ConAccount Meeting 11-12th October 04, Zurich

ConAccount Meeting11-12th October 04, Zurich

Andrea StockerAndrea StockerSustainable Europe Research Institute (SERI)Sustainable Europe Research Institute (SERI)

Modelling Changes in Resource Modelling Changes in Resource Use of the Austrian EconomyUse of the Austrian Economy

Andrea Stocker ConAccount Meeting, Zurich, 11-12 October, 2004 Page 2

Structure of presentation

1. Aim and Motivation

2. Input-Output Analysis • Explanation of extended IOA• Empirical results

3. Decomposition Analysis• Explanation of chosen method• Empirical results


Aim and Motivation

• Showing the resource use of the Austrian sectors

• Analysing which sectors are responsible (directly and indirectly) for the overall resource use, using Input-Output Analysis

• Analysing the development of the resource use in the period 1995 to 2000

• Separating the changes in resource use in a technological, structural and final demand effect (Structural Decomposition Analysis).

Aim of the contribution


Aim and Motivation

• Dematerialization as important goal to reach ecological sustainability - Reducing material inputs- Relative vs. absolute dematerialisation

• Decrease of resource use and its decoupling of economic growth represent central goals of the Austrian Strategy for sustainable development

• Parallel analysis of economic and environmental aspects, which can be done with IO Analysis

Motivation


Theoretical Methods

Input-output approach for analyzing the resource use of the Austrian economy

• Provides a comprehensive picture of inter-linkages between environment and socio-economic system as it allows to combine bio-physical data and social data with monetary input-output-models

• Shows not only direct but also indirect effects which occur because of the various relationships between the sectors of an economy.

Structural Decomposition Analysis• Using Input-Output Approach to decompose the

material use in its underlying factors.


Extended Input-Output Analysis• Integration of material flows in IO-Analysis:

Method developed by Hinterberger, Femia, Moll (1998)• Extending monetary IO tables by an additional row of

biophysical information • Extension with material inputs is reasonable because the

hypothesis of a closed monetary cycle between firms and households, which do not need absorptions from nature and deliveries to the nature is not adequate.

• Comprehensive quantification of direct and indirect resource inputs activated by final demand.

Extended IO Analysis


Monetary IO table with additional row of material input Use

SupplySectors (1,..,n) Final demand (y) Total output

Sectors (1,..,n) Z y x

Value Added v'

Imports m'

Total input x'

Material input(in tons per sector) DMI'

Extended IO Analysis

LyyAIx 1)(

MyDMI

1ˆ'' xDMIm

LmM ˆ

Static monetary IO model

Sectoral material input coefficients

Multiplier matrix, weighted by physical units (material input in tons)

Direct and indirect MI of final demand


Empirical Analysis

• To get a clear picture of the interrelations between the natural and the socio-economic (sub-)system, indicators of MFA can be related to Input-Output Tables.

• Input-Output Tables for 1995 and 2000 are available

• Austrian time series of material input from 1960 to 2001, using Direct Material Input (DMI) as indicator (domestic extraction plus imported materials)

Data requirements


Static Analysis• Direct and total amounts for 1995 and 2000• Material intensity for 1995 and 2000

– Direct material coefficients– Total material requirements and multipliers

Multiplier for sector j (column sum of the weighted Total Requirements Matrix): total amount of material use in all sectors of the economy that is necessary for sector j‘s output to satisfy a Euro‘s worth of final demand.

• Amount, share and multipliers of resource use of the catagories of final demand

Analysing changes over time

Empirical Analysis


Direct Material Use• Only a few sectors extract material directly

from nature– Agriculture and forestry – coal mining– ores mining– crude petroleum and natural gas– Natural stones, clay and grawel

• High import share (30 %)– In 1999 87 % of fossil materials were imported– Nevertheless only considering the domestic material

extraction, because an exact allocation of imported amounts is not possible.

Empirical Analysis


Empirical Results

Direct resource use 1995 und 2000, amounts and intensities

2000 Output (prices 1995)

[1000 t] [%] [Mio. Euro]Agriculture, forestry, fishing 34.050 27,71% 6.467,32 0,53Mining of coal and lignite 1.347 1,10% 50,42 2,67Crude petrol., natural gas, metal ores 4.653 3,79% 379,83 1,23Quarrying of natural stone 82.850 67,41% 1.121,74 7,39Summe 122.900 100,00% 8.019,30 15,33

1995 Output[1000 t] [%] [Mio. Euro]

Agriculture, forestry, fishing 37.990 30,45% 5.803,65 0,48Mining of coal and lignite 1.250 1,00% 52,98 1,71Crude petrol., natural gas, metal ores 4.460 3,57% 200,72 1,61Quarrying of natural stone 81.080 64,98% 836,46 7,04Summe 124.780 100,00% 6.893,82 18,10

Material input

Material input

Material coefficents

Material coefficents


Empirical Results

Direct resource use 1995 und 2000, amountsMaterialinput in 1000t

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.000

Agriculture, forestry, fishing Mining of coal and lignite Crude petrol., natural gas, metal ores Quarrying of natural stone

1995

2000


Direct resource use 1995 und 2000, intensitiesMaterialcoefficents

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

Agriculture, forestry, fishing Mining of coal and lignite Crude petrol., natural gas, metal ores Quarrying of natural stone

1995

2000

Empirical Results


-10.000

0

10.000

20.000

30.000

40.000

50.000

60.000

70.000

80.000

90.00001

Agr

icul

ture

,fo

rest

ry, f

ishi

ng

10 M

inin

g of

coal

and

lign

ite

11 C

rude

petro

leum

,na

tura

l gas

,m

etal

ore

s

14 O

ther

min

ing

and

quar

ryin

g

15 M

anuf

actu

reof

food

prod

ucts

and

beve

rage

s

26 M

anuf

actu

reof

oth

er n

on-

met

allic

min

eral

prod

ucts

45C

onst

ruct

ion

70 R

eal e

stat

eac

tiviti

es

75 P

ublic

adm

inis

tratio

n;co

mpu

lsor

yso

cial

sec

urity

Empirical results

Direct and total (direct + indirect) resource use 2000, amounts

directtotal (direct plus indirect)


Empirical results

Direct and total (direct + indirect) resource use 2000, intensities

0

10

20

30

40

50

60

70

80

90

Agric

ultu

re,

fore

stry

, fis

hing

Min

ing

of c

oal a

ndlig

nite

Cru

de p

etro

leum

,na

tura

l gas

, met

alor

es

Oth

er m

inin

g an

dqu

arry

ing

Elec

tric

ity, g

as,

stea

m a

nd h

otw

ater

sup

ply

Land

tran

spor

t;tra

nspo

rt vi

api

pelin

es

Con

stru

ctio

n

Sew

age

and

refu

sedi

spos

al,s

anita

tion

and

sim

ilar

act.

Activ

ities

of

mem

bers

hip

orga

niza

tions

n.e.

c.

Hea

lth a

nd s

ocia

lw

ork

Post

and

tele

-co

mm

unic

atio

ns

directtotal (direct plus indirect)


Empirical results

Resource use, induced by final demand catagories

• Absolute amount and percentage of the catagories• Multipliers: how much tons of material input are allocated

to a catagory through 1 Mio. Euro‘s worth of this catagory

Final demand catagories DMI Percentage Multiplier DMI Percentage Multiplicator[1000 Tonnen] [%] [1000 t / Mio. € [1000 Tonnen] [%] [1000 t / Mio.€]

Private Consumption 38.571,58 30,91% 0,4573 36.707,21 29,87% 0,4352Governmental Cons. 8.390,82 6,72% 0,2314 8.864,53 7,21% 0,2445Dwellings 17.308,18 13,87% 1,9693 13.784,48 11,22% 1,5684Other buildings a. structures 21.448,79 17,19% 1,6582 21.188,69 17,24% 1,6381Machinery 762,73 0,61% 0,1243 868,44 0,71% 0,1415Transport equipment 68,71 0,06% 0,0468 80,87 0,07% 0,0551other Investments 231,20 0,19% 0,0645 918,41 0,75% 0,2563Exports 37.998,01 30,45% 0,5270 40.487,06 32,94% 0,5615Total 124.780,02 100,00% 0,6561 122.899,68 100,00% 0,5447

1995 2000


Empirical Results

Total MI, induced by final demand catagories (amounts) DMI in 1000t

0,00

5.000,00

10.000,00

15.000,00

20.000,00

25.000,00

30.000,00

35.000,00

40.000,00

45.000,00

PrivateConsumption

GovernmentalCons.

Dwellings Other buildings a.structures

Machinery Transportequipment

otherInvestments

Exports

1995

2000


Governmental Consumption

7%Dwellings 11%

Other Buildings

18%

Privat Consumption

30%

Exports32%

Empirical Results

20001995

Other Buildings17%

Governmental Consumption

7%

Privat Consumption

31%Exports

30%

Dwellings14%

Total MI, induced by final demand catagories (share, %)


Empirical Results

Total MI, induced by final demand catagories (Multipliers)

0,0000

0,5000

1,0000

1,5000

2,0000

2,5000

Priv

ate

Con

sum

ptio

n

Gov

ernm

enta

l Con

s.

Dw

ellin

gs

Oth

er b

uild

ings

a.

stru

ctur

es

Mac

hine

ry

Tran

spor

t equ

ipm

ent

othe

r Inv

estm

ents

Expo

rts

1995

2000


Structural Decomposition Analysis (1)• Which factors contribute how much to the total

change in a specific variable in Austria?• SDA is based on IO models and thus is able to

distinguish different factors that influence total amounts as well as structure and intensity of material use.

• Decompose the absolute change in material use, separating- technological effect (changes in resource intensity)- structural effect (change of Leontief Inverse).- final demand effect (changes in final consumption)

Decomposition Analysis


Structural Decomposition Analysis (2)• General form of SDA for two factors

• When should we measure ΔL and Δy?


tt xxx 1

yAIx 1)( Lyx

yLLyx


Structural Decomposition Analysis (3)• Different possibilities:

Interaction

effect


yLLyx tt 1

yLLyx tt 1

yLyLLyx tt 11

yLyLLyx tt

Polar Decomposition Methods


Structural Decomposition Analysis (4)• Chosen Approach: Average of the polar

decompositions (Dietzenbacher and Los, 1998)- No interaction effects, order of occurence of effects

irrelevant- Decomposition of methods with interaction effects show a

relatively high share of these effects• Definition of starting equation

- Relation between resource use and IO analysis can be achieved by expressing the resource use per unit of total output.


1ˆ'' xDMIm LymxmDMI ''

19952000 DMIDMIDMI


Structural Decomposition Analysis (5)• First polar decomposition:

technology effect structural effect final demand effect

• Second polar decomposition:

technology effect structural effect final demand effect


yLmLymyLmDMI

200020001995200019951995 '''

yLmLymyLmDMI

199519952000199520002000 '''


Structural Decomposition Analysis (6)• Average of the two polar decomposition

methods:


)(5.0)(5.0)(5.0

1995199520002000

2000199519952000

1995199520002000

yLmyLmLymLymymLymL

DMI


Decomposition of DMI in Austria (1995 – 2000)

Material use 1995: 125 Mio t 2000: 123 Mio t

Change of Material use

Empirical Results

Effect [ 1000 t] [%]

Technology effect -21.410 1139%

Structural effect 4.048 -215%

Final demand effect 15.482 -823%

Total change of resource use -1.880 100%


Decomposition of DMI in Austria (1995 – 2000), 1000 t

Empirical Results

-25.000

-20.000

-15.000

-10.000

-5.000

0

5.000

10.000

15.000

20.000

Technology effect Structural effect Final demand effect Total change ofresource use


Decomposition, sectoral results in 1000 t (1995 – 2000)

-8.000

-6.000

-4.000

-2.000

0

2.000

4.000

6.000

8.000

10.000

01 Agriculture,

forestry, fishing

10 Mining of coal

and lignite

14 Other m

iningand quarrying

15 Food productsand beverages

24 Chem

icals andchem

icalproducts

26 Other non-

metallic m

ineralproducts

40 Electricity, gas,steam

,hot water

supply

45 Construction

60 Land transport;transport via

pipelines

70 Real estate

activities

Structural effectFinal demand effectTechnology effectTotal change


Conclusions• Decomposition is a powerful tool to show to which

extent underlying causes contribute to the observed overall change of a given variable.

• The resource use has decreased from 1995 to 2000 by about 2 Mio. tons.

• Much reduction has been achieved by decreasing the material use per unit of output (decreasing the material intensity)

• Since only domestic resource extraction is considered, the analysis does not provide a comprehensive picture of the Austrian resource use.

More information:

[email protected]

The end…..thank you !

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ConAccount Meeting 11-12th October 04, Zurich

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