energy management :: 2011/2012 economic input-output life-cycle assessment prof. paulo ferrão...
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Energy Management :: 2011/2012
Economic Input-Output Life-Cycle Assessment
Prof. Paulo Ferrã[email protected]
Energy Management
Economic Input-Output Life-Cycle Assessment
Industrial Ecology: Tools
EIOEIO
EIO-LCAEIO-LCA
Hybrid EIO-LCA Hybrid EIO-LCA
Micro-scaleMicro-scale Macro-scaleMacro-scale
EnvironmentEnvironment
EconomyEconomy
MFAMFALCALCA
EcodesignEcodesign
LCAALCAA
Energy Management
Economic Input-Output Life-Cycle Assessment
IO Principles
• Idea developed by W. Leontief (Nobel prize in economics in the 70’s)– Extend the ideas of the economic base model by disaggregating production into a set of sectors
Industry
Market
Households
$
$
$
Services Consumption
Exports
Imports
Industrial Sectors
Energy Management
Economic Input-Output Life-Cycle Assessment
As part of the establishment of national accounts, input-output analysis was devised in the
1930s, and first implemented in the 1940s for the USA.
Its founder was Wassilyu Leontief (1936), and his approach to national accounts was a
disaggregated one, focusing on how industries trade with each other, and how such inter-
industry trading influenced the overall demand for labor and capital within an economy.
HistoryEcomic Input-Output tables, History
Energy Management
Economic Input-Output Life-Cycle Assessment
The basic distinction that is made in input-output analysis is between the demand for goods
and services sold to ‘Final Demand’ (households, governments, exports, investment), and the
‘Total Demand’ in the various sectors, resulting from the direct impact of final demand, and
the indirect impacts resulting from inter-industry trading (intermediate demand).
For instance, almost no iron and steel products are sold directly to domestic consumers (final
demand), but a great deal is sold embodied in manufactured goods, such as cars and washing
machines
Total demand = intermediate demand + final demand
Basics
Energy Management
Economic Input-Output Life-Cycle Assessment
Input-Output Analysis
IntermediateInputs
(square matrix)
Primary Inputs
Total Inputs or Total Costs
Con
sum
ptio
n
Tota
l out
put
OutputsOutputs
Inpu
tsIn
puts
SectorsSectors
Sec
tors
Sec
tors
Consumption:
• Demand (families, government);• Exports
Primary Inputs:
• Added value (salaries, profits, …);• Imports;
+ =
+
=
Energy Management
Economic Input-Output Life-Cycle Assessment
IO model - Leontief
• W. Leontief (Nobel prize in economics in 70’s)• Part of National Income and Product Accounts• Total Inputs = Total Outputs
Transaction table beetween sectors
Final demand
Total Output
x11 + x12 + x13 + … + x1n + y1 = x1x21 + x22 + x23 + … + x2n + y2 = x2 x31 + x32 + x33 + … + x3n + y3 = x3…………………………………….xn1 + xn2 + xn3 + … + xnn + y3 = xn
Sales
$
Energy Management
Economic Input-Output Life-Cycle Assessment
Quadro de transacções
Energy Management
Economic Input-Output Life-Cycle Assessment
IntermediateInput (€)
Primary Input(€)
/ TechnicalCoefficient
Matrix(-)
=
Tecnichal Coeficients Matrix
Total Input(€)
IntermediateTechnicalCoefficientMatrix (-)
Primary TechnicalCoefficient (-)
Energy Management
Economic Input-Output Life-Cycle Assessment
IO model - Leontief
• If we define an input coefficient aij , that quantifies the output of sector i absorbed by sector j per unit of its total output of sector j
where,
– aij, is the input coefficient of product of sector i into sector j
– xij, is the amount of the product sector i absorbed, as its input, by sector j
– xj, is the physical output of sector j
then
or, in a matrix formYΑXX
j
ijij x
xa
ijiji yxax
Energy Management
Economic Input-Output Life-Cycle Assessment
IO model - Leontief
• That is equal to
• Since the final demand is normally exogenous or given, for economic purposes the problem is to calculate the output column vector X. To do that is necessary to pré-multiply the by the inverse of (I-A), commonly referred as the Leonfief inverse, that result in
Where – A denotes the net direct inputs of the coefficient matrix, – A2+A3+…+A∞ are, respectively, the 1st, 2nd, and n tier
indirect requirements of the coefficient matrix.
Α)X(IY
YΑ)(IX 1
YA...AAAIYΑ)(I 321
Energy Management
Economic Input-Output Life-Cycle Assessment
Quadro de transacções
Energy Management
Economic Input-Output Life-Cycle Assessment
Quadro de coeficientes de Leontief
Energy Management
Economic Input-Output Life-Cycle Assessment
One of the main uses of input-output analysis is to display all flows of goods and services
within an economy, simultaneously illustrating the connection between producers and
consumers and the interdependence of industries.
An advantage of input-output tables is that economic components, such as income, output
and expenditure, are presented in a consistent framework reconciling the discrepancies
between the estimates of these components.
Classical uses
Energy Management
Economic Input-Output Life-Cycle Assessment
Using linear algebra, input-output analysis allows all economic activity to be directly related
to final demand. Of course, the final demand for the various producing sectors sums to
Gross Domestic Product (GDP), one of the fundamental measures in national
accounting.
Input-output tables can be, and are being, used for various economic analyses within and
outside Government. The use of input-output tables is particularly important for analyzing
structural adjustment in industry.
Uses
Energy Management
Economic Input-Output Life-Cycle Assessment
Sector 1 Sector 2 Sector 3 + Exports Consumption = Total output
Sector 1 S11 S12 S13 E1 C1 TO1
Sector 2 S21 S22 S23 E2 C2 TO2
Sector 3 S31 S32 S33 E3 C3 TO3
+
Added value VA1 VA1 VA1
Imports I1 I2 I3
=
Total input TI1 TI2 TI3
Intermediate Input Final demand
Mathematical formulation of the Input – Output Model
Aij
Matrix of the intermediate Input
Aij
Matrix of the intermediate Input
Yi
Vector of final consumption
Yi
Vector of final consumption
Xi
Vector of total output
Xi
Vector of total output
Aij + Yi = Xi Aij + Yi = Xi
Energy Management
Economic Input-Output Life-Cycle Assessment
Input-Output Analysis
Macro-Economy Application (example)
Given the following matrix of the intermediate input for an economy with only 3 sectors (Agriculture, Industry and Services), and the respective values for the exports, imports, consumption and added value.
a) Determine the elasticity in the economy for the unitary demand increase in the Agriculture sector.
Macro-Economy Application (example)
Given the following matrix of the intermediate input for an economy with only 3 sectors (Agriculture, Industry and Services), and the respective values for the exports, imports, consumption and added value.
a) Determine the elasticity in the economy for the unitary demand increase in the Agriculture sector.
Agriculture Industry Services + Exports Demand = XAgriculture 5 20 0 20 30 75Industry 20 20 10 30 40 120Services 10 30 20 10 30 100+VA 20 40 30Imports 20 10 40
75 120 100
Intermediate input
Energy Management
Economic Input-Output Life-Cycle Assessment
Input-Output Analysis
Macro-Economy Application (example solution)Macro-Economy Application (example solution)
A Agriculture Industry ServicesAgriculture 0,07 0,17 0,00Industry 0,27 0,17 0,10Services 0,13 0,25 0,20
I-A Agriculture Industry ServicesAgriculture 0,93 -0,17 0,00Industry -0,27 0,83 -0,10Services -0,13 -0,25 0,80
(I-A)-1 Agriculture Industry ServicesAgriculture 1,14 0,24 0,03Industry 0,40 1,33 0,17Services 0,32 0,46 1,31
a) The elasticity in the economy will be given by X, X = {1.14; 0.40; 0.32 }, 1.86 .
Energy Management
Economic Input-Output Life-Cycle Assessment
IO Principles
• Basic assumptions
Main Assumption
The sector produces goods according a fixed production function (recipe)
Simplification But also a limitation
Leontief production functions
Linear production functions
No scale economies
Don’t allow the substitution of production factors
Limits the application scope to few years, where is shown that the “recipe” don’t change much
Energy Management
Economic Input-Output Life-Cycle Assessment
IO Principles
• Coefficient matrix
• Leontief Inverse
25,0003,00
07,033,018,008,0
0022,001,0
16,003,0015,0
A
82,112,284,140,1
33,1005,00
18,056,137,015,0
001,028,102,0
31,055,014,023,1
)( 1
smultiplier
AI
The difference between the values is the due to the indirect effect (in this case 0,37-0,18 =0,17)
Direct effect
In the principal diagonal which is > 1, the unit value represents the increase in final demand in that sector, and the remaining (0,33) is the direct and indirect impact of the expansion
Multiplier - Is the column sum, tells that the for an increase of 1 unit value production of that sector, 0,84 worth of activity is generated, for a total value of production of 1,84 (due to direct and indirect effects)
Energy Management
Economic Input-Output Life-Cycle Assessment
IO Principles
• Multipliers– Provide an information on the sector impact on the rest of the economy of a unit change in final
demand– Also called the “ripple effect”– Multipliers are explicated upon a domino theory of economic change. They translate the consequences
of change in one variable upon others, taking account of sometimes complicated and roundabout linkages.
– Besides the output multiplier, there are others types of multipliers like the employment and income multipliers
MultiplierMultiplier Is a function of the economical structure, size of the economy and the way exports and sectors are linked to each others
Change over timeChange over regions
The sector importance depends of other factors besides the multiplier
Energy Management
Economic Input-Output Life-Cycle Assessment
EIO-LCA
• The environmental extension of the input-output framework is easily done, by only considering that the amount of environmental impacts associated with one industry is directly proportional to is output, in a fixed proportion. Then:
• Where:– b is a q x n matrix which shows the amounts of pollutants
or natural resources emitted or consumed to produce a unit of monetary output of each industry, with
• q rows with environmental interventions (CO2, CH4, etc…)
• n columns with industrial sectors – B is a also a q x n matrix and represents the total direct
and indirect environmental impacts for each industrial sector
YΑ)b(IB 1
Energy Management
Economic Input-Output Life-Cycle Assessment
GWG Emissions in the Portuguese EconomyNAMEA
Unidade 10E6 escudos
Sox Nox COVNM CH4 CO CO2 N2O NH3(ton) (ton) (ton) (ton) (ton) (Kton) (ton) (ton)
01 Agricultura e Caça 2595 22843 8042 203083 7923 1464 7885 7807202 Silvicult. E Expl Flor. 176 1555 342144 12 541 92 34 103 Pesca 984 8668 131 529 1094 482 1104 Carvão 25 7 205 Petróleo 53521 7154 54480 4725 1297 2413 11206 Electr., Gás e Água 166933 72807 385 152 2240 16135 21107 Min Fer. E não Fer. 5135 1160 596 55 49677 597 6 1908 Min. não Metálicos09 Porcelanas e Faiança 4451 2689 4417 464 6666 2268 7310 Fab. Vidro e Art. Vid 12084 2184 52 150 583 894 911 Out. Mat. Construção 27320 9531 4713 1003 5967 6502 7512 Produtos Quimicos 4417 3855 773 359 20320 1485 3266 697113 Produtos metálicos 224 253 1052 23 9 46 114 Máq. Não Eléctricas 19 21 173 2 1 415 Maq. Out. Mat. Eléct. 130 147 207 13 5 2716 Material Transporte 69 78 3092 7 3 1417 Aba. Cons. de Carne 667 235 20 24 69 61 118 Lacticínios 1043 368 31 37 108 96 219 Conservação de Peixe 485 171 106 7997 50 141 24320 Óleos e Gord. Alim. 267 94 3050 10 28 2521 Prod.Cereais e Legu. 486 172 1842 17 50 48 122 Out. Prod. Alimentar 2246 793 204 12051 233 351 36723 Bebidas 1482 523 4710 3591 153 213 11024 Tabaco 929 428 9 37 11 70 1
Energy Management
Economic Input-Output Life-Cycle Assessment
Evolution of the contribution to the Portuguese GDP of the main economic sectors between 1993 and 1995
1. Agriculture & hunting
2. Petroleum
3. Chemical products
4. Transport vehicles and equipment
5. Textile & clothing industry
6. Construction
7. Restaurants & Hotels
8. Financial services
9. Services rendered for companies
10.Non-commercial services of Public Administration
4.6%
3.8%
4.6%
5.5%
6.6%
3.4%2.9%
4.7%
4.0%
7.1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
1 2 3 4 5 6 7 8 9 10Economic Sectors
% o
f G
DP
Energy Management
Economic Input-Output Life-Cycle Assessment
Direct and indirect costs of the most important sectors to fulfil the total demand in 1993 and 1995
1. Textile & clothing industry
2. Construction
3. Transport vehicles and equipment
4. Agriculture & hunting
5. Chemical products
6. Non-commercial services of Public Administration
7. Financial services
8. Services rendered for companies
9. Petroleum
10.Restaurants & Hotels
0 1 2 3 4 5 6 7 8 9 10Econom ic Sectors
0
4000
8000
12000
10
6 E
uro
s
Ind irect 93D irect 93
Indirect 95D irect 95
20
2123
19
22
24
3030
68
Energy Management
Economic Input-Output Life-Cycle Assessment
GNP and GWP per economic sector for the years of 1993 and 1995
1. Textile & clothing industry
2. Construction
3. Transport vehicles and equipment
4. Agriculture & hunting
5. Chemical products
6. Non-commercial services of Public Administration
7. Financial services
8. Services rendered for companies
9. Petroleum
10.Restaurants & Hotels
0 1 2 3 4 5 6 7 8 9 10Econom ic Sector
-40
-20
0
20
40
60
Pe
rcen
tage
G NP & G W P x SectorG N PG W P
Energy Management
Economic Input-Output Life-Cycle Assessment
Environmental sustainability of the sectors (increase of GNP versus increase of GWP)
1. Textile & clothing industry2. Construction3. Transport vehicles and equipment4. Agriculture & hunting5. Chemical products6. Financial services7. Services rendered for companies8. Petroleum 9. Restaurants & Hotels
-40 -20 0 20 40% G N P
-40
-20
0
20
40
% G
WP
1
23
4
5
6
7
8
9
Total
Strong Sustainability
Non-sustainable
W eak Sustainability
Energy Management
Economic Input-Output Life-Cycle Assessment
OBJECTIVES
• Develop and assess EIO-LCA related tools. to promote fast and accurate life cycle analysis of products and services.
• Analyze a case-study to compare the different tools.
LCA
EIO-LCA
HEIO-LCA
Energy Management
Economic Input-Output Life-Cycle Assessment
Hybrid EIO-LCA
• The hybrid Input-Output analysis combines the bottom-up approach of process-based LCA with the traditional top-down economical technique Input-Output Analysis, developed by Wassily Leontief 50 years ago
YAIL
MAbbB
~~
B, is the Total environmental intervention due to external demand
~b, is the environmental flow matrix for process analysis
b, is the pollutant emission per $ of sector output
Ã, is the technology matrix for process analysis, expressed in various physical units per unit operation time for each process.
M, is the foreground system matrix, and represents the total physical output per total production in monetary term. It is expressed in physical flow required to produce $ worth output of each industry.
L, is the foreground system matrix, which represents the monetary input to each sector per given operation time, thus expressed in monetary unit per time.
A, is the matrix of inputs coefficients of traditional Input-output analysis, with n x n sectors.
Foreground
Background