Environmental and Economic Accounts for the World – towards a Global MR EE IO database Dr. Arnold Tukker Exiopol Scientific Director, WIOD conference, May 2010, Vienna

2 2 Presentation Elements EXIOPOL in Brief Main areas of work on EE IO Progress and status

3 3 EXIOPOL in Brief Integrated Project under FP6 of the EU Topic: externalities in an economic/environmental accounting framework 5 Mio EU FP Lead by FEEM, co-ordinator (Anil Markandya), focus on externalities TNO, scientific director (Arnold Tukker), focus on EE I-O 35 other partners, with CML, NTNU, Wuppertal Institute, SERI, Groningen University, EU DG JRC IPTS, GWS, ZEW in EE I-O Main clusters 1.Management & Strategy 2.Externalities 3.EE I-O 4.Illustrative policy applications 5.Education and dissemination Philosophy Protected, open source database To be handed over to IPTS, EEA, Eurostat for formal use Filling an essential gap in the EU toolbox

4 4 Some backgrounds on SUT/IOT EE SUT for a single country Economic Supply and Use By industry: emissions and primary resource use Can provide you Per final use category: value added by industry With impact per Euro per industry known: life cycle impacts per final use category Advantages Inherently complete Inherently consistent

5 5 Example: the EIPRO study TNO, CML, DTU and VITO for DG JRC IPTS in 2005 Europeanised US data of Suh Provided detailed prios for Integrated product policy Most studies based on scaling up LCAs for individual products gave wrong estimates

6 6 The key goal of the project Drawbacks of EE SUT/IOT Limited EU data Detail (60 sectors) Emissions (16) No insight in pollution embodied in trade Goal of EXIOPOL: Detailed SUT/IOT (130 sectors) Detailed extensions 80 resources, 60 emissions EF, TMR, 4 LCIA themes, ext. Costs For EU27+16 non EU countries covering 95% Global GNP

7 7 Key tasks Workstream III.1: Inception WP III.1.a Scope and architecture development: FINISHED < M12 WP III.1.b: Providing country generic externality data per substance: Workstream III.2: Gather, align and detail SUT data WP III.2.a: EU27 WP III.3.a: 16 non EU countries and real Rest of World (rRoW) WP III.2.c: Specific work on households and waste Workstream III.3: Gather environmental extensions WP III.2.b: EU27 WP III.3.b: 16 non EU countries + rRoW Workstream III.4: Trade-links, database, link with models WP III.4.a: Link SUT data via trade WP III.4.b: Overall database construction WP III.4.c: Interface with models

8 8 Or, in another perspective: CML: database WPIII.4.b: Data transformation to EEIO tables RUG: Trade links and data WPIII.4.a: Trade linked global system (linking country SUT/IO tables via trade WPIII.2.a: EU27 SUT (NTNU)WPIII.2.b: EU27 EE WPIII.3.b: non EU EE WPIII.3.a: non EU SUT (TNO) IPTS: models and EU SUT data WP III.4.c: Interfaces to existing models and elaboration of the WTM Illustrative applications in Cluster IV.1 WSL: NTNU&TNOWSL: WI WSL: CML WPIII.2.c:consumers (CML) Data-interface Dbase architecture Aligned with models Dbase architecture Fits with GRAS etc. Use of data and involvement Use of data and involvement Use of trade data

9 9 Workstream III.1: Inception Basic structure: SUT -> MR EE SUT -> MR EE IOT Base year 2000

10 10 Workstream III.2: Gather, align and detail SUT data Sector and product classification: NACE 1.1, default: ESA95 (60 sectors) Enhanced detail until 130 sectors in view of difference in impact inensities Agro-food Resource extraction/refining and energy Mobility, waste treatment Valuation and Import Use matrices Added value elements, factor inputs, selected constraints/stocks STATUS: SUT in bp + valuation layers in original classifications for 43 countries plus auxiliary data for detailing 2 subsequent beta versions of detailed SUT for 43 countries Fundamental problems appeared, now being solved

11 11 Workstream III.3: Gather environmental extensions Environmental extensions + physical flows Emissions (about 50) Based on activity variables and emission factors (TNOs TEAM model) Energy related: IEA database allocated to EXIOPOL sectors Other: dedicated activity variables Cross check with recent Eurostat NAMEA air for 16 emissions Resources (about 80) based on SERI and WI MFA databases, straigtforward allocation to EXIOPOL sectors Selected energy resources will form a physical layer in the economic SUT Should support EF, 4 LCIA themes, MFA/TMR, externality calculations STATUS Resources done, energy database and emissions done Some final allocation issues related to energy and emissions wait on SUT finalisation - economic allocation is the only approach

12 12 Workstream III.4: Trade-links, database, link with models WP III.4.a: Trade linking Import Use data are starting point Use COMTRADE etc. to calculate which % comes from which exporting country Doing so for all 43 EXIOPOL countries provides implicit exports per country in basic (cif) prices We use exports from SUT (fob) as constraints This matrix is unbalanced; with RAS or minimum entropy method data will be rebalanced and allocate insurance and freight to countries exporting these services STATUS: concept ready, data sets ready, tests done on Asian MR IOT, Exiopol 60x60 SUT, and beta set 130x130 SUT, implemented in database WP III.4.c : Links with models Mainly a matter of building bridge matrices, is prepared as far as possible and is finalised when all is ready

13 13 Workstream III.4: Trade-links, database, link with models WP III.4.b: Database with five big blocks Block 0: Fuzzy front end with transformations in WS III.2 and III.3 Block 1: Harmonized EE SUT in database, individual countries -> trade links Block 2: Trade linked MR EE SUT, world -> transformation to IOT Block 3: Various MR EE IOT Block 4: Inverse, aggregation routines, links to models etc. …..with aggregation routines for EE to relevant indicators (EF, TMR, LCIA, ext) and various aggregation routines (countries, sectors) STATUS: all works with beta SUT, remains importing real SUT and EE

14 14 Progress visualised CML: database WPIII.4.b: Data transformation to EEIO tables RUG: Trade links and data WPIII.4.a: Trade linked global system (linking country SUT/IO tables via trade WPIII.2.a: EU27 SUT (NTNU)WPIII.2.b: EU27 EE WPIII.3.b: non EU EE WPIII.3.a: non EU SUT (TNO) IPTS: models and EU SUT data WP III.4.c: Interfaces to existing models and elaboration of the WTM Illustrative applications in Cluster IV.1 WSL: NTNU&TNOWSL: WI WSL: CML WPIII.2.c:consumers (CML) Data-interface Dbase architecture Aligned with models Dbase architecture Fits with GRAS etc. Use of data and involvement Use of data and involvement Use of trade data

15 15 Summary of status The project is now on two-thirds Extremely challenging, particularly the SUT detailing Delays did occur SUT detailing more complicated than thought, appeared in an unpleasant way fall 2009 Key staff had an accident Two main points still can result in uncertainty Trade linking procedure – we tested what was possible already but surprises (e.g. rRoW) are possible Though we do of course interim data quality checks, we may see some problems only in cases Overall we have 6 months delay which is unlikely that we can catch up

16 16 Planning April 2009, and deviations

17 17 THANKS FOR YOUR ATTENTION!

18 18 Some choices and discussion points

19 19 Externalities that the EE IO stream will exclude Non-environmental effects like: -Effects on Employment quality -Technological externalities -Risk of terrorism and proliferation -Income distribution Depletion of non-renewable resources (oil, gas, silicon, copper, …) Assessment of Damocles risks (risk aversion) Visual Intrusion Research and development Local ecosystem damage

20 20 Externalities that we will include DriversPressuresState and ImpactComments Sector activity Emissions Prim. Res. Use Mid point ind. (e.g GWP) End point ind. DALY, PAFF ForestryM3 or ton or Euro wood harversting We may be able to calculate external costs based on M3 wood production Water useNo method available Emissions A 17 in Ecosense, including CO2 Use Ecosense with info on - country of emission - Estimated stack hight (high/low/traffic), relevant for PM10 only Provides hence externalities that are pollutant and country specific. Emissions B 39 not in Ecosense GHG other than CO2: calculate GWP, multiply with NEEDS values per kg GWP Other: Calculate DALY/PDF with Eco- indicator 99 to and multiply with external costs per DALY or PDF Spatial and temporal variability will hence not be factored in for this group of emissions. AgricultureManure,f ertilizer use Pesticide use We may be able to calculate N and P emission per catchment area and combine with externalities Accidents Number of traffic death We may include deaths by accidents

21 21 Discussion points relevant for our workshop At which level to include include externalities in an IO framework? Driver Pressure Impact Combination? How to include as much as possible information with regard to spatical and temporal variation? Regionalised LCIA methods Simple assumptions on spatial and temporal variabilities Other issues?

22 22 What can we do with the result? Static Track pollution by final consumption by process of origin globally Uncover differences in impact intensities per sector per country Identify hot spots, from a resource input, sector and consumption perspective Historical (in case of time series) Understand decoupling and contributing processes Better emission factors? Change in economic structure? Change in consumption structure? Understand burden shifting processes between countries Foresight: needs links with models

23 23 Spin-off and further involvement Further involvement of OECD, WB, EU and others in Advisory Board Several statistical bureaux and Eurostat in other roles Strong connections with IIOA and ISIE Key challenge: how to turn this project into a open source community effort once the basis has been laid in the project IPR issues Presentation and documentation (interactive website?) Institutional embedment and community management? E.g. Management by an EU institution (IPTS? Eurostat? EEA?) Formal EU-RoW collaboration (Eurostat and OECD?) Eco-invent or GTAP model? (reasonable price for the database provides resources for updates) Interest community of IE and IO experts => Join the EE IO Lunch corner for discussing ISIE Section!