代做PHYS5033 Environmental Footprints and IO Analysis Week 1代做Statistics统计
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Environmental Footprints and IO
Analysis
Reading Material
Week 1
Week 1 Supply chains and input-output tables
Everything that we consume is built on three inputs – raw materials, labour, and energy (which is itself reliant on raw materials). Our society relies on economic activity to transform. these inputs, with money usually changing hands at each usage occasion. The term ‘supply chain' is used to describe the connections between goods and services as they accumulate towards the point of final consumption. Figure 1.1 provides an illustration of a simplified supply chain with 3 tiers, using the example of a notebook. The point at which the notebook is purchased by a consumer is the first tier of the supply chain, the money spent by the notebook manufacturer on the goods and services it needs to manufacture the notebook is the second tier of the supply chain, and the money spent by the suppliers of those goods and services on their suppliers is the third tier of the supply chain, and so on.
Figure 1.1: A simplified supply chain based on expenditure on a notebook.
One method of accounting for the transactions within these supply chains is to follow the individual goods and services until the original input of raw materials is reached. This method can become unwieldy very quickly, since the number of goods and services increases exponentially with each tier of the supply chain. Another, more manageable, method is to follow the flow of money as it changes hands between economic sectors throughout the supply chain.
The System of National Accounts (United Nations Statistics Division, 2008) is a globally accepted framework used by countries to manage their macroeconomic accounts. It provides guidance on how to account for all monetary flows within a country and enables standardisation of economic reporting across the globe. Included within this framework is the use of input-output tables for compiling transactions within and between sectors, and between other economic actors. These input-output tables provide us with information on the flow of money as it makes its way through supply chain transactions and are the key data source used for supply chain analysis.
The structure of input-output tables
Each input-output table follows the same high-level structure, with three main building blocks:
1. The intermediate demand matrix (T). This provides information on the value of transactions between all sectors within the economy and has the dimensions (m x m) where (m) represents the number of sectors in the economy. Each sector is represented as both a row and a column, with the order of these sectors the same in both dimensions.
2. The final demand matrix (Y). This provides information on the value of transactions at the point of final consumption. The dimensions of Y include the same numbers of rows (m) as the intermediate demand matrix T, and the number of columns (n) is determined by the number of consumption entities included in the data. The most common consumption entities are households, governments, and exports to other countries.
3. The value-added matrix (v). This provides information on the primary inputs into each sector’s production, which are those inputs not provided by other sectors. This is where the compensation of employees, taxes, and imports from outside the region in question are accounted for. The dimensions of v include the same number of columns (m) as the intermediate demand matrix T, and the number of rows (r) will depend on the number of primary inputs included.
Figure 1.2 provides a visual overview of the components of an input-output table for a single region. This region’s economy includes six economic sectors - Agriculture, Mining, Construction, Manufacturing, Retail, and Banking and three consumption entities – households, government, and exports. The primary inputs to production accounted for are from households (usually in the form. of compensation of employees), governments (usually in the form of taxes and/or subsidies), and imports from other countries.
Figure 1.2: Components of an input-output table: Intermediate demand matrix (T), final demand matrix (Y), and value-added matrix (v). The flow of goods and services is represented by the solid blue line, and the flow of money is represented by the dotted red line.
Most input-output tables group sectors (explicitly or implicitly) into categories of Primary (involved in the provision of raw materials), Secondary (involved in the production of finished goods), and Tertiary (involved in the provision of services).
Input-output methodology was introduced by Wassily Leontief in 1936 as a method for analysing a national economy. Leontief expanded on this methodology to incorporate environmental considerations (Leontief, 1970) and the methodology has since been widely used for environmental and social footprint analysis (Foran, Lenzen & Dey, 2005; Hertwich & Peters, 2009; Hoekstra & Chapagain, 2007; Irwin et al., 2022; Lenzen et al., 2012; Lenzen et al., 2018; Shilling, Wiedmann & Malik, 2021; Xiao et al., 2018)
The first step in any input-output analysis is to calculate the total output and the total input for each sector within the economic system. Each sector’s ‘row’ provides us with information on how the output of that sector is allocated to each sector and to the consumption entities. The total output for each sector is calculated by adding across each row, such that
total intermediate demand + total final demand = total output
Each sector’s ‘column’ provides us with information on what inputs are required from each sector and the primary input entities to produce that sector’s total output. The total input for each sector is calculated by adding down each column, such that
total intermediate demand + total value-added = total input
A key feature of input-output tables is that they must balance since the total use of goods and services from a particular sector cannot be greater than or less than the total supply of those goods and services. This means that for each sector, total output must be equal to total input. Figure 1.3 provides a hypothetical input-output table with the total output and total input calculated for each sector. Note that total output is equal to total input for each sector.
Figure 1.3: A hypothetical input-output table, with total output and total input calculated.
References
Foran, B, Lenzen, M & Dey, C 2005, ‘A Triple Bottom Line Analysis of the Australian Economy,,
https://isa.org.usyd.edu.au/publications/documents/balancingact1.pdf
Hertwich, E & Peters, G 2009, 'Carbon Footprint of Nations: A Global, Trade-Linked Analysis',
Environmental Science & Technology, vol. 43, no. 16, pp. 6414.
Hoekstra, A & Chapagain, A 2007, 'Water footprints of nations: Water use by people as a function of
their consumption pattern', Water Resources Management, vol. 21, no. 1, pp. 35-48.
Irwin, A, Geschke, A, Brooks, TM, Siikamäki, J, Mair, L & Strassburg, BBN 2022, 'Quantifying and categorising national extinction-risk footprints', Scientific Reports, vol. 12, no. 1, pp. 5861.
Lenzen, M, Moran, D, Kanemoto, K, Foran, B, Lobefaro, L & Geschke, A 2012, 'International trade drives
biodiversity threats in developing nations', Nature, vol. 486, no. 7401, pp. 109-112.
Lenzen, M, Sun, Y-Y, Faturay, F, Ting, Y-P, Geschke, A & Malik, A 2018, 'The carbon footprint of global tourism', Nature Climate Change, vol. 8, no. 6, pp. 522-528.
Leontief, W 1936, 'Quantitative Input and Output Relations in the Economic Systems of the United States', The Review of Economics and Statistics, vol. 18, no. 3, pp. 105-125.
Leontief, W 1970, 'Environmental Repercussions and the Economic Structure: An Input-Output Approach', The Review of Economics and Statistics, vol. 52, no. 3, pp. 262-271.
Shilling, H-J, Wiedmann, T & Malik, A 2021, 'Modern slavery footprints in global supply chains', Journal of Industrial Ecology, vol. 25, no. 6, pp. 1518–1528.
United Nations Statistics Division 2008, 'System of National Accounts', New York.
Xiao, Y, Lenzen, M, Benoît-Norris, C, Norris, GA, Murray, J & Malik, A 2018, 'The Corruption Footprints of Nations', Journal of Industrial Ecology, vol. 22, no. 1, pp. 68-78.