Better Global Assessment of Worker Inequality: Comment on “The Employment Footprints of Nations”

This commentary responds to the previously published Journal of Industrial Ecology article “The Employment Footprints of Nations: Uncovering Master‐Servant Relationships” by Alsamawi and colleagues. Their article uses extended input‐output analysis to calculate employment and income footprints and, consequently, quantifies and provides an analysis of the average wages embodied in consumption of countries in comparison with the wages received by domestic workers. In effect, Alsamawi and colleagues show the extent of inequality in labor income, especially between developed and developing economies, traced throughout the global supply chains, but ignore the price differentials existing between countries in their discussion of the welfare implications of global trade on workers. This commentary contends the appropriateness of adjusting nominal compensation of workers to purchasing power parity (PPP) when undertaking global comparisons that pertain to well‐being and recalculates the employment footprints and income footprints of nations with PPP adjustment. The price adjustment in this work is intended to show a more accurate depiction of the disparity among workers of different nations when their labor incomes are deflated by the index price of consumption goods in their country. Using observations covering 189 countries and 14,839 sectors for the period 1990–2011, the results of the adjustment reveal that the ratio of domestic wages to foreign wages paid in support of a country's consumption (footprint wages) tends to be underestimated for labor‐exporting countries (developing economies with relatively cheaper consumption goods) and overestimated for labor‐importing countries (developed economies with more expensive consumption goods), thus demonstrating, generally, relatively less income inequality than previously exposed.     

Consumption‐based Material Flow Accounting

In 2007, imports accounted for approximately 34% of the material input (domestic extraction and imports) into the Austrian economy and almost 60% of the GDP stemmed from exports. Upstream material inputs into the production of traded goods, however, are not yet included in the standard framework of material flow accounting (MFA). We have reviewed different approaches accounting for these upstream material inputs, or raw material equivalents (RME), positioning them in a wider debate about consumption‐based perspectives in environmental accounting. For the period 1995–2007, we calculated annual RME of Austria's trade and consumption applying a hybrid approach. For exports and competitive imports, we used an environmentally extended input‐output model of the Austrian economy, based on annual supply and use tables and MFA data. For noncompetitive imports, coefficients for upstream material inputs were extracted from life cycle inventories. The RME of Austria's imports and exports were approximately three times larger than the trade flows themselves. In 2007, Austria's raw material consumption was 30 million tonnes or 15% higher than its domestic material consumption. We discuss the material composition of these flows and their temporal dynamics. Our results demonstrate the need for a consumption‐based perspective in MFA to provide robust indicators for dematerialization and resource efficiency analysis of open economies.     

Drivers of land use efficiency and trade embodied biomass use of Finland 2000–2010

Globally human pressure on the biosphere is increasing, in spite of increases in land use efficiency. The pressure consists of land use and potential degradation. Human appropriation of net primary production (HANPP) is emerging as an indicator, which combines the dual aspects of biomass use and land degradation. Recently HANPP has been used to map the increasing dependence of European countries on biomass imports and the conflicting processes of increased yields and increased consumption. However large overview studies could be complemented with indepth analysis into the causes of changes in individual countries and economic sectors. This allows the analysis of the macroeconomic drivers of change and the responses in sectors to these drivers. In this study we decomposed the HANPP of Finland including imports for the years 2000–2010 using IPAT and applied input-output analysis to look at sectoral land use efficiency in that time period. Finland is a country with intensive biomass trade, and with a very high per capita HANPP. During the study period the sum of domestic and embodied in imports HANPP of the Finnish economy decreased from 76 Mt C/a to 62 Mt C/a (−1% annually on average), while the HANPP related to imports increased from 12 Mt C/a to 14 Mt C/a. The overall trend was that of declining exports and increasing domestic consumption. Of the economic sectors wood harvesting and processing dominated HANPP results, followed by residential construction, animal production and energy supply. In terms of HANPP, most of these decreased, but housing and energy production increased considerably from 2002 to 2010. At the macroeconomic level domestic biomass use per unit of value added decreased (−2.2%/a) as did the amount of HANPP per unit of biomass (−1.1%/a) reflecting increased economic efficiency in land use. In contrast, GDP/capita (+1.3%/a), population (+0.4%) and the share of outsourced HANPP (+0.6%) resulted in increased consumption-based HANPP (from 21 Mt C in 2002 to 27 Mt C in 2010). Our results underline the importance of including international trade and consumption in interpreting overall change in regional HANPP.     

The energy embodied in the first and second industrial revolutions

Understanding the nature of energy embodied in economies is essential to assessing their potential to grow or transform sustainably. As the first country to undergo industrialization, study of the United Kingdom during the Industrial Revolution is particularly important for understanding transformational processes. Historical accounts describe how exploitation of Britain's coal reserves supported the evolution of steel production, railways, and other industries; yet reconstructions of the UK's eighteenth/nineteenth century economy have found relatively small contributions from coal mining to economic growth. Here, economic input‐output models for 1841 and 1907 are used to calculate the coal embodied in capital investment, consumption, and exports. Most of the coal was embodied in consumption in 1841, with coal embodied in exports growing particularly fast by 1907. The coal embodied in capital was smaller, but the energy intensity of investment was about four times larger than the energy intensity of consumption. The coal embodied in building the capital stock, much of it used for production of materials such as iron, steel, and bricks, was important for economic growth and transformation. Using historical proxy data, it is estimated that ～1.1 billion imperial tons of coal (34,000 PJ) were used to build the UK's capital assets between 1760 and 1913. The conceptual model developed here helps to explain the role of energy in economic growth and is important to contemporary sustainable development. This article met the requirements for a gold – gold JIE data openness badge described at http://jie.click/badges .     

Disparate Geography of Consumption,Production, and Environmental Impacts

International trade transfers social and environmental impacts across national borders. The consumption of forest products often takes place far away from industrial production sites, and mills procure raw material from remote forests. Finland produces about 10% of forest products that are traded internationally, with the majority of its exports destined for other European countries. Here we report and analyze data that demonstrate that international leakage, in relative terms, increased faster than the production of commodities. The international consumption of products made in Finland increased, and an increase in wood imports from Russia provided the raw material for most of the incremental production. The international consumption‐production system translated the increasing global demand for Finnish products into increased harvests in Russia, until the Russian customs duties started to increase in 2007. We argue that national and regional policies for the promotion of sustainable consumption and production must be analyzed and assessed from an international, holistic perspective.     

The Biophysical Performance of Argentina (1970–2009)

The biophysical features of the Argentinean economy are examined using a social metabolism approach. A material flow analysis (MFA) for this economy was conducted for the period 1970–2009. Results show that Argentina follows a resource‐intensive and export‐oriented development model with a persistent physical trade deficit. Also, Argentina's terms of trade (the average weight in tonnes of imports that can be purchased through the sale of 1 tonne of exports) show a declining trend in the period of study. Argentina's economy shows a pattern typical of countries whose economies are based primarily on exports. Comparisons between Argentina's metabolic profile and the metabolic profile of other countries in Latin America and of Australia and Spain show that the Argentinean economy presents the same pattern as other Latin American exporting economies, and its terms of trade are opposite to those of industrialized economies.     

Resource Use in Small Island States

Iceland and Trinidad and Tobago are small open, high‐income island economies with very specific resource‐use patterns. This article presents a material flow analysis (MFA) for the two countries covering a time period of nearly five decades. Both countries have a narrow domestic resource base, their economy being largely based on the exploitation of one or two key resources for export production. In the case of Trinidad and Tobago, the physical economy is dominated by oil and natural gas extraction and petrochemical industries, whereas Iceland's economy for centuries has been based on fisheries. More recently, abundant hydropower and geothermal heat were the basis for the establishment of large export‐oriented metal processing industries, which fully depend on imported raw materials and make use of domestic renewable electricity. Both countries are highly dependent on these natural resources and vulnerable to overexploitation and price developments. We show how the export‐oriented industries lead to high and growing levels of per capita material and energy use and carbon dioxide emissions resulting from large amounts of processing wastes and energy consumption in production processes. The example of small open economies with an industrial production system focused on few, but abundant, key resources and of comparatively low complexity provides interesting insights of how resource endowment paired with availability or absence of infrastructure and specific institutional arrangements drives domestic resource‐use patterns. This also contributes to a better understanding and interpretation of MFA indicators, such as domestic material consumption.     

Assessing Socioeconomic Metabolism Through Hybrid Life Cycle Assessment

This article applies a combined input−output and life cycle inventory (LCI) method to the calculation of emissions and material requirements of the Czech economy in 2003. The main focus is on materials and emissions embodied in the international trade of the Czech Republic. Emissions and material extraction avoided due to imports are calculated according to an input−output approach that assumes the same production technology for imports as for domestic production. Because not all products are provided by the domestic economy, the LCI data are incorporated into the monetary input−output model.
The results show that incorporating the LCI data into an input−output model is reasonable. The emissions embodied in the international trade of the Czech Republic are comparable to the domestic emissions. We compare the economy-wide material flow indicators, such as direct material input, domestic material consumption, and physical trade balance, to their raw material equivalents. The results of our calculation show that the Czech Republic exerts environmental pressure on the environment in other countries through international trade.
We argue that raw material equivalents should be used to express the flows across national boundaries. Furthermore, we recommend a raw material consumption indicator for international comparisons.     

The Employment Footprints of Nations

In this study, we present an analysis of the average wages paid for producing direct and indirect imports of nations using employment and income footprints. An employment footprint includes a country's domestic employment and that occurring along the supply chains of, and hence embodied in, its imported goods and services. Our results allow us to group the world's nations into “masters” that enjoy a lifestyle supported by workers in other countries and “servants” that support the lifestyle of master countries. We show that, in 2010, employment footprints of countries differed substantially from their own workforce footprints. Hong Kong, Singapore, the United Arab Emirates, and Switzerland occupy the top‐ranking positions of master countries, whereas many African and Asian countries are servants. Our findings show that the commodities that are “servant intensive,” such as electronics, agricultural products, and chemicals, tend to have complex supply chains often originating in third‐world countries. The quantification of these master‐servant relationships and the exposing of implicated supply chains could be of benefit to those concerned with their corporate social responsibility and committed to fairer trading or those developing policy around fair globalization.     

Greenhouse gas emissions of the production chain behind consumption of products in Austria: Development and application of a product‐ and technology‐specific approach

Globalization has been one main driver affecting our whole economy. Thus, greenhouse gas emissions (GHGs) associated with imports and exports should get addressed in addition to the national emission inventory according to the United Nations Framework Convention on Climate Change (UNFCCC), which is focused on territorial emissions only. To enable a correct calculation for imports and exports and to find the most emission‐intensive products and their origin, a product‐ and technology‐specific approach would be favorable which has not been applied up to now. This article addresses this research gap in developing and applying such an approach to calculate the GHGs behind consumption of products in Austria. It is based on physical flows combined with life‐cycle‐based emission factors and emission intensities derived from sector‐ and country‐specific energy mix, for calculating all emissions behind the production chain (resources to final products) of products consumed in Austria. The results have shown that consumption of products in Austria leads to about 60% more emissions than those of the national inventory and that the main part of these emissions comes from the provision of products. The most emission‐intensive products are coming from the chemical and the metal industry. In particular, imports are the main driver of these emissions and are more emission intensive than those produced in Austria. As a result, it is necessary to look at practical measures to reduce emissions along the production chain not only in Austria, but especially abroad as well.     

Testing environmental Kuznets curve hypothesis: The role of renewable and non-renewable energy consumption and trade in OECD countries

This paper investigates the causal relationships between per capita CO₂ emissions, gross domestic product (GDP), renewable and non-renewable energy consumption, and international trade for a panel of 25 OECD countries over the period 1980–2010. Short-run Granger causality tests show the existence of bidirectional causality between: renewable energy consumption and imports, renewable and non-renewable energy consumption, non-renewable energy and trade (exports or imports); and unidirectional causality running from: exports to renewable energy, trade to CO₂ emissions, output to renewable energy. There are also long-run bidirectional causalities between all our considered variables. Our long-run fully modified ordinary least squares (FMOLS) and dynamic ordinary least squares (DOLS) estimates show that the inverted U-shaped environmental Kuznets curve (EKC) hypothesis is verified for this sample of OECD countries. They also show that increasing non-renewable energy increases CO₂ emissions. Interestingly, increasing trade or renewable energy reduces CO₂ emissions. According to these results, more trade and more use of renewable energy are efficient strategies to combat global warming in these countries.     

The Importance of Imports for Household Environmental Impacts

A promising way to reduce environmental impacts of consumer expenditure is through the encouragement of more sustainable consumption patterns. Consumers cause environmental impacts both directly, such as by fuel use in personal cars, and indirectly, by paying for the production of consumables. With increased international trade, the indirect environmental impacts are difficult to determine because a portion of the emissions occurs in different geographical regions. Many previous studies have unrealistically assumed that imports are produced using domestic production technology. For countries with diverging technology and energy mixes the likely errors are significant. This study applies a methodology that explicitly includes technology differences to the case of Norwegian households. It is found that a significant portion of pollution is embodied in Norwegian household imports. Further, a disproportionately large amount of pollution is embodied in imports from developing countries. Overall, as in previous studies, we find that mobility and food are most important in terms of household environmental impacts. By analyzing the imports in more detail we find that for some sectors the majority of emissions occur in foreign regions; in particular, this is true for food, business services, clothing, chemicals, furniture, cars, agriculture, textiles, and most manufactured products.     

The Energy Structure of the Canadian Economy

We developed a model of a national economy in which the phenomena of supply, demand, economic growth, and international trade are represented in terms of energy flows. In examining the structure of the economy, we distinguish between the energy embodied in capital assets used in the production and distribution of energy and that embodied in capital assets and goods that consume energy. Sources used to quantify the energy flows include: end‐use energy data by economic sector; International Energy Agency–style national energy balances, and national input‐output tables. As an example, the Canadian economy for 2008 produced 16.97 exajoules (EJ) of energy, which after net export of 6.16 EJ and other adjustments left a total primary energy consumption of 10.61 EJ. The energy supply and distribution sectors used close to 32% (3.36 EJ) of total primary consumption. Analysis of primary energy consumption shows that 25.14% was embodied in household consumption, 22.85% was consumed directly by households, 7.88% was embodied in government services, and 34.07% was embodied in exports. Of significance to economic growth, 7.14% was embodied in capital in energy demanding sectors, 1.25% in energy consuming personal assets, and 1.52% in supply sector capital. The energy return on energy investment was relatively constant, averaging 5.14 between 1990 and 2008. Capital investments required to decouple the Canadian economy from its dependence on fossil fuels are discerned.     

Determinants of Ecological Footprints: What is the role of globalization?

This paper empirically analyzes the ecological consequences of globalization, by employing the Ecological Footprint (EF) as a proxy for human ecological demands and the KOF index of Globalization. We develop an unbalanced data set covering 146 countries over the 1981–2009 period and are thus able to address the influence of countries’ development over time. After empirically showing that globalization is an explanatory factor of ecological demands, an Extreme Bounds Analysis (EBA) identifies a robust set of impact factors. Subsequently, specific hypotheses on economic, political, social and overall globalization guide the empirical analysis. The findings suggest that economic globalization drives the EF of consumption, production, imports and exports. Social globalization correlates negatively with the EF of consumption and production, while increasing the EF of imports and exports. No effects are found for political globalization while overall globalization is positively correlated with EFs of imports and exports. The findings show that globalization may have different effects on EFs depending on the dimension (consumption, production, exports and imports) referred to.     

Rationale for and Interpretation of Economy-Wide Materials Flow Analysis and Derived Indicators

Economy-wide material flow analysis (MFA) and derived indicators have been developed to monitor and assess the metabolic performance of economies, that is, with respect to the internal economic flows and the exchange of materials with the environment and with other economies. Indicators such as direct material input (DMI) and direct material consumption (DMC) measure material use related to either production or consumption. Domestic hidden flows (HF) account for unused domestic extraction, and foreign HF represent the upstream primary resource requirements of the imports. DMI and domestic and foreign HF account for the total material requirement (TMR) of an economy. Subtracting the exports and their HF provides the total material consumption (TMC).
DMI and TMR are used to measure the (de-) coupling of resource use and economic growth, providing the basis for resource efficiency indicators. Accounting for TMR allows detection of shifts from domestic to foreign resource requirements. Net addition to stock (NAS) measures the physical growth of an economy. It indicates the distance from flow equilibrium of inputs and outputs that may be regarded as a necessary condition of a sustainable mature metabolism.
We discuss the extent to which MFA-based indicators can also be used to assess the environmental performance. For that purpose we consider different impacts of material flows, and different scales and perspectives of the analysis, and distinguish between turnover-based indicators of generic environmental pressure and impact-based indicators of specific environmental pressure. Indicators such as TMR and TMC are regarded as generic pressure indicators that may not be used to indicate specific environmental impacts. The TMR of industrial countries is discussed with respect to the question of whether volume and composition may be regarded as unsustainable.     

The Energetic Metabolism of the European Union and the United States: Decadal Energy Input Time-Series with an Emphasis on Biomass

This article presents an assessment of energy inputs of the European Union (the 15 countries before the 2004 enlargement, abbreviated EU‐15) for the period 1970–2001 and the United States for 1980–2000. The data are based on an energy flow analysis (EFA) that evaluates socioeconomic energy flows in a way that is conceptually consistent with current materials flow analysis (MFA) methods. EFA allows assessment of the total amount of energy required by a national economy; it yields measures of the size of economic systems in biophysical units. In contrast to conventional energy balances, which only include technically used energy, EFA also accounts for socioeconomic inputs of biomass; that is, it also considers food, feed, wood and other materials of biological origin. The energy flow accounts presented in this article do not include embodied energy. Energy flow analyses are relevant for comparisons across modes of subsistence (e.g., agrarian and industrial society) and also to detect interrelations between energy utilization and land use. In the EU‐15, domestic energy consumption (DEC = apparent consumption = domestic extraction plus import minus export) grew from 60 exajoules per year (1 EJ = 10¹⁸ J) in 1970 to 79 EJ/yr in 2001, thus exceeding its territory's net primary production (NPP, a measure of the energy throughput of ecosystems). In the United States, DEC increased from 102 EJ/yr in 1980 to 125 EJ/yr in 2000 and was thus slightly smaller than its NPP. Taken together, the EU‐15 and the United States accounted for about 38% of global technical energy use, 31% of humanity's energetic metabolism, but only 10% of global terrestrial NPP and 11% of world population in the early 1990s. Per capita DEC of the United States is more than twice that of the EU‐15. Calculated according to EFA methods, energy input in the EU and the United States was between one‐fifth and one‐third above the corresponding value reported in conventional energy balances. The article discusses implications of these results for sustainability, as well as future research needs.     

The United Kingdom's Fossil Resource Consumption Between 1968 and 2000

This article presents the trends of two indicators measuring fossil resource consumption in the United Kingdom (UK). First, a domestic material consumption (DMC) indicator for fossil resources (DMC_fossil) in the mass unit million tonnes is calculated. DMC_fossil shows that between 1970 and 2000 UK fossil resource consumption decreased by 10%, which suggests absolute dematerialization for this resource. Investigation into the mix of fossil resources during this period highlighted the shift from the heavy fossil resource coal to the lighter, more energy‐dense natural gas, which resulted in decreased mass of resource required. Second, an alternative indicator, resource consumption by a nation (RCN) for fossil resources (RCN_fossil) was calculated, which includes the indirect fossil resources attributable to traded goods and is measured in million tonnes of oil equivalent. RCN_fossil shows that between 1970 and 2000 United Kingdom's fossil resource consumption increased by 14%, which emphasizes that even though there has been a decrease in the mass of fossil resources demanded, it has been accompanied by an increase in the volume of resource consumed. Additionally, deconstruction of RCN_fossil shows that indirectly used resources attributable to exports and imports for the United Kingdom are significant. RCN_fossil indicates that on the basis of past trends, fossil resources attributable to UK imports will overtake fossil resources attributable to its exports, which will make it dependent on imported resources. We conclude that further debate on appropriate aggregate and complementary indicators is needed.     

Trends and scenarios of the carbon budget in postagricultural Puerto Rico (1936–2060)

Contrary to the general trend in the tropics, Puerto Rico underwent a process of agriculture abandonment during the second half of the 20th century as a consequence of socioeconomic changes toward urbanization and industrialization. Using data on land‐use change, biomass accumulation in secondary forests, and ratios between gross domestic product (GDP) and carbon emissions, we developed a model of the carbon budget for Puerto Rico between 1936 and 2060. As a consequence of land abandonment, forests have expanded rapidly since 1950, achieving the highest sequestration rates between 1980 and 1990. Regardless of future scenarios of demography and land use, sequestration rates will decrease in the future because biomass accumulation decreases with forest age and there is little agricultural land remaining to be abandoned. Due to high per‐capita consumption and population density, carbon emissions of Puerto Rico have increased dramatically and exceeded carbon sequestration during the second half of the 20th century. Although Puerto Rico had the highest percent of reforestation for a tropical country, emissions during the period 1950–2000 were approximately 3.5 times higher than sequestration, and current annual emission is almost nine times the rate of sequestration. Additionally, while sequestration will decrease over the next six decades, current socioeconomic trends suggest increasing emissions unless there are significant changes in energy technology or consumption patterns. In conclusion, socioeconomic changes leading to urbanization and industrialization in tropical countries may promote high rates of carbon sequestration during the decades following land abandonment. Initial high rates of carbon sequestration can balance emissions of developing countries with low emission/GDP ratio. In Puerto Rico, the socioeconomic changes that promoted reforestation also promoted high‐energy consumption, and resulted in a net increase in carbon emissions.     

Land Use Change in India (1700–2000) as Examined through the Lens of Human Appropriation of Net Primary Productivity

Land use caused by human socioeconomic activities is a driver of change in the global environment. To understand and quantify land‐use change on Earth's natural systems, interdisciplinary approaches linking biophysical and socioeconomic parameters are required. One approach to understand the degree of terrestrial colonization of the biosphere is using the human appropriation of net primary productivity (HANPP). HANPP is defined as the difference between the net primary productivity (NPP) of potential vegetation and the actual NPP for a given area of land. Here, we use HANPP as a lens to examine land‐use change in India from 1700 to 2007 using a spatially explicit data set that extends over this period. We also used the nongridded, Food and Agriculture Organization (FAO) data set to calculate HANPP for India from 1961 to 2012 and compared our results. The average potential NPP for India was estimated to be 664 grams of carbon per square meter per year (g C/m²/year). Between 1700 and 2012, the fraction of pastureland and cropland increased from 20% to almost 60%. HANPP as a fraction of the potential NPP increased from 29% to 73% over this period. Calculations of HANPP using the FAO data set yielded an increase from 600 g C/m² to just over 700 g C/m² between 1961 and 2012. We also calculated the embodied HANPP of India by considering imports and exports, but the difference between the two is negligible in comparison to the HANPP of India. We further examined the variation of HANPP with socioeconomic parameters such as the Human Development Index (HDI) and population density. There was a roughly negative trend of HANPP with HDI. HANPP roughly increases with population density and then plateaus above a population density of roughly 200 persons per square kilometer.     

A Hybrid‐Unit Energy Input‐Output Model to Evaluate Embodied Energy and Life Cycle Emissions for China's Economy

We develop a hybrid‐unit energy input‐output (I/O) model with a disaggregated electricity sector for China. The model replaces primary energy rows in monetary value, namely, coal, gas, crude oil, and renewable energy, with physical flow units in order to overcome errors associated with the proportionality assumption in environmental I/O analysis models. Model development and data use are explained and compared with other approaches in the field of environmental life cycle assessment. The model is applied to evaluate the primary energy embodied in economic output to meet Chinese final consumption for the year 2007. Direct and indirect carbon dioxide emissions intensities are determined. We find that different final demand categories pose distinctive requirements on the primary energy mix. Also, a considerable amount of energy is embodied in the supply chain of secondary industries. Embodied energy and emissions are crucial to consider for policy development in China based on consumption, rather than production. Consumption‐based policies will likely play a more important role in China when per capita income levels have reached those of western countries.