Waste Input-Output Analysis

Transcription

1 Waste Input-Output Analysis

2 ECO-EFFICIENCY IN INDUSTRY AND SCIENCE VOLUME 26 Series Editor: Arnold Tukker, TNO-STB, Delft, The Netherlands Editorial Advisory Board: Martin Charter, Centre for Sustainable Design, The Surrey Institute of Art & Design, Farnham, United Kingdom John Ehrenfeld, International Society for Industrial Ecology, New Haven, U.S.A. Gjalt Huppes, Centre of Environmental Science, Leiden University, Leiden, The Netherlands Reid Lifset, Yale University School of Forestry and Environmental Studies, New Haven, U.S.A. Theo de Bruijn, Center for Clean Technology and Environmental Policy (CSTM), University of Twente, Enschede, The Netherlands For other titles published in this series, go to

3 Waste Input-Output Analysis Concepts and Application to Industrial Ecology Shinichiro Nakamura and Yasushi Kondo ABC

4 Shinichiro Nakamura Graduate School of Economics Waseda University Nishi-waseda Shinjuku-ku, Tokyo, Japan Yasushi Kondo Graduate School of Economics Waseda University Nishi-waseda Shinjuku-ku, Tokyo, Japan ISBN: e-isbn: Library of Congress Control Number: c 2009 Springer Science+Business Media B.V. No part of this work may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording or otherwise, without written permission from the Publisher, with the exception of any material supplied specifically for the purpose of being entered and executed on a computer system, for exclusive use by the purchaser of the work. Printed on acid-free paper springer.com

5 Preface Industrial ecology (IE) is a rapidly growing scientific discipline that is concerned with the sustainability of industrial systems under explicit consideration of its interdependence with natural systems. In recent years, there has been an ever-increasing awareness about the applicability of Input-Output Analysis (IOA) to IE, in particular to LCA (life cycle assessment) and MFA (material flow analysis). This is witnessed in the growing number of papers at ISIE (International Society for Industrial Ecology) conferences, which use IOA, and also by the installment of subject editors on IOA in the International Journal of Life Cycle Assessment. It can be said that IE has become a major field of application for IOA. The broadening of users of IOA from various backgrounds implies a need for a self-contained textbook on IOA that can meet the needs of students and practitioners without compromising on basic concepts and the latest developments. This book was written with the aim of filling this need, and is primarily addressed to students and practitioners of IE. As the title suggests, the core contents of the book have grown out of our research in IOA of waste management issues over the last decade. We have been fascinated by the versatile nature of IOA with regard to various technical issues of waste management in particular, and to IE in general. For us (both economists by training), IOA has turned out to be extremely useful in establishing productive communication with scientists and engineers interested in IE. Many people have helped us in writing this book. Special thanks go to Kohji Takase and Shigemi Kagawa for helpful comments on major parts of the draft, and to Anthony Newell for his kind help in checking the English. We have also benefited from helpful correspondence with Manfred Lenzen, Keisuke Nansai, Helga Weisz, Erik Diezenbacher, Jan Minx, Makiko Tsukui, Kiyoshi Fujikawa, Noboru Yoshida, Ettore Settanni, and Yasuaki Iwasaki. We would like to thank Chen Lin, too, for his assistance in preparing TeX files. Tokyo November 2008 Shinichiro Nakamura Yasushi Kondo v

6 Contents Preface... List of Figures... List of Tables... v xi xv 1 Introduction TheAimoftheBook Outline of the Book s Content Putting IOA in Practice by Excel References Part I Input-Output Analysis 2 Basics of Input-Output Analysis The One-Sector Model Input and Output in a Productive Economy The Leontief Quantity Model Production, Income, and Consumption: The Input-Output Table Cost and Price: The Price Model The Two-Sector Model Production Processes The Leontief Quantity Model The Price Model TheIOTable The n Sectors Model MatrixNotations Inversion of a Matrix and the Quantity Model Exogenous Inputs and Waste Generation CostandPrice Structural Decomposition Analysis IOA for the Case of n vii

7 viii Contents 2.4 Exercise with Excel BasicAnalysis Consolidating of Sectors References Extensions of IOA Regional Extensions A Two-Region Open Model A Two-Region Closed Model A Three-Region Model: An Open Model International IO Tables By-Product Defining By-Product and Waste The Leontief Quantity Model with By-Product ANumericalExample ImplicationsforPositivityConditions The Model Based on Use and Make Matrices U and V Matrices, and Related Identities Industry-Based Technology Commodity-Based Technology The Relationship Between Ă and À Extension Towards a Closed Model IntegratingConsumption The Dynamic Model: Closing the IO Model with Regard tocapitalformation A Fully Closed Model Extension to the System with Inequalities Limited Supply of Exogenous Inputs Issues of Substitution: Programming Model The Supply-Side Input-Output Model of Ghosh The Fundamental Structure of Production Identifying the Fundamental Structure of Production Application to the Japanese IO Table Exercise with Excel Accounting for Competitive Imports The Upper Bounds of Final Demand When the Supply of Exogenous Inputs Is Limited The Choice of Technology References Microeconomic Foundations Introduction Representation of Technology Technology and Production Function Cost and Input Demand Functions Duality Between Cost and Production Functions...134

8 Contents ix 4.3 Specification of Technology Top-Down and Bottom-Up Approaches The Elasticity of Substitution Between Inputs CES Functions Flexible Functional Forms Tree Structure of Technology: Separability Technology in the Leontief IO Model Characteristics of Technology in IOA Substitution Theorems Supply and Demand Curves in IOA IOA:Bottom-UporTop-Down? References Part II Waste Input-Output Analysis 5 BasicsofWIO EnvironmentalIO(EIO) Linking the Economy and the Environment in IOA EnergyAnalysis Emission IO Model The IO Models of Pollution Abatement and Their Relevance to Waste Management The Leontief Model of Pollution Abatement Further Extensions of the Leontief EIO Model IO Tables with Waste and Waste Management Waste IO: Concepts and Modeling The Leontief Duchin EIO and the Dutch NAMEA TheWasteIO References WIO Analysis WIOTablesandAnalysis:EmpiricalExamples WIO for a City in Hokkaido, Japan WIO Tables for Japan The Dynamic Nature of Waste Treatment Processes A System Engineering Representation of the Incineration Process ImplicationsforWIO Effects of Changing the Allocation Pattern of Waste totreatmentprocesses The WIO Cost/Price Model The WIO Price Model with Waste Treatment The WIO Price Model with Waste Treatment andrecycling NumericalExample References

9 x Contents 7 Application of WIO to Industrial Ecology Introduction The Full Life Cycle WIO Model: Closing the Loop of The Product LifeCycle The Use (and Discard) Process Incorporating the Use (and Discard) Phase LCC: The Cost and Price Model NumericalExamples ApplicationstoLCAandLCC ApplicationofWIOtoMFA Two Major Methods of MFA WIO-MFA: Methodology ApplicationofWIO-MFAtoMetals Regional WIO Models Interregional WIO Model Regional WIO Table for Tokyo The Choice of Technology: WIO-LP Waste Input-Output Linear Programming Model MakingAllocationMatricesVariable Application to the Case Involving Alternative Waste Recycling and Treatment Technologies OtherApplicationsofWIO References Index...291

10 List of Figures 1.1 The Structure of the Book: The Interdependence of Sections. The Large Arrows Connecting the Boxes Referring to Chapters Indicate the Logical Connections. The Arrows in Broken Lines Refer to Individual Items in the Respective Chapters on Which the Subjects BeingPointedtoAreBased The Black Box Representation of a Production Process with Three Inputs and Two Outputs: The Circles Refers to Inputs and Outputs, While the Box Refers to a Process. The Arrow Indicates the DirectionoftheRelevantFlow The Production Process of Rice. A Part of Production Waste Reenters the Process as an Ingredient of Compost Process Representation of Household Consumption The System with Rice Production and Household Consumption. The Area Circled by the Broken Line Refers to the System Boundary. The Flows Generated Inside the Boundary are Endogenous Flows, and the Remaining Flows are Exogenous The Flow of Inputs and Outputs of an Economy with Two Producing Sectors, Rice and Fish Production. The Flow of Output of a Process Is Indicated by an Arrow Leaving the Box Referring to the Process, Whereas the Flow of Input into a Process Is Indicated by an Arrow Entering the Relevant Box. Rice Is Used in Fish Production as Feed, While Fish Is Used in Rice Production as Fertilizer Decomposing the Imports to Their Final Demand Origins. The d s and i s Attached to Each Final Demand Category (see Table 3.1 for the Notations) Respectively Refer to the Direct Effects and Indirect Effects. The Changes in the Stock Were Omitted Because oftheirsmallsizes xi

11 xii List of Figures 3.2 Basic Patterns of the IO Matrix. The Square at the Northeast Corner Refers to a Zero Matrix. (a) Block Decomposability, (b) Block Independence, (c) Block Decomposability and Triangularity, (d) Block Independence and Triangularity. Modified from Figure 1 in[26] The A Matrix in a Triangulated Form: The Elements Smaller Than 1/104 = Set Equal to The A Matrix in Original Form: The Elements Smaller Than 1/104 Set Equal to The Set of Technical Possibilities, and the Isoquant: the Case of an Infinite Number of Processes. The Shaded Area Represents all the Possible Combinations of z 1 and z 2 to Produce y, That Is, V (y) in (4.7). The Southwest Frontier of the Combinations Represents the Set of Most Efficient Combinations, the Isoquant Curve The Set of Technical Possibility, V (y), and the Isoquant: The Case ofafinitenumberofprocesses Isoquants for Homothetic Production Function Isoquants for Nonhomothetic Production Function Isoquant Curves Corresponding to Different Degree of Substitution A Tree Structure of Technology The Tree Structure of the AIM Model. The Numbers in the Boxes with Broken Lines Indicate the Values of Elasticity of Substitution. Source: Own Drawing After Figure 2 in [17] The Isoquant Curve of the Production Function Underlying IOA The Supply and Demand Curves in IOA. The Supply Curve Does Not Depend on the Level of Output Because of Constant Returns to Scale. The Demand Curve Does Not Depend on Any Price, Because of the Absence of Substitution Among Inputs and of the Fact That the Final Demand Is Exogenous The Economy and the Ecosystem: The Former is an Open Subsystem of the Latter A Schematic Representation of the Food Web in the Form of an IO Table: The Color Density Shows the Relative Size of Values. See [22],forNumericalExamplesoftheMarineFoodWeb The Distribution Among Waste Treatment Options: Countries Where Landfill Is the Major Treatment Option The Distribution Among Waste Treatment Options: Countries WhereIncinerationIstheMajorTreatmentOption The Final Product Origin of Waste for Treatment. See Table 6.20 forthenotations The Waste Footprint of Selected Products. See Table 6.20 for the notations

12 List of Figures xiii 6.3 Tracing the Origin of Waste to Final Demand Categories. See Table 6.20forthenotations TheFlowDiagramofaWasteIncinerationProcess Solving the WIO Model Integrating a System Engineering Model of Waste Management in an Iterative Fashion Effects of the Shift of Allocation Patterns from S 0 to S 1. The Upper Bar Indicates the Case Where the Changes in the Input-Output Coefficients That Result from a Change in the Allocation Matrix Are Taken into Account by Using an Engineering Submodel of Waste Treatment. The Lower Bar Indicates the Case Where These Changes Are Not Considered, and the Same Set of Input-Output Coefficients Is Used When There Is a Change in the Allocation Matrix Changes in Prices of Steel Products and Scrap: Index (January 2001 = 1) of the Average Price at the Tokyo Market. Source: Nippon Keizai Shimbun Inc. Main Market Price and Iron Scrap, Steel Newspaper Inc. Steel Newspaper, The Japan Iron and Steel Federation, Steel Supply and Demand Statistics Monthly Report. H2 Refers to a Grade of Iron Scrap in Japan Changes in the Price of Demolition Scrap: Index (2001=100) Calculated on the Basis of the Average Price in Euros for France, Germany, Italy, Spain, and the UK. Source: European Confederation of Iron and Steel Industries Price and Energy Efficiency of Air Conditioners: 2.5 kw Models, 2002 Winter, Japan. Source [27] Cost and Environmental Load of Different Air Conditioners Types: Relative Values with the Levels of Cost, Landfilling, and GWP (GWP100 in CO2 eq) Set Unity for the Average Model (Discount Rate = 0). Source [27] The Flows of Inputs and the Input Composition of a Product Material Composition of the Metal Products that Constitute One Million Yen of a Passenger Car Material Compositions of Metal Products that Constitute Engines Per Million Yen of a Passenger Car Nine Regions of Japan. Source: Geographical Survey Institute (GSI) The Effects of Household Consumption in the Kanto Region on the Level of Waste Incineration in the Chugoku and Shikoku Regions. Kanto: Foods Refers to the Amount of Waste Incineration in Chugoku and Shikoku that was Induced by the Final Demand for Foods Produced in Kanto, While Chugoku: Foods Refers to the Amount of Waste Incineration in Chugoku and Shikoku that was Induced by the Final Demand of Kanto for Foods Produced in Chugoku. Source [15]

13 List of Tables 2.1 An Example of Rice Production Process A Numerical Example of Unit Process for Rice Production The IO Table of an Economy with One Production Sector An Example of Extended IO Table with Environmental Flows A Numerical Example of Unit Processes for Rice and Fish Production The IO Table of an Economy with Two Production Sectors in Value Units An Extended IO Table with Physical Flows for the Case of Two Production Sectors IO Table with User Specific Price of Inputs Monetary IO Table with a Direct Representation of Trade and Transport Monetary IO Table with an Indirect Representation of Trade and Transport: Purchasers Prices Monetary IO Table with an Indirect Representation of Trade and Transport: Producers Prices Japanese IO Table for 2000 at Producers and Purchasers Prices Basic Equations of IOA in Terms of Scalars and Matrices NumberofEmployedPersons The Classification of Row Sectors (continued) The Classification of Column Sectors Japanese IO Table for Year 2000: An IO Table of Competitive Imports Type The Share of Competitive Imports in Total Domestic Demands: μ The 2000 Japan U.S. Input-Output Table: Isard Type The 2000 Japan U.S. Matrix of Leontief Inverse Coefficients The 2000 Japan U.S. Input-Output Table: Chenery Moses Type Estimates of μ ab for the US Japan IO Table xv

14 xvi List of Tables 3.7 The Capital (Investment) Matrix for Japan, An Example of (I (A +C)) 1 Matrix The Order of Metal Related Sectors in Figure An Input-Output Representation of the Interaction Between Economy and Environment by Daly [4] A Simplified Version of the Daly Diagram with the Quadrant δ Excluded AMatrixofUnitProcesseswithPollutionAbatement TheLeontiefEIOTablewithNoPollutionAbatement The Leontief EIO Table with Pollution Abatement: 50% Reduction ofemissionintotheenvironment The Leontief EIO Table with Pollution Abatement: 100% Reduction of Emission into the Environment The A and R Matrices of EIO with Multiple Pollutants The Input-Output Coefficients Matrix of the Duchin Model The Input-Output Coefficients Matrix of the Duchin Model Made Square by Introducing a Column Referring to Dumping APrototypeofDutchNAMEA A Schematic Representation of Waste Flows in German PIOT An Input-Output Account with Waste Flow (I): the Case of One-to-One Correspondence Between Waste and Treatment An Input-Output Account with Waste Flow (II): the Case of One-to-One Correspondence Between Waste and Treatment with Net Waste Generation Unit Processes with Waste Generation and Final Demand Unit Processes with Waste Generation and Final Demand with Landfill Unit Processes with Waste Generation and Final Demand with Landfill Unit Processes with Waste Generation and Final Demand with Landfill and Incineration A WIO Representation of the Flow of Goods Waste in City F The Allocation Matrix S forthewasteflowintable The Squared WIO Table of City F The Squared Matrix of WIO Input Coefficients: City F TheMatrixofLeontiefWIOInverseCoefficients:CityF Attributing Production and Treatment to Final Demand Category: CityF Net Generation of Waste Per Unit of Product/Treatment for Final Delivery: Ξ Attributing Waste Generation to Final Demand Categories Waste Items in WIO Waste Classification in WIO

15 List of Tables xvii 6.11 WIO Table for Japan, 2000: The Flow of Goods & Services WIO Table for Japan, 2000: The Flow of Waste The Share of Imports in the Domestic Use of Waste, μ w ExamplesoftheAllocationMatrix The Flow of Waste Converted to the Flow of Treatment by the Allocation Matrix S Allocation of Waste to Treatment Under Alternative Allocation Matrices The Matrix of Squared Input/Generation Coefficients Under S The WIO Inverse Matrix Under S Generation of Waste Attributed to Final Demand Categories Under S The Net Generation of Waste Per Unit of Product/Treatment for Final Delivery: The Matrix Ξ Under S Heat Value and Chemical Composition of Municipal Solid Waste The Major Inputs/Output Coefficients of the Incineration Sector Under Different Sorting Patterns A Numerical Example for the WIO-Price Model ANumericalExampleforWIO-LCA:UnitProcesses Data for the Washing Machine Example An Example of the Material Composition Matrix C MP for Selected Products The Metal Composition of a Passenger Car The Basic Structure of the Interregional WIO Table for Tokyo by Tsukui A Schematic form of Automobile Recycling IO Table [6]