An introduction to input-output analysis and its use in ... · 5 The UK 0 200 400 600 800 1000 1200...
Transcript of An introduction to input-output analysis and its use in ... · 5 The UK 0 200 400 600 800 1000 1200...
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School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
An introduction to input-output analysisand its use in consumption-basedaccountingAnne Owen
Homework
• Introduction to Matrix Algebra using Matlab
• Any problems?
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Lecture (30 mins)
• What does a consumption-based approach to emissionsaccounting tell us?
• How can we account for emissions from consumption?
• Input-Output analysis
• The future
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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Carbon emissions are increasing.
But what are the driving factors of this increase?
• Increase inindustrial output?
• Population?
• Increase in airtravel?
• Increase inconsumption?
• Productionbecoming moreinefficient?
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Annex B countrieswere supposed toreduce theiremissions under the1997 Kyoto Protocol
Non-Annex Bcountries wereallowed to keepgrowing
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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Historically, theEU and US stillcontribute thegreatest share ofemitted CO2
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
• Why are emissions growing?
• Why have China’s emissions increased at such a paceover the last two decades?
• Who is responsible for emissions reduction?
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
• What if we reallocated emissions accounts to who was consuming theproducts rather than who produced them?
Chinacoal
Chinaplastic
USAPC
UK finaldemand
Chinasteel
Germancar
UK taxifirm
Frenchfinal
demand
UKelectricity
UKgadgets
USAplane
Germanfinal
demand
Producerperspective
Consumerperspective
ChinaUSA
UK
ChinaGermanyUK
France
UKUSA
Germany
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
The difference between production and consumptionemissions
Production: point source e.g. from factory or power station – relativelyeasy to indentify, link and add up
Consumption: emissions along the supply chain of a product – can bevery complex, difficult to draw boundaries
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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The UK
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Me
ga
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ne
sC
O2e
UK comsumption-based emissions
UK production-based emissions
UK territorial emissions
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
• How can we reallocate emissions from producer toconsumer?
• Need to understand global supply chains
• How do businesses trade with each other and how doconsumers consume?
• Two methods: LCA or Input Output Analysis
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Production layers and structural paths
of a family train journey
Lenzen & Murray, 2003
A bottom up approach: the full supply chain emissions of a train journey
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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How to measure a product carbon footprint?
Hybrid LCA
Life Cycle Analysis Input-Output Analysis
Advantages Good for individual products Accounts for full supplychains.
Can determine the whole CBA
Disadvantages Truncation issues – howmany levels along the supplychain?
Impossible to account for allconsumption by a nation
Works on aggregated productlevel – e.g. ‘electronicappliances’ rather than‘washing machine’
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Credits Debits
Sales $1000
Machines $300
Repairs $20
Insurance $15
Wages $15
Taxes $20
Grossoperatingsurplus
$650
Total $3000 $3000
Credits Debits
Sales $300
Machines
Repairs
Insurance
Wages
Taxes
Agriculture industry
Machine making industryAgriculture industry
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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Transaction Matrix
(Z)
Value Added (H)
Total Input (X)
Sales to
Final
Demand
(Y)
Tota
lO
utp
ut
(X)
Environmental Extensions
(F)
Purchases from
intermediate demand
Sale
sto
Inte
rmedia
te
dem
and
School of Earth & Environment3750: Sustainability Economics in Practice
12 8 4
2 18 12
6 10 26
This product ismade from thismix of sectors
Agriculture
Manufacturing
Services
Agri
culture
Manufa
ctu
ring
Serv
ices
16 12 24
36 48 66
12
16
24
36
48
66
Note that
12 + 8 + 4 + 12 = 36
Total output foragriculture is the sumof intermediate salesplus final demand
72 66 42
X in = X out
Value added
Fin
alD
em
and
These are the CO2
emissions fromproduction byindustrial sector
Total = 180 tonnesCO2
School of Earth & Environment3750: Sustainability Economics in Practice
Transaction Matrix
(Z)
Value Added (H)
Total Input (X)
Sales to
Final
Demand (Y)
Tota
lO
utp
ut
(X)
Environmental Extensions (F)
Purchases from intermediate
demand
Sale
sto
Inte
rmedia
te
dem
an
d
The total output ܠ) ) of a particular sector can be expressedas:
ܠ ൌ ܢ ܢ ڮ ܒܢ ܡ
Total output of a sector is the sum of its intermediate andfinal demand.
If each element, ,ܒܢ, along row i is divided by the output ܠ ,
associated with the corresponding column j, then eachelement in ܈ can be replaced with:
=ܒ܉ܒܢ
ܒܠ
Going back toalgebra…
8
1236
848
466
236
1848
1266
636
1048
2666
A matrix:
ܠ ୀܢ ܢ ڮ ܒܢ ܡ
=ܒ܉ܒܢ
ܒ܆
ൌܒܢ ܒܠܒ܉�
ൌܠ ܠ܉ ܠ܉ ڮ ܠܒ܉ ܡ
(1)
(2)
Substitutefor (2) in (1)
�ൌܠ �ܠۯ� ܡ
��ൌܡ ܠۯ��Ȃܠ��
=ܡ –۷)ܠ (ۯ
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
12
6
24
��ൌܠ ��۷�Ȃۯ� ܡ
36
48
66
1236
848
466
236
1848
1266
636
1048
2666
1- 0- 0-
0- 1- 0-
0- 0- 1-
2436
- 848
- 466
- 236
3048
- 1266
- 636
- 1048
- 4066
=
But we want =ܠ (something) x ܡ
��ൌܡ ሻۯ�ሺ۷�Ȃܠ��
36
48
66
2436
- 848
- 466
- 236
3048
- 1266
- 636
- 1048
4066
=
-1
12
16
24
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
12
16
24
36
48
66
=1.6265 0.5422 0.3253
0.3052 1.8795 0.5944
0.5522 0.7952 1.9438
36
48
66
=12 x
1.626516 x
0.542224 x
0.3253
12 x0.3052
16 x1.8795
24 x0.5944
12 x0.5522
16 x0.7952
24 x1.9438
=36
48
66
��ൌܠ ܡۺ��
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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36
48
66
=
42.5
49.2
68.2
Output from agriculture has to increase by 6.5
Output from manufacturing has to increase by 1.2
Output from services has to increase by 2.2
So…. If demand for agriculture increased to 16 from 12….
Compared to
16 x1.6265
16 x0.5422
24 x0.3253
16 x0.3052
16 x1.8795
24 x0.5944
16 x0.5522
16 x0.7952
24 x1.9438
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Matlab tasks (15 mins)
• Work through tasks 1 to 4 from ‘Introduction to Input-Output analysis’
• Loading variables
• Calculating A
• Calculating L
• Investigating the effect of a change in demand
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
If ൌ܍ ܠ
܍ is the emissions per unit of output
Multiplying both sides of �ൌܠ‘ ’ܡۺ� by :gives܍
ൌܠܠ ܇ۺ܍
ൌ ܡۺ܍
But what about those emissions?
7236
6648
4266
2 1.375 0.636
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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=
12
16
24
And if final demand for agriculture increases to 16?
CO2 increases by
16 tonnes
2 1.375 0.636
180
=
16
16
24
2 1.375 0.636
196
1.6265 0.5422 0.3253
0.3052 1.8795 0.5944
0.5522 0.7952 1.9438
1.6265 0.5422 0.3253
0.3052 1.8795 0.5944
0.5522 0.7952 1.9438
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
12 0 0
0 16 0
0 0 24
2 0 0
0 1.375 0
0 0 0.636
1.6265 0.5422 0.3253
0.3052 1.8795 0.5944
0.5522 0.7952 1.9438
39.0361 17.3494 15.6145
5.0361 41.3494 19.6145
4.2169 8.0964 29.6867
72
66
42
48.2892 66.7952 64.9157
Column sum is the carbon emissions by product – i.e.the full supply chain emissions of making the product
Row sum isthe originalindustryemissions
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
16 0 0
0 16 0
0 0 24
2 0 0
0 1.375 0
0 0 0.636
1.6265 0.5422 0.3253
0.3052 1.8795 0.5944
0.5522 0.7952 1.9438
52.0482 17.3494 15.6145
6.7149 41.3494 19.6145
5.6225 8.0964 29.6867
64.3855 66.7952 64.9157
If final demand for agriculture increases, only theproduct footprint for agriculture increases
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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Matlab tasks (15 mins)
• Work through task 5 to 6 from ‘Introduction to Input-Output Analysis’
• Using L to investigate Carbon Consumption-Based Accounts
• Saving your work
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
2000s World IO, footprinting, Hybrid LCA
1990s Industrial ecology, physical IO
1970s Energy analysis, pollution
1973 Nobel Prize
1940-60s Structure of the economy
1930s Introduction of IOA
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Hoekstra, R. (2010) (Towards) A complete database of peer-reviewed articles on environmentally extended input-output analysis.18th International Input-Output Conference of the International Input-Output Association (IIOA) , 20-25 June 2010. Sydney, Australia.
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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Hoekstra, R. (2010) (Towards) A complete database of peer-reviewed articles on environmentally extended input-output analysis.18th International Input-Output Conference of the International Input-Output Association (IIOA) , 20-25 June 2010. Sydney, Australia.
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Hybrid Approaches
• IO-LCA Models
• Physical flow models
• Dynamic IO
• Econometric forecasting
Increasing complexity, coverage, comparability androbustness
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
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New MRIO data, models, techniques (Eora)
• Computer runtime under 6 hours per year, 20 days total
Global MRIO (USyd)
• 130 countries at 100 sectors = 13,000 sectors, plus
• 40 countries at ≈ 200 sectors = 8,000 sectors
• 1 sheet size ≈ 20,000 x 20,000 = 400 million entries
• 7 valuations (bp, 2xfob, 2xcif, tax, subs) = 2.8 billion entries
• 40 years = 112 billion entries
• ≈ 900 GB per MRIO set
• Computer runtime under 6 hours per year, 20 days total
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
Matlab tasks (45 mins)
• Work through task 7-8 from ‘Introduction to Input-Output Analysis’
• Multiregional Input-Output tables
• Structs
• Bar charts
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics
School of somethingFACULTY OF OTHER
Thank you
Anne Owen
School of Earth & Environment5582M: Tools and Techniques in Ecological Economics