Economy-wide Material Flow Accounts

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Economy-wide Material Flow Accounts Importance
and analysis of Indirect flows

• Aldo Femia, Donatella Vignani
• 10th London Group Meeting
• New York, 19-21 June 2006
• Second day
• Session on Physical flow accounts and hybrid
  accounts

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A global target for Natural Resource Use

• Total Material Requirement (TMR)
• The Italian Environmental Strategy Action Plan
  for Sustainable Development suggests, among
  others, the target of a reduction of natural
  resources exploitation by 25 within 2010 this
  target is fixed in reference to the TMR, possibly
  in comparison with Gross Domestic Product (GDP)
• TMR is the widest indicator in the EW-MFA as it
  measures the total material base of an economy.

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Empirical evidence for the long term-trend
The TMR has grown by 21 from 1980 to 2003
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and its components? Direct and Indirect flows
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What are Indirect Flows associated to Imports

• They are the up-stream uses of resources
  necessary, in a life-cycle perspective, in order
  to realise the imported products, though not
  embodied in them.
• These are both used and unused natural resources
  that have been taken from the environment
  abroad.
• This matter has not been embodied in the
  products it has been given back to the
  environment as residual matter (emissions to air
  and water, and waste). IF therefore also
  represent a proxy for the additional potential
  pressures activated by the demand for the
  products imported, avoided by the importing
  country.

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The growth of Indirect Flows
Indirect Flows associated to Italian Imports,
1980-2004
1980-2004 80
Italy can contribute to the reduction of resource
use worldwide mostly by putting under control the
foreign components of its TMR
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Analytical setting effects decomposition
IF ? (IF/Ip) (Ip/Iv) (Iv/Y) Y
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Focus physical determinants

• Let us split the identity in two parts
• IFtot ? (IFtot/Ip)Ip
• and
• Ip ? (Ip/Iv)(Iv/Y)Y
• We will focus on the first part, and in
  particular on its first factor, after a quick
  look at the change of Ip and the way its drivers
  contributed to its change

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Contributions of IF intensity and of Imports
growth to overall IF growth
Both components grow until the beginning of the
1990s.
The cumulated contribution of IF intensity has
peaks in 1993 and 1998, then decreases rapidly
and in 2004 explains only 10 of overall IF
growth. The tendency of Imports growth
contribution is quite steady.
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Macro driving forces of physical Imports
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IF Intensity two sub-periods
Ratio between indirect flows associated to
imports and actual import flows, Italy, 1980-2004
(tons per ton)
The IF intensity of imports has grown throughout
the 1980s. It reached a peak in 1993 and then
decreased, though not going back to the initial
values. This is at the origin of IFs growth
slowdown from 1993 onwards.
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How to decompose IF intensity

• The overall IF intensity can be seen as a
  weighted average
• IF/Ip ? ?i (IF/Ip)i (Ipi /Ip)
• The disaggregation helps understanding the
  reasons for the trend

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Dimensions of the analysis

• We analysed the following sub-periods
• 1988-1993 overall IF intensity grows from 3,11
  to 4,15
• 1993-2004 overall IF intensity falls from
  4,15 to 3,13.
• What kind of changes determined this evolution?
• We tried to understand it by breaking down the
  Imports and their respective Indirect Flows
• by kind of material (i B,F,M,P)
• by geographical origin (i countries) (for
  selected commodities only).
• by use destination (i intermediate/final/mixed)

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Analysis by kind of material

• Biomasses and products thereof
• Fossil fuels and products thereof
• Minerals and products thereof
• Composite products

on average 16 of imports and 9 of IFs on
average 59 of imports and 14 of IFs on average
24 of imports and 76 of IFs on average 1 of
imports and 1 of IFs
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Composition and intensity by material
Sources of overall Imports IF intensity change
1988-1993 (yellow) and 1993-2004 (red)
The two sub-periods display opposite trends. It
is the change within the groups that explains
most of the story. In the second sub-period the
change in composition between the groups gives a
tendency towards higher IFs.
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The main component minerals
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Analysis of specific commodities IFs
A subset of Minerals and products thereof
ores and precious metals representing
0,9 of total Imports, to which are associated
28,9 of total IFs on average in 1993-2004
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First-level determinants

• Profile of the overall volume of direct imports
  and of the average IF intensity of ores and
  precious metals

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Overall shift-share effects on IF intensity
Effect of changes of average IF intensities of
individual commodities (due to the change of
supplying country)
Effect of changes of composition by commodity

• The change is due almost only to the shift
  between products, towards ores and minerals with
  lower average coefficients. Is this change also
  connected to changes in the countries that supply
  them?

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Changing the sources of materials
The sources of these materials have sensibly
changed more than 70 of the change in average
intensity is due to the shift between continents
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Change of continent
Share in the italian Imports of ores and precious
metals
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Average intensity of ores imports from Africa
Cumulated contribution of the shift within
African countries as suppliers to the change of
the average intensity for ores and precious
metals, tons per ton
As the share of quantities imported from Africa
fell, their unitary upstream flows increased
dramatically
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Analysis by use destination
3 kinds of possible uses of imported goods
intermediate, final, both
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Conclusions and discussion issue

• Indirect flows are an important component, that
  should not be disregarded in a sustainability
  perspective for the globalised world
• In spite of the uncertainties connected to their
  calculation, IFs have great communication power
• It is possible to look behind macro-aggregated
  indicators (such as total IFs) and try and
  understand the dynamics that determine their
  evolution.
• How should these be handled in the upcoming
  revision of the SEEA?

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Thank you for your attention