Environmental input-output analysis at Statistics Netherlands Sjoerd Schenau

What can you do with IO-analysis ? Projections - allows to calculate multiplier effects (impact of shock of final demand – chain reactions) Calculate footprints (carbon, water etc.) Calculate emission trade balances Attribution of environmental pressures to final demand Structural decomposition analysis Easy to apply and powerful technique

Decomposition analysis Decomposition analysis can be used to analyse changes in environmental pressures It is a tool by which the particular driving forces influencing changes in environmental impacts are estimated separately When a decomposition model is specified using an input-output model it is known as structural decomposition analysis (SDA) The changes in changes in efficiency improvements in the production process The changes in the industry structure of the economy The changes in final demand/economic growth To undertake an SDA it is necessary to have data that permits analysis in volume terms, i.e. through the removal of price effects. This may be done by using input-output data in the current prices of a given reference year and in prices of a base year (constant prices).

Structural Decomposition Analysis The change in the level of CO2 emissions by economic activities in the period 1995–2012 can be explained by different factors. Structural decomposition analysis allows us to account in detail for the factors underlying the changes in emissions. First of all, economic growth may have contributed to extended CO2 emissions. A change in the energy mix (the energy products used in the production process) may also have had an influence on the emission levels. The economic structure may have changed, for example due to a change in the input-output relations of the intermediate use, or a change in the composition of the final demand structure for products and services. Finally, eco-efficiency improvements of the production processes, either via integrated technologies, add-on technologies or else, may have lowered CO2 emissions. Figure 5.2.3 shows the results of a structural decomposition analysis of CO2 emissions for the period 1995–2012. Changes in the structure of the supply chain and the structure of demand

Decomposition for households CO2 emissions stationary sources Models which do not use an input-output model are more prevalent because the data requirements are less restrictive. These methods are often referred to as index decomposition analysis The CO2 emissions by households produced in and around the home have fallen by 7 percent since 1990. These so-called emissions from stationary sources originate for the most part from the combustion of natural gas for space heating, production of warm water and from cooking (93 percent). The causes for the decrease in emission levels for stationary sources can be further analysed by decomposition analysis. The changes in emissions can be decomposed into several factors, including the number of households, the average household size, the effect of the average temperature and an energy saving effect.

Footprint analysis The expression “footprint” became popular in the context of environmental issues with the introduction of the “ecological footprint” Footprints can be calculated using input-output techniques that use the economic structure of economies in combination with environmental accounting data. There is wide range of methods being used  NSIs often use ‘simple’ models Partial MRIO model: National economic structure imposed on trade partners Country specific emission intensities Dissemination practices of the institutes show that the results are not always presented as “official statistics” Footprint indicators have in common that they relate consumption to environmental pressures. It is therefore often referred to as the “consumption perspective” or the “consumption-based approach”. The advantage of these calculations is that they quantify the direct and indirect pressures of the full supply chains

SNAC footprint project MRIO table adjusted with Dutch data: Produce a footprint, based on MRIO, that is consistent to official statistics of the Netherlands Single-country National Accounts consistent (SNAC) Main approach: “Adjust WIOD to be consistent to Dutch data” Gain insight why results could be so different In the past, Statistics Netherlands has published estimates for the Dutch carbon footprint based on input-output techniques using various model specifications but always based upon a domestic technology assumption in combination with country specific emission Intensities. This approach has as its main drawback that it does not include to analyse intercountry trade, which requires a so-called multi-regional input-output table (MRIO) describing the structure of the world economy including all trade flows between countries. The advantage of using a MRIO for the calculations is that it allows for quantifying indirect pressures along the complete supply chains in order to obtain a country specific allocation of pressures. However, the construction of a MRIO is highly data intensive requiring numerous data Sources. Follow WIOD procedure, but overrule with improved Dutch int SUT Balancing using the WIOD procedure but keeping the Dutch data fixed

Dutch carbon (CO2 only) footprint from various MRIO databases Many footprint calculations available. Figure 9.2.1 shows an enormous spread of the estimates in the size of footprint as well as the trend. Some show a rapid increase in the footprint while others show a fairly rapid decrease. Data provided by Glen Peters and Nori Yamano

GHG from Dutch consumption The carbon footprint in 2009 amounted to 202 Mton CO2. As shown in Figure 9.4.1 the footprint consists of 83 Mton embedded in imports, 80 Mton domestic indirect and 40 Mton due to direct emissions from final consumption and accumulation. The total emissions according to the Dutch economy amounted to 205 Mton CO2 which suggests that the emission trade balance for the Netherlands as a whole would be positive. A positive emission trade balance indicates that greenhouse gases emitted domestically during the production of exported goods is larger than the greenhouse gases emitted abroad during the production of goods and services imported by the Netherlands. GHG balance of trade for Netherlands slightly positive with rest of the world

Import emissions allocated to country of origin, 2009 Figure provides a breakdown of the import emissions into country of origin. Of all CO2 emissions abroad due to final consumption in the Netherlands, China contributed most with 19 percent, followed by Germany at 10 percent and Russia at 8 percent.

Per capita carbon footprint of countries (2009) In 2009, on a per capita basis, the Dutch CO2 emissions according to the SNAC approach equal 12.2 ton. The SNAC footprint lies within the range found by other studies. According to the alternative estimates, the Netherlands would rank at most 6 and at least 18 out of the 40 countries distinguished in WIOD, and according to SNAC method the Netherlands would rank 9th. The analysis is of course limited to the countries that are distinguished within WIOD.

Personal carbon footprint Example of an interactive tool. http://www.cbs.nl/en-GB/menu/themas/natuur-milieu/cijfers/extra/footprint.htm?Languageswitch=on

Conclusion Environmental accounts in combination with IO tables allow several interesting types of analysis Decomposition analysis: easy to do when you have IO tables en environmental accounts data available Footprint calculations:  High demand for data  MRIO: Labour and data intensive, should be a joint international effort (?)  Need for enhanced cooperation especially in light of 2008 SNA Between statistical offices and between MRIO producers