Input Output Analysis with Environmental Extension

Application of input-output analysis (IOA) to environmental concerns was undertaken by Wassily Leontief, the pioneer of IOA, in the early 1970s (Leontief [1973] 1986). He carried out case studies for Japan (Leontief [1972] 1986) and this might be one reason why environmental application of IOA has been and continues to be active in Japan. The Japanese IO table consists of some 400 sectors and is thought to be one of the most detailed and qualified in the world.

IOA was already applied for the above-mentioned energy analysis, in the late 1970s. Energy consumption by sectors is indicated in physical unit tables, which officially accompany the national IO tables. Other official statistics on energy consumption are often used in order to supplement the data in the physical unit tables, in which data coverage and accuracy are not complete. Once sectoral direct energy consumption per unit of output is quantified, one can easily calculate overall sectoral energy intensity, including indirect energy consumption in upstream industries, by applying the Leontief inverse matrix. This calculation process has been applied to energy consumption, CO2 emission (Kondo et al. 1996; Kondo and Moriguchi 1997), traditional air pollutants (SOx, NOx) (Hondo et al.

1998), water pollutants (BOD, N, P), solid wastes and so on. They have often been used for life cycle inventory analysis. Another example is an analysis of structural changes of CO2 emissions from the viewpoint of final demand of the economy as influenced by international trade (Kondo et al. 1998).

More recently, application of IOA to the issues of waste management and recycling has become very active. A Waste Input-Output (WIO) model was proposed (Nakamura 2000) to describe an interdependence of goods-producing sectors and waste management sectors, in which both monetary and physical flows were dealt with. Description of whole material flows within the economy and their interaction with the environment has also been attempted, linking sectoral IO studies and macroscopic MFA studies. Learning from the German pioneering experiences in PIOT (physical input-output tables: see Stahmer et al. 1998), a framework of 3DPIOT (three-dimensional PIOT) is being proposed (Figure 24.1), and case studies are being undertaken (Moriguchi 1997). These environmentally extended IO studies have many features in common with MFA studies.

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