EIPOT Final Project Report - Stockholm Environment Institute

ERA-NET SKEP Project EIPOT (www.eipot.eu)
“Development of a methodology for the assessment of global environmental impacts of traded goods and services”
of a given product. Environmental extensions such as the use of raw materials or emissions of air
pollutants can be linearly linked to the input-output framework. However, production technologies in
different countries can only be modelled in an MRIO model.
Process- and product-specific bottom-up methods have an important role to play. Even at the meso
level, pure top-down approaches reach limitations on precision and the uncertainty stemming from
different products being aggregated into individual sectors (problem of homogeneity assumption) can
be high (see Chapter 5.3). Furthermore, top-down models are often based on monetary flows that do
not always depict physical flows adequately. Process-specific information is valuable in these cases
to reduce uncertainty and to extend the range of policy and research questions to the micro level.
Concentrating on the analysis of trade flows implies looking at the meso to macro level. Methods such
as MRIO or MFA have often been criticised for their high level of aggregation and, consequently, lack
of detail. So far, no method or approach has the necessary detail to separate factories or companies
in the supply chain. The challenge lies in coming down from the macro-economic level to the sectoral
level – projects such as EXIOPOL 14 or FORWAST 15 show that this is feasible but needs considerable
mathematical effort (see, for instance, Tukker 2007; Tukker et al. 2009). Any disaggregation of sectors
will come at the price of increased resource demand and will be limited in scope. For example, the
combination of arable farming and horticulture in one aggregated agricultural sector covers up the
different characteristics of individual sub-sectors. Splitting up the aggregated sector into these subsectors
results in an individual horticultural sector, but still hides the differences between greenhouse
vegetables and those grown in the open, or between food and non-food products, like flowers.
Alternative ways of using process-specific information will therefore have to be found in these cases.
Currently, no single method can be applied to all research questions associated with trade and the
environment. In the future, however, it is conceivable that more sophisticated and detailed models can
be developed which cover macro to micro levels. In addition to specifying the conceptual design for
such a method, we provide a tentative outlook of emerging approaches that promise greater coverage
of micro-level questions.
4.2 Environmentally extended MRIO as methodological basis
Generally, the System of Economic and Environmental Accounts (SEEA) constitutes a solid
conceptual fundament for EE-IOA (United Nations 2003a) as it is a satellite account of the System of
National (economic) Accounts (SNA, United Nations 1993). Some countries have adopted an even
closer integration of economic and environmental accounts in the NAMEA system which stands for
"National Accounting Matrix including Environmental Accounts" (de Haan and Keuning 1996). As
stated in our interim report, SEEA consistently links economic statistics and environmental statistics,
illustrating the contributions of different economic sectors and different actors (producers, final
consumers) to the overall economic output and to the related environmental consequences.
Information on environmental pressures and impacts, as embraced in the NAMEA tables, can be
connected to traded goods and services via monetary input-output tables. The same holds for
materials with the design of economy-wide MFA as a fully integrated sub-module.
In general, the SEEA/NAMEA framework is specified at the national level. Since SRIO lacks
region/country-specific information, MRIO is more appropriate for quantifying and assessing the
transnational environmental impacts of trade flows of goods and services. The full version of MRIO
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http://www.feem-project.net/exiopol
http://forwast.brgm.fr
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