ConAccount Meeting 11-12th October 04, Zurich Andrea Stocker Sustainable Europe Research Institute (SERI) Modelling Changes in Resource Use of the Austrian Economy

Andrea Stocker ConAccount Meeting, Zurich, 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 3 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 4 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 5 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.

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 6 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 7 Monetary IO table with additional row of material input Use Supply Sectors (1,..,n) Final demand (y)Total output Sectors (1,..,n)Zyx Value Addedv' Importsm' Total inputx' Material input (in tons per sector) DMI' Extended IO Analysis 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 8 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 9 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 10 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 % of fossil materials were imported –Nevertheless only considering the domestic material extraction, because an exact allocation of imported amounts is not possible. Empirical Analysis

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 11 Empirical Results Direct resource use 1995 und 2000, amounts and intensities

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 12 Empirical Results Direct resource use 1995 und 2000, amounts

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 13 Direct resource use 1995 und 2000, intensities Empirical Results

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 14 Empirical results Direct and total (direct + indirect) resource use 2000, amounts

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 15 Empirical results Direct and total (direct + indirect) resource use 2000, intensities

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 16 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 17 Empirical Results Total MI, induced by final demand catagories (amounts)

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 18 Empirical Results Total MI, induced by final demand catagories (share, %)

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 19 Empirical Results Total MI, induced by final demand catagories (Multipliers)

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 20 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

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 21 Structural Decomposition Analysis (2) General form of SDA for two factors When should we measure ΔL and Δy? Decomposition Analysis

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 22 Structural Decomposition Analysis (3) Different possibilities: Interaction effect Decomposition Analysis Polar Decomposition Methods

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 23 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. Decomposition Analysis

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 24 Structural Decomposition Analysis (5) First polar decomposition: technology effect structural effect final demand effect Second polar decomposition: technology effect structural effect final demand effect Decomposition Analysis

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 25 Structural Decomposition Analysis (6) Average of the two polar decomposition methods: Decomposition Analysis

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 26 Decomposition of DMI in Austria (1995 – 2000) Material use 1995: 125 Mio t 2000: 123 Mio t Change of Material use Empirical Results

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 27 Decomposition of DMI in Austria (1995 – 2000), 1000 t Empirical Results

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 28 Decomposition, sectoral results in 1000 t (1995 – 2000)

Andrea Stocker ConAccount Meeting, Zurich, October, 2004 Page 29 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.

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