content

Computational framework

Supply, use and symmetric input-output

tables

Contributional and structural path

analysis

Structural decomposition analysis

Multiregional input-output analysis

2

Computational Framework

Iron production: consumes 10 tons of coal and 1 ton of iron and produces 50 tons of iron

Coal production: consumes 5 tons of iron and 5 tons of coal and produces 75 tons of coal

How much coal is needed to produce 5 tons of steel including the full production chain?

What are the related CO2 emissions?

3

Computational framework

iron

coal

10 tons coal

1 ton iron

5 tons iron

5 tons coal

50 tons iron

75 tons coal

Demand

\

Supply

Iron Coal Outside Total

Iron 1 5 44 50

Coal 10 5 60 75

50 – 5 – 1 =

44 tons iron

75 – 10 – 5 =

60 tons coal

Z y x

4

Computational framework

A . x + y = x

x* = (I – A)-1 . y* if (I – A) is regular

Demand

\

Supply

Iron Coal Outside Total

Iron 1 5 44 50

Coal 10 5 60 75

Z y x

2

1

2221

1211

2

1

y

y

zz

zz

x

x Z . 1 + y = x

A = Z . diag(x)-1

1

11

5

Computational framework

6

Demand \

Supply

Iron Coal Outside Total

Iron 1 5 44 50

Coal 10 5 60 75

Environmental

extension

CO2 (t) 100 20

Z y x

Fr

F = Fr . diag(x)-1

E = F . x*

x* = (I – A)-1 . y*

E* = F . (I – A)-1 . y*

0

5*

2

1

y

y

General equalities

(I – A)x = y

(I – A’)p = v

p'y = v‘x

7

Supply table

Which commodities are supplied by

which industries

8

Sector

Product

Sector 1 … Sector n Import Total

supply

Product 1

Supply matrix S

m1 q1

… m… q…

Product n mn qn

Use table

Which commodities are consumed by which industries

Sector

Product

Sector 1 … Sector n Final

demand

Total use

Product 1

Use matrix U

y1 q1

… y… q…

Product n yn qn

Value

added VA

Environme

ntal

extension

Fr

9

Domestic x Imports

Use table can be split by origin of

products into domestic and imported

U = Ud + Um

Two types of analysis

◦ Domestic environment

◦ Global environment (under domestic

technology assumption)

10

Domestic technology assumption

In a single region IOA imported products

are assumed to be produced by the same

technology as the domestic products

11

Symmetric input-output table

12

„Product by product“

◦ All products of one sector are produced with the same

structure of inputs (industry technology assumption)

◦ Each product is produced using the same technology regardless

the production sector (product technology assumption)

„Sector by sector“

◦ Each product has fixed sales structure

◦ Each sector has its own fixed sales structure regardless the

products on the output

Differences caused by bi-products

◦ For diagonal supply table all the models are equivalent

Transformation of supply and use

tables Intermediate consumption

Value added

Final demand

Environmental extension

Symmetric IOT looks like use table, but it

is symmetric (product by product or

sector by sector)

13

Input coefficient and Leontief

inverse matrix A = Z . (diag(domestic output)-1)

L = (I – A)-1

x* = L . y*

Note inequality:

q ≠ (I - A)-1(y)

But

q = (I - A)-1(y – m)

14

Environmental extension

Usually similar position as value added

Environmental interventions of economic sectors (denote Fr)

Transformation and normalization to unit output

Environmental interventions of the full supply chain of final demand y*

e* = F . L . y*

15

Environmental extension

Needs to be transformed according to

type of IOT

Can include unlimited number of rows

(environmental interventions)

16

Value added

Wages and salaries

Employers’ social contributions

Other taxes on production

Other subsidies on production

Consumption of fixed capital

Operating surplus, net

Mixed income, net

17

Final demand

Final consumption Gross fixed

capital

formation

incl. changes

in valuables

Changes in

inventories

Exports

(FOB)

expenditure

Households Governments NPISH

18

Valuation

Countries differ in valuation concepts

EU: ◦ Supply table and IOT: basic prices

◦ Use table: purchaser prices

◦ The difference is: Taxes

Subsidies

Transport margins

Trade margins

US IOT: ◦ Producer prices – includes non deductible taxes

on products (VAT is deductible)

19

Contribution analysis

How much different products on final

contribute to total environmental impact?

E = F . L . diag(y)

How much different sectors contribute to

total environmental impact?

E = F . diag(L . y)

20

Structural path analysis

Which processes of which production paths contribute

the most to the total environmental impact?

While contribution analysis focuses on total impact of

each sector, SPA aims at distinguishing particular

production paths

e = F . L . y = F . (I – A)-1 . y = F . (I + A + A2 + … + An) . y

eijk = Fk . Akj . Aji . yi

Need for an algorithm to calculate impacts from all

paths (limits needed) and sort those.

21

Structural decomposition analysis

It is used to analyze the drivers behind changes

Includes Leontief inverse matrix

Options for environmental input output analysis: ◦ Direct intensity of sectors

◦ Economic structure – intermediate inputs

◦ Structure of final demand

◦ Contribution of final demand categories

◦ Total volume of final demand (per capita)

◦ Total population

e = F . L . M . D . G . P

Optional: to merge any of the factors

22

Structural decomposition analysis

Example for two variables (additive decomposition)

z = x . y

What is the change due to x? y?

◦ Equal share of higher orders effects

zx = y1.Δx + ½ Δx. Δy

zy = x1.Δy + ½ Δx. Δy

Δq = q2 – q1

Becomes too

complicated

for more variables.

23

x

y

x1 x2

y1

y2

1

2

z1 zx

zy z?

Structural decomposition analysis

Logarithmic mean divisia index

y = x1 . x2. … . xn

Complete decomposition (without residues

Not defined for zeroes and negatives (when a variable changes sign)

Matrix algebra?

24

ixi x

y

ydy ln

ln

Structural decomposition analysis

eijkl = Fli . Lij . Mjk . D1k . G . P,

Δeijkl = dFijkl + dLijkl + dMijkl + dDijkl+ dGijkl + dPijkl

25

m

l

d

k

n

ji

lkjieE1 1 1.

,,,

m

l

d

k

n

ji

lkjieE1 1 1.

,,,

li

ijkl

ijkl

ijkl Fe

edF ln

ln

m

l

d

k

n

ji

ijklijklijklijklijklijkl dPdGdDdMdLdFE1 1 1.

m

l

d

k

n

ji

ijkldFdF1 1 1.

Structural decomposition analysis

Negatives

◦ Not so common in IOA

◦ Suitable to treat negatives separately

◦ E.g. Changes in stocks and inventory

Zeroes

◦ Only relevant if zero in time and non zero

other time

◦ Specific treatment for each case

26

SDA: Case study

Structural decomposition analysis of raw

material input, Czech Republic, 1995 –

2011

RMI = F . L . y (material footprint of the

total final demand)

RMI = F . L . M . D . G . P + F . L . B . Z +

F . L . S

27

SDA: Case study

RMI = F . L . M . D . G . P + F . L . B . Z + F . L . S

RMIr = F . L . M . D . G . P

RMIe = F . L . B . Z

RMIs = F . L . S

ΔRMI = Δ(F . L . M . D . G . P) + Δ (F . L . B . Z) + Δ(F . L . S)

ΔRMI = ΔRMIr + ΔRMIe + ΔRMIs

ΔRMI = Δ(Fr . Lr . M . D . G . P) + Δ (Fe . Le . B . Z) + Δ(F . L . S)

dF = dFr + dFe

dL = dLr + dLe,

RMIrijkl = Fli . Lij . Mjk . Dk . G . P

28

m

l

d

k

n

ji

li

ijkl

ijklFr

RMIr

RMIrdFr

1 1 1.

lnln

SDA: Case study - results

Material F L M D G P B Z S

Crude oil -4 209 -2 527 - 866 310 2 959 156 -1 423 8 211 509

Natural gas 2 801 -3 245 -1 088 350 3 427 143 -1 672 9 671 665

Hard coal -2 149 -19 268 - 934 394 4 845 139 -7 788 17 939 1 062

Lignite 18 962 -59 310 -3 554 1 261 13 669 493 -23 047 46 281 2 995

Iron ore 2 996 -8 436 -1 076 - 49 3 038 143 -1 933 16 300 - 782

Non iron ores 2 962 -1 777 67 - 166 5 480 358 -2 872 33 848 - 159

Industrial minerals -10 153 - 797 - 877 81 4 432 167 -3 567 15 839 253

Construction

minerals -12 635 18 550 -24 493 -3 630 24 500 1 414 -1 829 11 853 - 769

Food crops 4 366 -7 797 -3 675 1 092 5 424 231 -2 685 8 339 777

Feed crops -3 665 -6 479 -2 894 926 4 322 135 -2 467 6 513 633

Wood -2 259 -1 376 61 79 2 049 109 -2 533 8 791 292 29

Multiregional input-output

framework Connection of multiple economies in

order to avoid the domestic technology

assumption

Detail international trade

Which product of one economy

consumed by which sectors of other

economy

Assumptions

Databases

30

31

Product 1

Product 2

…

Product n

Product 1

Product 2

…

Product n

Product 1

Product 2

…

Product n

Regi

on 1

R

egi

on …

R

egi

on m

Pro

duct

1

Pro

duct

2

…

Pro

duct

n

Pro

duct

1

Pro

duct

2

…

Pro

duct

n

Pro

duct

1

Pro

duct

2

…

Pro

duct

n

Region 1 Region … Region m Final demand

Regi

on 1

…

Regi

on 2

Regi

on m

Displacement of CO2 emissions

Source: Peters, G.P., Minx, J.C., Weber, C.L., Edenhofer, O., 2011. Growth in emission transfers via international trade from 1990 to 2008. Proc. Natl. Acad. Sci. U. S. A. 108, 8903-8908. 32

Material extraction

Source: Wiedmann, T.O., Schandl, H., Lenzen, M., Moran, D., Suh, S., West, J., Kanemoto, K., 2013.

The material footprint of nations. Proc. Natl. Acad. Sci. U. S. A. 33

Land use

Source: Weinzettel, J., Hertwich, E.G., Peters, G.P., Steen-Olsen, K., Galli, A., 2013. Affluence

drives the global displacement of land use. Global Environmental Change 23, 433-438. 34

Land use

Units: million gha

Source: Weinzettel, J., Hertwich, E.G., Peters, G.P., Steen-Olsen, K., Galli, A., 2013. Affluence

drives the global displacement of land use. Global Environmental Change 23, 433-438. 35

Biodiversity threats

Source: Lenzen, M., Moran, D., Kanemoto, K., Foran, B., Lobefaro, L., Geschke, A., 2012.

International trade drives biodiversity threats in developing nations. Nature 486, 109-112. 36

Literature Eurostat, 2008. Eurostat Manual of Supply, Use and Input-Output Tables.

European Communities, Luxembourg.

Hertwich, E.G., 2005. Life cycle approaches to sustainable consumption: A critical review. Environmental Science & Technology 39, 4673-4684.

Lenzen, M., Moran, D., Kanemoto, K., Foran, B., Lobefaro, L., Geschke, A., 2012. International trade drives biodiversity threats in developing nations. Nature 486, 109-112.

Peters, G.P., Minx, J.C., Weber, C.L., Edenhofer, O., 2011. Growth in emission transfers via international trade from 1990 to 2008. Proc. Natl. Acad. Sci. U. S. A. 108, 8903-8908.

Peters, G.P., Hertwich, E.G., 2006. The importance of imports for household environmental impacts. J.Ind.Ecol. 10, 89-109.

Schoer, K., Weinzettel, J., Kovanda, J., Giegrich, J., Lauwigi, C., 2012. Raw material consumption of the European union - concept, calculation method, and results. Environmental Science & Technology 46, 8903-8909.

Weinzettel, J., Kovanda, J., 2011. Structural Decomposition Analysis of Raw Material Consumption. J.Ind.Ecol. 15, 893-907.

Wood, R., Lenzen, M., Foran, B., 2009. A Material History of Australia. J.Ind.Ecol. 13, 847-862.

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