Rutger Hoekstra

Structural Decomposition Analysis of Physical Flows in the Economy

Many environmental problems can be attributedto the extraction and emissions of physicalsubstances. Increasing our understanding of theeconomic and technological driving forcesbehind these physical flows can contribute tosolving the environmental problems related tothem. The input-output framework is a usefulsetting in which to integrate detailedinformation about economic structure andphysical flows. In this article a specificmethod in input-output analysis is reviewed,namely Structural Decomposition Analysis (SDA).It is based on comparative static analysis,which decomposes historical changes of a policyvariable into determinant effects. SDA has beenapplied, for example, to analyze the demand andtechnological driving forces of energy use,CO2-emissions and various other pollutantsand resources. This article examines thetheoretical aspects of structuraldecomposition, in particular those concerningphysical flows and environmental issues.Furthermore, the article includes an extensivesurvey of empirical studies.

Environmental Responsibility and Policy in a Two Country Dynamic Input-Output Model

Increased spatial dependency of economic activities, as well as spatial differentiation of production and consumption, has implication for environmental policy. One of the issues that has gained importance is the responsibility for the emissions from products that cross national boundaries during its life cycle. This paper discusses the different ethical views of environmental responsibility. Furthermore, the policy measures that are associated with the different viewpoints on environmentally responsibility are analyzed in a novel dynamic two-country two-sector dynamic input-output model. A numerical example is used to illustrate that an ethically preferable tax, which takes account of environmental damages throughout the lifecycle of the product, is less effective that the current policy of taxing consumers of products. Therefore, we might conclude that policies that are based on ethically superior standpoints may have detrimental distortionary effects in the dynamic setting.

The emission cost of international sourcing: using structural decomposition analysis to calculate the contribution of international sourcing to CO 2 -emission growth

ABSTRACT The effect of changes in trade patterns, particularly increasing international sourcing, on global CO2-emissions growth has yet to be clearly understood. In this paper, we estimate the emission cost of sourcing (ECS), which originates from replacing domestic products by imports from countries with more CO2-intensive technologies. Using a structural decomposition analysis, we find that changes in sourcing patterns between 1995 and 2007 contribute (1) to reducing territorial emissions in high-wage countries (70% of their territorial emissions growth) and (2) to increasing territorial emissions in low-wage countries (30% of their territorial emissions increase). The net global effect, the ECS, amounts to 18% of total global CO2-emissions growth. Our results call the climate change policies based on territorial principles into question given that they disregard that differences in emission intensities between countries contribute to raising global emissions. In contrast, policies fostering the transfer of cleaner technologies to low-wage countries decrease the ECS.

The RAS Structural Decomposition Approach

Technology and trade are widely considered to be significant driving forces of economic growth and have been subject to numerous studies. The input-output framework is a useful tool in this respect, because it coherently integrates information on the production technologies of the sectors and on the import and export relations. Input-output tables for different years, therefore may provide insight into how these economic processes have affected the economic structure and growth.

A Tourism SAtellite Account for the Netherlands: approach and results

During 2002–03 Statistics Netherlands (CBS) conducted the pilot project ‘Tourism Satellite Accounts for the Netherlands’. This article describes the main results of this project. A Tourism Satellite Account (TSA) provides a systematic and consistent description of the economic effects of tourism based on an internationally recommended method in accordance with the system of National Accounts (UN et al, 1993). Roughly, tourism accounted for 2.5% of the Gross Domestic Product (GDP) of the Netherlands in 1999. In total, visitors spent about ₠21 billion in the Netherlands that year, which generated some 330,000 jobs, almost 4% of the total number of jobs in the country.

A METHOD TO CREATE CARBON FOOTPRINT ESTIMATES CONSISTENT WITH NATIONAL ACCOUNTS

Although multiregional input–output (MRIO) databases use data from national statistical offices, the reconciliation of various data sources results in significantly altered country data. This makes it problematic to use MRIO-based footprints for national policy-making. This paper develops a potential solution using the Netherlands as case study. The method ensures that the footprint is derived from an MRIO dataset (in our case the World Input–Output Database (WIOD)) that is made consistent with Dutch National accounts data. Furthermore, usage of microdata allows us to separate re-exports at the company level. The adjustment results in a foreign footprint in 2009 that is 22% lower than the original WIOD estimates and a significantly altered country allocation. We demonstrate that already in the data preparation phase due to the treatment of re-exports and margins, large differences arise with Dutch national statistics, which may help explain the variation in footprint estimates across MRIO databases.

The Impact of Structural Change on Physical Flows in the Economy: Forecasting and Backcasting Using Structural Decomposition Analysis

Structural decomposition analysis (SDA) is employed to examine physical flows other than energy and energy-related emissions. A unique set of hybrid-unit I/O tables, including both physical and monetary data, was constructed for this purpose. The decomposition results are used to perform forecasting and backcasting (target) analyses. The approach is applied to the use of iron and steel, and plastics in the Nether-lands over the period 1990 to 1997. The analysis shows that export-driven “rematerialization” has occurred during this period, and that the physical volume of the materials considered will continue to grow until 2030 under a wide range of scenarios. (JEL N5, Q3)

Changing Industrial Metabolism: Methods for Analysis

Research in the field of “industrial metabolism” traditionally has been focused on measuring and describing physical flows of economic systems. The “metabolism” of economic systems, however, changes over time, and measuring material flows is insufficient to understand this process. Understanding the relation between economic activities and material flows can help to unravel the socio-economic causes of these physical flows. Three issues are addressed: The importance of spatial scales and trade flows, empirical analysis of relations between economic development and material flows, and treatment of behaviour of and interactions between stakeholders. For each of these issues, methods for analysis are suggested.

Towards Robust, Authoritative Assessments of Environmental Impacts Embodied in Trade: Current State and Recommendations

Global multiregional input-output databases (GMRIOs) became the standard tool for track ing environmental impacts through global supply chains. To date, several GMRIOs are available, but the numerical results differ. This paper considers how GMRIOs can be made more robust and authoritative. We show that GMRIOs need detail in environmentally relevant sectors. On the basis of a review of earlier work, we conclude that the highest uncertainty in footprint analyses is caused by the environmental data used in a GMRIO, followed by the size of country measured in gross domestic product (GDP) as fraction of the global total, the structure of the national table, and only at the end the structure of trade. We suggest the following to enhance robustness of results. In the short term, we recommend using the Single country National Accounts Consistent footprint approach, that uses official data for extensions and the national table for the country in question, combined with embodiments in imports calculated using a GMRIO. In a time period of 2 to 3 years, we propose work on harmonized environmental data for water, carbon, materials, and land, and use the aggregated Organization for Economic Cooperation and Development (OECD) Inter-Country Input-Output GMRIO as default in combination with detailing procedures developed in, for example, the EXIOBASE and Eora projects. In the long term, solutions should be coordinated by the international organizations such as the United Nations (UN) Statistical Division, OECD, and Eurostat. This could ensure that when input-output tables and trade data of individual countries are combined, that the global totals are consistent and that bilateral trade asymmetries are resolved.

Reducing the variation of environmental footprint estimates based on multiregional input–output databases

Purpose – The purpose of this paper is to study reducing the variation of environmental footprint estimates based on multiregional input–output (MRIO) databases. Footprint estimates from various MRIO databases sometimes vary significantly. As a result, conclusions about the absolute levels or trends of a footprint may be inconsistent. The sources of these variations are attributable to three phases in the footprint calculations: differences in data preparation, MRIO database construction and footprint calculation. Design/methodology/approach – This paper provides a literature overview and a breakdown of the computation of footprints based on MRIO database. Based on these insights, strategies that lead to lower variation in footprint estimates are formulated. Findings – Convergence of footprint estimates require enhanced cooperation amongst academics, among statisticians and between academics and statisticians. Originality/value – Reducing the variation in footprint estimates is a major challenge. This pap...