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A green input-output model and social accounting matrix
Contributions to the IGEM
Dr. Xin Zhou
Principal Policy Researcher and Leader of Green Economy AreaInstitute for Global Environmental Strategies (IGES)
Technical Workshop on Designing an Integrated Green Economy Modelling (IGEM) tool for informing green economy policy making processes, 22 April 2016, UNEP, Geneva
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Overview: A green IO-SAM in the IGEM framework
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Fundamentals of an input-output model
The framework of an IO modelAn IO model is an economic accounting framework which presents the inter-industry transactions in terms of monetary values of the flows of products from each of the producing sectors (as a seller) to each of the purchasing sectors (as a buyer).
1 … j … n1 x 11 … x 1j … x 1n c 1 i 1 g 1 e 1 X 1
… … … … … … … … …
i x i1 … x ij … x in c i i i g i e i X i
… … … … … … … … …
n x n1 … x nj … x nn c n i n g n e n X n
v 1 … v j … v n v c v i v g v e Vm 1 … m j … m n m c m i m g MX 1 … X i … X n C I G ETotal inputs (X )
Final demandPurchasing sectors
Prod
ucin
g se
ctor
s
Totaloutputs (X )
Value-added (v' )Imports (m )
The basics of an input-output analysis
FAXX BFFAIX 1)(
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Input-output model, social accounting matrix and CGE
Social accounting matrixA Social Accounting Matrix (SAM) is a double-entry economy-wide data framework representing the economy of a nation with incomes located along its row and the expenditures along its column.
1 … n Capital Labor Domesticindirect tax
Import tariffs Household Government Investment
1…
n
CapitalLabor
Domestic indirect taxImport tariffs
Household Householdincome
Government Governmentrevenuefromproductiontaxes
Governmentrevenue fromimport tariffs
Governmentrevenuefrom directtaxes onhouseholds
Governmentincome
Investment Householdsavings
Governmentsavings
Externalsavings
Savings
Foreign outflow
Householdexpenditures
Governmentexpenditures
Investment Foreigninflow
External
Total
External
Value-added from capital servicesValue-added from labor services
Factor
Indirect Tax
Final Demand
Activity
Activity costs (gross input) Factor expenditures Tax expenditure
Imports
Total
Intermediate inputs Householdconsumption
Governmentconsumption
Investment
Activity Factor
Activity income(gross output)
Exports
Indirect Tax Final Demand
Factor income
Tax revenueProduction taxImport tariffs
Factor income to households
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Features of a green IO-SAM
Greenness: Green sectors vs. conventional sectorse.g. Renewable energy vs. fossil fuel-based energy
Recycling sectorSustainable agriculture and forestry, etc.
Social inclusiveness: Disaggregated labour marketse.g. different income groups
gender groupsurban vs. rural, etc.
Environmental extensionse.g. Carbon footprints accounting from consumer perspective
Skilled (S) Unskilled (US)
Female (F)Male (M)Male (M) Female (F)
Labor (L)
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Linking the green IO-SAM with the CGE
Green IO-SAM as the basic database for an empirical CGE- IO-SAM is used to build the production function of different sectors
including the green sectors;- The base-year SAM is used to estimates coefficients and exogenous
variables;
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Steps towards constructing a green IO-SAM
Step 1: A green IO model
1 … j … n n+11 x 11 … x 1j … x' 1n x' 1,n+1 c 1 i 1 g 1 e 1 X 1
… … … … … … … … … …
i x i1 … x ij … x' in x' i,n+1 c i i i g i e i X i
… … … … … … … … … …
n x' n,1 … x' n,j … x' n,n x' n,n+1 c' n i' n g' n e' n X' n
n+1 x' n+1,1 … x' n+1,j … x' n+1,n x' n+1,n+1 c' n+1 i' n+1 g' n+1 e' n+1 X' n+1
v 1 … v j … v' n v' n+1 v c v i v g v e Vm 1 … m j … m' n m' n+1 m c m i m g MX 1 … X i … X' n X' n+1 C I G ETotal inputs (X )
Purchasing sectorsFinal demand
Totaloutputs (X )
Prod
ucin
g se
ctor
s
Value-added (v' )Imports (m )
Follows a supply chain approach;
EGSS vs. greening the production and process
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Steps towards constructing a green IO-SAM
Step 2: A green SAM
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Steps towards constructing a green IO-SAM
Step 3: Mapping EGSS with corresponding IO sectors: Japanese case- EGSS consists of activities which produce goods and services to
measure, prevent, limit, minimize or correct environmental damage to water, air and soil, as well as problems related to waste, noise and eco-systems. – by OECD/Eurostat (1999)
- MOEJ conducted annual surveys on the market size of environmental industry since 2000 following the 1999 OECD’s EGSS classification.
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A green IO-SAM for Mexican renewable energy simulation
Construction of a renewable energy-expanded IO-SAM for Mexican renewable energy simulation
CGE model, built upon the energy-expanded IO-SAM, can simulate the impacts of policy interventions, such as a FIT or RPS, on energy supply and demand as well as the economy-wide responses.
σE
Electricity (E)
Electricity from Conventional Resources (CS)
Electricity from Renewable Resources (RS)
Natural Gas (NG)
Coal (CO)
Wind (W)
Solar PV (SP)
Hydro(HY)
Geothermal (GE)
Biomass (BI)
σRSσCS
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Mapping renewable energy with Mexican IO
A renewable energy-expanded IO-SAM requires to present renewable energies and their associated production chains explicitly in relevant IO sector classification.
In current Mexican IOs, either the industry by industry (262 sectors) or the product by product (814 products), there is no specific classifications related to renewable energies and associated production chains.
Needs to map renewable energy with Mexican IO sector classification which is based on the NAISC.
Use Japanese study (Zhou, et al., 2015) of the mapping of renewable energies with ISIC and the correspondence of ISIC and NAISC.
gure 17. Mapping renewable energy sectors/EGSS with Mexican IO sector classifications
Japanese revised EGSS sector classification 2012
ISIC Version 3.1
ISIC Version 4
NAISC sector classifications
Mexican IO sector classifications
