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”
Market Exchange Rate (MER) as a mean for currency conversion have been discussed (Ahmad and
Wyckoff 2003, Peters 2007) and the difference between the two methods has been quantified in a
MRIO study (Weber and Matthews 2007). Arguably, PPPs are better for cross-country comparisons of
GDP and MERs are better for trade data. Whether the use of PPP and MER can be combined in an
automated hybrid technique and what the quantitative effect would be of using one method over the
other in the UK-MRIO model should be investigated.
Linking to economic policy – Other types of studies could be of interest for traded goods. The
environmental pressure is often largely connected to the kind of energy system being used.
Environmental policies are different across the world and the price of fuel is influenced by national
pricing policies, such as taxes or subsidies. Price effects could also be studied.
Including toxic products in a harmonised way – Another interesting question is how to capture
effects from the use of toxic material, such as pesticides in agriculture or chemicals used in the textile
industry. Given the large number of chemicals, and the fact that their toxic effects are not always
known, systematic data collection is difficult to accomplish. If environmental and economic accounting
were in place internationally, this problem could at least partly be addressed.
Including land use and types of management – There is a need for more data and harmonised
methods to record the links between land use and traded goods. Examples include the impacts of
biofuels or agricultural mega-crops on primary rainforests in the developing world.
6.4 How to use results of EIPOT studies in policy?
The first issue that people discuss when the data on environmental pressure in other countries are
being presented is whether the environmental improvement witnessed over the last few years an
illusion. Meaning, is the reduced environmental impact merely an effect of moving production to other
countries? In Sweden, it is easy to point to environmental policies and activities that have been
successful. Air and water pollution have decreased because environmental management has made a
difference. Still, high consumption implies responsibility for environmentally polluting activities in other
countries. This responsibility is only partly the consumers’, as the producers are those with the power
to change production methods.
In some studies, the environmental trade balance has been calculated to address the question of
emissions being exported to other countries. The trade balance has often been calculated as the
difference between emissions from imports and emissions from exports, or vice versa. However, trade
flows and environmental pressures connected to them are more complex than this. The environmental
trade balance is different for each pollutant, and it is not an easy task to figure out why it is high or low,
nor if that is good or bad.
After struggling with that measure of the environmental trade balance without knowing what to make of
it, Swedish studies have returned to basics and presented imported embodied emissions as a part of
the environmental pressure connected to Swedish consumption. This relates the size of the embodied
emissions to national environmental goals, and thus shows it in perspective to a known figure.
In addition to direct resource use, the indirect resources necessary to produce products for final
demand can be quantified by economic-environmental models and statistical analysis. Thereby,
interdependencies of different sectors are taken into account and consequently the total amount of
resources required to produce final products is illustrated. These findings reflect economic activities
and final demand for goods in monetary terms, which are extended by environmental data to calculate
environmental pressures, such as material use, emissions and so on. Consequently, the material
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