Consumption Land Use Matrix (CLUM),

Multi-regional Input-Output model

(MRIO) and the link to trade

Nicole Grunewald

March 26, 2014

Table of Contents

1. What is a CLUM?

2. What is IO?

3. What is MRIO?

4. Use of MRIO

5. How to reconcile NFA and MRIO?

6. Limitations

Table of Contents

1. What is a CLUM? And why is a CLUM useful?

2. What is IO?

3. What is MRIO?

4. Use of MRIO

5. How to reconcile NFA and MRIO?

6. Limitations

4.4 1.1 0.8 0.8 0.3 0.3

1

NFA

LAND USE C

ON

SU

MP

TIO

N

National

Consumption

Footprint

2 11% 100% 95% 2% 10% 100%

25% - - 35% 35% -

16% - - - 35% -

32% - 5% 50% 10% -

16% - - 13% 10% -

0.5 1.1 0.7 0.0 - 0.3

1.1 0.0 - 0.3 0.1 -

0.7 0.0 - - 0.1 -

1.4 0.0 0.0 0.4 0.0 -

0.7 0.0 - 0.1 0.0 -

3

2.7

1.4

0.8

1.9

0.9

7.7

Food

Housing

Mobility

Goods

Services

Breakdown of overall Footprint into its components

All numbers in (gha/cap)

ECOLOGICAL FOOTPRINT BY HOUSEHOLD CONSUMPTIONS

-

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1,0

gha

pe

r ca

pit

a Built-up Land

Forest Land

Fishing Grounds

Grazing Land

Cropland

Carbon

Table of Contents

1. What is a CLUM?

2. What is IO?

3. What is MRIO?

4. Use of MRIO

5. How to reconcile NFA and MRIO?

6. Limitations

What is Input-Output?

• Question: How to estimate the direct and indirect natural resource input of each consumption item.

• Sample production tree showing upstream inputs required to provide a hamburger to final consumer.

What is Input-Output?

• Input-output models are made up of matrices describing transactions between actors within an economy.

• Columns represent the industries such as agriculture Ag and manufacturing Ma, as well as final demand FD by governments and households.

• Rows represent product groups and their total input TI as well as value added VA.

• Transactions are generally accounted for in monetary values however some IO tables based on mass or energy transactions have been constructed.

Table of Contents

1. What is a CLUM?

2. What is IO?

3. What is MRIO?

4. Use of MRIO

5. How to reconcile NFA and MRIO?

6. Limitations

Ecological Footprint adapted MRIO

• Multi-Regional Input-Output model to track the flow of traded commodities from country to country from origin to end use.

• This is based upon GTAP data that tracks the monetary flows of 57 sectors in 113 regions around the world.

• By using footprint intensities it is possible to track the flow of resources from country to country measured by the Ecological Footprint.

• And to produce Consumption Land Use Matrices (CLUM) for a variety of nations.

• This identifies the demands that populations are placing upon the biosphere in terms of differing consumption categories/sectors.

NFA,IO, and MRIO models

1.National Footprint Account (NFA)

3. MRIO model

2.Single IO model

Multiple countries

Overview of MRIO methodology

How is the data transformed?

*The GTAP data base is coordinated by the Center for Global Trade Analysis in Purdue University's Department of

Agricultural Economics. It provides a global data base describing bilateral trade patterns, production, consumption and

intermediate use of commodities and services. (from GTAP web page)

*EF = EF Intensity * Final Demand

*Leontief Inverse = (I-A)-1 the Leontief inverse (input-output) table show the input requirements, both direct and indirect, on all other producers,

generated by one unit of output (From OECD web page)

Table of Contents

1. What is a CLUM?

2. What is IO?

3. What is MRIO?

4. Use of MRIO

5. How to reconcile NFA and MRIO?

6. Limitations

What are possible MRIO/CLUM products/applications?

1. Basic breakdown of national numbers – rough, or detailed (typically along the line of “food, housing, mobility, goods, services”

2. Calculate Ecological Footprint of sub-national populations (household, socio-economic group, city, region)

3. Identify trade patterns and the source regions of ecological inputs (bottom of supply chain)

4. Identify regions consuming the nation’s ecological inputs

5. Extract conversion efficiency

6. Compare structural difference between economies

7. Personal calculators (like www.footprintcalculator.org)

8. Policy analysis through economic modeling

Use of MRIO for analyzing trade patterns

• The results from the MRIO can be used to assess changes in trade patterns.

• As part of Global Footprint Network’s Mediterranean Initiative maps have been developed to show the shift in trading partners with this region and the rest of the world.

• Highlighted here are the trends for imports, but exports can also be assessed.

Map of imports to the Mediterranean for 1977

Countries coloured green have

a biocapacity remainder, those

in red have a biocapacity

deficit. The more intense the

colour the larger the value.

Map of imports to the Mediterranean for 2007

Note: shifting import patterns

from countries in biocapacity

deficit

Use of MRIO results for policy analysis though CGE modeling

Household

Government

Gross Fixed Capital

Formation

Purchases of

consumable

items by

households,

under the

categories:

food

Predominantly

investments by

firms, also

includes

purchases of

residences by

households,

and

infrastructure

purchases by

governments

Purchases by government of consumable

items, categorized by the final producing

sector

Footprint of Cities

Table of Contents

1. What is a CLUM?

2. What is IO?

3. What is MRIO?

4. Use of MRIO

5. How to reconcile NFA and MRIO?

6. Limitations

2

1. "Process-Based" method (piece-by-piece approach)

2. “Input-Output” method (comprehensive approach)

Tracking of physical flows of materials and energy in various categories,

multiplied by respective Footprint intensities (from LCA data bases)

Using monetary flows between economic “sectors” to estimate all resource

flows and ultimate origin of all those flows. For lack of better data, monetary

flows are used to describe flows (as presented in national input-output

tables).

Reconciliation between NFA and MRIO results (different trade results)

EFp +EFi – EFe = EFc

same different different

Table of Contents

1. What is a CLUM?

2. What is IO?

3. What is MRIO?

4. How to reconcile NFA and MRIO?

5. Limitations

6. Possible Applications

7. Questions?

What are some limitations? (1/2)

1.Uncertainties in source data / Data gaps

• There are substantial data gaps and intermittent publication of input-output tables. the different base year of the tables for various nations. (ex. Honk Kong’s data)

• Monetary flow (e.g., in current MRIO model) vs. physical flow (NFA)

• Monetary exchange rates, fluctuations within a year.

2.Resolution of sectors

• Aggregation and concordance to a common sectoral scheme

• Aggregation is a problem in particular when high and low impacting sectors are combined in one aggregated sector.( electricity together with gas and water production)

What are some limitations? (2/2)

3.Trade flow

• Trade statistics themselves bear a range of uncertainties which are (according to Lenzen et al., 2004, p.405) “ … due to

– time lags between shipping of exports and receipt of imports

– differences in commodity classification

– reporting errors

– losses due to accidents in transits

– discrepancies of origin and destination country due to commodity re-export.

4.Concordance between “industrial sectors” and consumption categories

The output from some industrial sectors corresponds to multiple consumption categories. In creating a concordance between industrial sectors and consumption categories, assumptions must be made regarding the distribution based on available data.

11111

Thank you for your attention

What is a CLUM?

2

Basic Structure of Input-output table

(Intermediate output: Z + final demand: F) = (intermediate input + value add)

= total output: X (or input).

Z + F =X

2

Furthermore, final demand

section is disaggregated into

domestic final demand (consisting

of household consumption,

government consumption, and

gross fixed capital formation) and

trade related demand.

The value added part is mainly

divided into tax, compensation of

employees and operating surplus.

(Intermediate output: Z + final demand: F) = (intermediate input + value add)

= total output: X (or input).

Basic Structure of Input-output table

2

Z + F =X

AX + F = X

A = Zj / Xj

Basic Structure of Input-output table

2

Z + F =X

AX + F = X

(I – A) X = F

X = (I- A) -1 F

Leontief Inverse Matrix = (I – A) -1 where I is the identity Matrix

and A is the technical Coefficient Matrix

X = (I- A) -1 F Recipes of

Economics

Final

Demand

Basic Structure of Input-output table

2

Applications of Input Output Analysis

X = (I- A) -1 F Recipes of

Economics

Final

Demand

With the concept of Leontief

Inverse as main engine, IO tables

can provide consistent and

reproductive tools for economic

analysis including of industrial

structure, growth, and employment.

2

α X = α (I- A) -1 F

Increasingly, input-output tables are applied to the environmental aspect, in

what is called environmental extended input-output analysis (EEIO). EEIO

can be used, for example, to measure direct and indirect CO2 emission by

industry sectors in a given country.

where α is a physical co-efficiency vector which represents direct

environmental pollutants such as carbon dioxide, methane, nitrous oxide,

per unit currency.

Applications of Input Output Analysis

2

Calculate Ecological Footprints of final demand categories, industry

sector, and CLUM

Ecological Footprint by final demands = EFtot (diag) * FDdomestic

where EFtot (diag) is the diagonal matrix of Total Footprint Intensity, FDdomestic

is the domestic final demand expressed separately as household consumption,

government consumption, and gross fix capital.

2

Calculate Ecological Footprints of final demand categories, industry

sector, and CLUM

The Ecological Footprint was redistributed to a domestic final

demand category by multiplying EFtot by domestic final demand,

FDdomestic.

Domestic final demand mainly consists of three components such

as household consumption, government consumption, gross fixed

capital (GFC).

Ecological Footprint by final demand category can clearly show the

responsibility of each player to entire National Footprint.

2

1. Sector based Footprints were redistributed in IO/COICPI concordance table, and

then Footprints by COICOP category were obtain by summing the number in

each column in the concordance table.

2. Finally, Footprints by COICOP in each land type were set in CLUM table

accordingly.

Flowchart of calculation methodology

Step 3:

Consumption Land Use Matrix

(CLUM)

Step 2:

Input-output based

Ecological Footprint

analysis

Step 1:

Initial Allocation

Footprint by industry sector

Step 1: Initial Allocation

Carbon EF in

Industry

Initial Allocation

2. Data for

CO2 emission

Carbon Footprint in Direct

Household Consumption

3. Input-output

Table

1. Ecological Footprint (EF)

A. Land Based EF

Cropland, Grazing land, Forest land,

Fishing ground, and Built-up land

B. Carbon EF

Data source

National Footprint Account (NFA)

Results

Step 2: Input-output based

Ecological Footprint analysis

Total Footprint

Intensity (TFI)

Physical

Intensity for EF

consumption

(EFdirect)

Government consumption

Household consumption

Gross Fixed Capital

Total Required

Footprint (TRF)

EF by Final

Demand (gha)

EF by Industry

Sector (gha)

Total Output for

Domestic final

demand ($)

Leontie

f

Inverse

(I-A)-1

Initial Allocation

Translates production input

to consumer output

Resource

requirement by sector

Final Demand 3. Input-output

Table

Step 3: Consumption Land Use

Matrix (CLUM)

EF by Industry

Sector (gha)

4.Concordance

table

Carbon EF in Direct

Household Consumption

National CLUM

Work hard!

What is the outcome?

Translation of Ecological Footprint

Economics activity +

consumption based EF