1. Multiregion input / output tables and material footprint accounts session
Discussion of aspects of of MRIO / material footprinting work, and considerations for developing and resource based economies.
James West | Senior experimental scientist
22nd November 2016
Land and water flagship

2. This session focus – MRIO and material footprinting work, and data considerations for developing / extractive economies
Module 1 - Direct material accounts: Domestic extraction (DE) of primary materials, and direct physical imports and exports of these materials
Module 2 - indirect flows of primary materials "embodied" in trade. Raw Material Equivalents (RME) of Exports (RMEEx) and Imports (RMEIm)
Module 3 - domestic processed output (DPO) i.e. waste and emissions flows back to environment.
Module 4 - In use stocks and net additions to stocks (NAS)
Module 5 - Unused extraction / hidden flows
Module 6 - Material flows by sector
The first thing I’ll do here is remind you of where we are within the overall scope of the material flows modules, outlined in the Draft UNEP IRP report.
In contrast to preceding sessions, for this session we are not dealing with Module 1, but instead with the embodied flows of Module 2 .
Physical flows workshop for ONEP– Bangkok 22nd November | James West

3. Raw material equivalents and the scope of current and planned modules, and workshop focus.
Unused extraction
RMEIm
RMEEx
National Economy IM EX DE
DPO
NAS
And here’s the diagrammatic representation again, showing where we are within that system of modules.
The big change over yesterdays work is that the scope now expands to cover the embodied extraction in trade.
I or others have mentioned flows embodied in trade previously, but I’ll review its meaning again by example.
If Thailand imports a tonne of aluminium from Australia, the RME of that import would add that tonne of metal to Thailand’s footprint, plus all of the mine tailings left behind in Australia, plus all of the coal burned in Australia used to generate to electricity for smelting the aluminium. It will also add in small materials components to reflect the full chain of inputs required to produce that tonne of aluminium.
The same thing will happen in reverse when Thailand exports a tonne of rice to another country. All of the direct and indirect inputs required to produce that rice will be subtracted from Thailand’s material footprint, as the final product is consumed outside of Thailand.
The way that these materials are attributed is not by direct measurement of the full chain of physical inputs to production, but by using the data on DE from EW-MFA accounts, and combining that with monetary IO Tables.
Stock
Physical flows workshop for ONEP– Bangkok 22nd November | James West

4. Scope of the session – Not detailed treatment of MRIO methodology
Thailand had SUTs thence IO table for it done by ADB around 2011, for
15 products/sectors. What is happening now?
IO tables specialized area, and I’m not an IO specialist. Given this, I’ll skip mechanical detail, and concentrate on:
things that we’ve learned are important in IO table structure, AND their satellite accounts, for material footprinting.
develop thoughts on what data which is needed to augment IO data for MF work in developing economies generally, and for Thailand in particular
The ADB did Supply and Use tables (SUTs) , the basis for IO Tables, then completed 15 product/sector IO tables
These are very aggregated and ideally should be much more detailed. Is Thailand working internally to establish SUTs and IO tables?
While IO tables are central to Material footprinting, I’m not going to try and explain the technical details of them in any depth here for a couple of reasons. The main one is that it is a specialized area, and I’m not a specialist. CSIRO / UNEP MF work relies on work at Sydney University. It is not a topic which can be covered well, quickly.
Secondly, IO tables are only one part of what’s needed for material footprinting. Some of the most important parts of getting footprinting right depend on the Satellite accounts to IO tables, and how different levels of detail for product categories/industrial sectors, and materials categories, might interact.
Satellite accounts to IO tables are just extra rows beneath the main IO table. They record things like the materials, energy, and water which are consumed by each of the economic sectors which make up the main IO table. This is closely related to the data collected for the MFA accounts that we’ve been covering.
The key satellite account for material footprinting is DE, which we have spent most of my sessions explaining and discussing.
Physical flows workshop for ONEP– Bangkok 22nd November | James West

5. Summary of recent findings on effect of disaggregation
Format here is open Q&A from Now
Who knows about current Thai IO table efforts, and their structure?
de Koning et al.: spatial and product/sectoral disaggregation effect = few %, materials disaggregation > 25%, sometimes > 100% (note: “low” disaggregation was still 60 products, not 15)
The big differences from material disaggregation occur in primary sectors (The main area for EW-MFA)
General strength of effects seem modest, but examples of very strong effects for certain material / sectoral groups of importance to extractive economies
More important point is that, for materials, a great deal will depend on where disaggregation is done
de Koning et al.: spatial and product/sectoral disaggregation effect = few %, materials disaggregation > 25%, sometimes > 100% (note: “low” disaggregation was still 60 products, not 15)
The big differences from material disaggregation occur in primary sectors (The main area for EW-MFA)
General strength of effects seem modest, but examples of very strong effects for certain material / sectoral groups of importance to extractive economies
More important point is that, for materials, a great deal will depend on where disaggregation is done. Identify large aggregations with widely varying products.
Physical flows workshop for ONEP– Bangkok 22nd November | James West

6. Need for country specific material / sectoral disaggregation
Last point leads in to a point discussed with our footprinting people (Manfred Lenzen’s group), best illustrated by example
Coffee Vs Sorghum, Locally consumed staple Vs high value export
Can probably expect similar or worse effect for minerals e.g. Copper ore Vs concentrate Vs metal, 2 orders of magnitude metal difference, even greater difference in value terms.
Of much relevance to Thailand ?-> other ideas on key products/sectors that need split?
The current material footprinting methodology relies on using flows of money between different economic sectors to estimate flows of materials between them.
It would be much better if these material flows were directly measured, but this is almost never the case, and would be an extremely complex task to carry out, and not something that the ONEP is likely to have the resources to carry out. So we need to resort to using monetary flows as a proxy. That is why IO tables are central to current footprinting methodology.
One problem with this approach is that when you have only a small number of products/sectors in your IO table, there will be mixing of materials which have very different prices per tonne. An example of this is when an IO table has only one product/sector for Agriculture.
In Kenya, for example, two main agricultural products dominated money flows in Agriculture. One product, sorghum, had a low price per tonne, and was used almost entirely for domestic consumption. The other, coffee, had a very high price per tonne, and almost all of it was exported.
As there was only one product/sector in the countries IO table for all Agriculture, material flows were estimated from one unit price ($/kg) which averaged the money and tonnes for both products.
Physical flows workshop for ONEP– Bangkok 22nd November | James West

7. Need for country specific material / sectoral disaggregation
Last point leads in to a point discussed with our footprinting people (Manfred Lenzen’s group), best illustrated by example
Coffee Vs Sorghum, Locally consumed staple Vs high value export
Can probably expect similar or worse effect for minerals e.g. Copper ore Vs concentrate Vs metal, 2 orders of magnitude metal difference, even greater difference in value terms.
Of strong relevance to Thailand -> other ideas on key products/sectors that need splitting?
As the material footprinting methodology relies on flows of money to estimate flows of materials, if there is only one sector in the IO table for both coffee and sorghum, then $100 in Agricultural exports will be converted to the same tonnage as $100 in domestic consumption.
The problem is that in reality the $100 in exports was probably just a few kg of coffee, while $100 in domestic consumption was probably hundreds of kg of sorghum. This will cause an underestimation of the country’s MF in biomass.
The main solution to this problem is adding resolution to your IO tables. Ideally, for the example I gave, there would be a product and sector for each agricultural commodity, but that would be impractical. However, having a having a “coffee” product/sector in addition to “rest of agriculture” sector is probably reasonable, and would greatly improve the result.
Where might such factors be important in Thailand’s case?
Physical flows workshop for ONEP– Bangkok 22nd November | James West

8. Subsistence coefficients
A second point (that CSIRO is also currently discussing with Lenzen’s group):
Low to middle income economies, often have large subsistence sector
Informal sector is largely invisible to IO tables, but can be very significant in tonnage terms
Possible example for Thailand. Exports of agricultural products Vs. Local barter exchange?
Another very important problem with material footprinting comes from using money flows to calculate material flows. In many low to middle income countries, there are large informal, or subsistence sectors to the economy.
For these sectors, there are little or no monetary flows recorded. If a rice farmer trades some rice for some vegetables with his neighbour, there is no monetary transaction. This type of material flow and consumption is physically very real, and important in many countries, but it is totally invisible to the current material footprinting methods.
It is obviously not practical to expect any sort of systematic reporting of these transactions to become part of national statistics.
It is realistic for local research organizations to provide rough estimates of how much production could be accounted for by such transactions.
Someone studying small holdings farmers could probably make reasonable estimates of what proportion of their production is consumed for subsistence, what proportion is exchanged with neighbours, and what proportion is traded in a formal monetary transaction.
Integrating this information into footprinting looks likely to an area where major improvement in the methodology could be made.
Physical flows workshop for ONEP– Bangkok 22nd November | James West

9. Different prices for same product when traded between different sectors
$ Pumpkin to feed input for beef <> $ pumpkin to local market <> $ pumpkin exported
Local Thai examples?
Is there data on this? Could it practically be collected?
Yet another problem with material footprinting associated with using money flows to calculate material flows arises when different prices are charged for the same product, depending on which sectors are receiving it.
Physical flows workshop for ONEP– Bangkok 22nd November | James West

10. Some references
de Koning, A., M. Bruckner, S. Lutter, R. Wood, K. Stadler, and A. Tukker Effect of aggregation and disaggregation on embodied material use of products in input–output analysis. Ecological Economics 116: Giljum, S., H. Wieland, F. S. Lutter, D. Wiedenhofer, A. Schaffartzik, H. Schandl, and J. West An empirical assessment comparing input-output-based and hybrid methodologies to measure demand-based material flows. Also, if you really want to get into it further, Google: +Lenzen +material +footprint That will provide many leads to the relevant literature.
Physical flows workshop for ONEP– Bangkok 22nd November | James West

11. Thank You James West Senior experimental scientist
CSIRO land and water flagship t e
Land and Water/ASES