Economy-wide material flow accounts
Encyclopedia
Economy-wide material flow accounts (EW-MFA) is a framework to compile statistics linking flows of materials from natural resources
to a national economy . EW-MFA are descriptive statistics, in physical units such as tonnes per year.
EW-MFA is consistent with the principles and system boundaries of the System of National Accounts (SNA)
and follows the residence principle . This means that EW-MFA is also a part of the System of Integrated Environmental and Economic Accounting (SEEA)
.
.
EW-MFA strives to produce a mass balance
of material flows. It systematically categorises material input and output flows crossing the functional border between economy (technosphere, anthroposphere) and environment. Mass balances are defined as "...on the first law of thermodynamics (called the law of conservation of matter), which states that matter (mass, energy) is neither created nor destroyed by any physical process" .
In the European Union between 2000 and 2007, resource productivity increased by almost eight percent . Resource productivity of the EU is expressed by the amount of gross domestic product
(GDP) generated per unit of material consumed (Domestic Material Consumption, see below), in other words GDP / DMC in euro per kg. This means that less material was consumed in order to produce the same amount of products in the EU. However, breaking down the components of the index it is seen that both GDP and DMC are increasing, only not equally fast.
met in Helsinki in December 1999, part of the agenda was dedicated to establishing an understanding of how economies are dependent on the use of natural resources and that these resources are not in limitless supply. .
The following year, Eurostat
, together with the Wuppertal Institute and national statistical offices in Europe, developed the first statistical guideline for how to compile statistics and subsequent indicators on material flows.
and EW-MFA. Statistics are based on the same principles (the residence principle of the SNA) and thus become the EW-MFA a sub-component of the SEEA. The EW-MFA links the environment to the economy through the flows of materials extracted, processed and traded.
. In 2011 the European Council
and European Parliament
passed a statistical regulation for the compilation of annual statistics on material flows.
Most European statistical offices compile the statistics on EW-MFA through the use of existing statistics. Trade statistics, some agricultural statistics and other sources are used in combination to create EW-MFA statistics.
The definitions explained below are extracted from the work of Eurostat and are applied by the national statistical officies who are following the framework of EW-MFA.
Input side: DE, DMC, and DMI
Output side: DPO
Direct Material Consumption (DMC) is defined as the total amount of material directly used in an economy, i.e. it equals domestic extraction plus imports minus exports . DMC does not include upstream hidden flows related to imports and exports of raw materials and products .
Domestic Material Input (DMI) summarizes domestic extraction of reources and the imports, i.e. all materials which are of economic value and are used in production and consumption activities, except balancing items . It should be noted that DMI is not additive across countries. Due to the inlclusion of trade within the EU double counting would occur if one would add several countries together .
Physical trade balance (PTB) equals physical imports minus physical exports. This means that in relation to monetary trade balances which is exports minus imports) the flows are the reverse. It measures the fact that in economies money and goods move in opposite direction. A physical trade surplus indicates a net import of materials, whereas a physical trade deficit indicates a net export .
Net Additions to Stock (NAS) measures the ‘physical growth of the economy’, i.e. the quantity (weight) of new construction materials used in buildings and other infrastructure, and materials incorporated into new durable goods such as cars, industrial machinery, and household appliances. Materials are added to the economy’s stock each year (gross additions), and old materials are removed from stock as buildings are demolished, and durable goods .
Domestic processed output (DPO) measures the total weight of materials which are released back to the environment after having been used in the domestic economy. These flows occur at the processing, manufacturing, use, and final disposal stages of the
production-consumption chain. Included in DPO are emissions to air, industrial and household wastes deposited in controlled and uncontrolled landfills, material loads in wastewater and materials dispersed into the environment as a result of product use
(dissipative flows). Recycled material flows in the economy (e.g. of metals, paper, glass) are not included in DPO .
Natural resource
Natural resources occur naturally within environments that exist relatively undisturbed by mankind, in a natural form. A natural resource is often characterized by amounts of biodiversity and geodiversity existent in various ecosystems....
to a national economy . EW-MFA are descriptive statistics, in physical units such as tonnes per year.
EW-MFA is consistent with the principles and system boundaries of the System of National Accounts (SNA)
United Nations System of National Accounts
The United Nations System of National Accounts is an international standard system of national accounts, the first international standard being published in 1953...
and follows the residence principle . This means that EW-MFA is also a part of the System of Integrated Environmental and Economic Accounting (SEEA)
System of Integrated Environmental and Economic Accounting
System of Integrated Environmental and Economic Accounting is a framework to compile statistics linking environmental statistics to economic statistics. SEEA is described as a satellite system to the United Nations System of National Accounts . This means that the definitions, guidelines and...
.
Scope
The underlying definition of economy-wide material flow accounts includes statistics on the overall material inputs into national economies, the changes of material stock within the economic system and the material outputs to other economies or to the environment. Statistics on EW-MFA cover all solid, gaseous, and liquid materials, except for water and air. However, water in products is included. EW-MFA includes statistics on material flows crossing the national (geographical) border, i.e. imports and exports..
EW-MFA strives to produce a mass balance
Mass balance
A mass balance is an application of conservation of mass to the analysis of physical systems. By accounting for material entering and leaving a system, mass flows can be identified which might have been unknown, or difficult to measure without this technique...
of material flows. It systematically categorises material input and output flows crossing the functional border between economy (technosphere, anthroposphere) and environment. Mass balances are defined as "...on the first law of thermodynamics (called the law of conservation of matter), which states that matter (mass, energy) is neither created nor destroyed by any physical process" .
Interpreting the statistics
In principle, the statistics will show which countries are dependent on others for natural resources and which are major exporters of natural resources. The statistics also show if a countries production is sustainable, i.e. whether the economy of a country can produce more products using fewer natural resources.In the European Union between 2000 and 2007, resource productivity increased by almost eight percent . Resource productivity of the EU is expressed by the amount of gross domestic product
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
(GDP) generated per unit of material consumed (Domestic Material Consumption, see below), in other words GDP / DMC in euro per kg. This means that less material was consumed in order to produce the same amount of products in the EU. However, breaking down the components of the index it is seen that both GDP and DMC are increasing, only not equally fast.
History
When the European CouncilEuropean Council
The European Council is an institution of the European Union. It comprises the heads of state or government of the EU member states, along with the President of the European Commission and the President of the European Council, currently Herman Van Rompuy...
met in Helsinki in December 1999, part of the agenda was dedicated to establishing an understanding of how economies are dependent on the use of natural resources and that these resources are not in limitless supply. .
The following year, Eurostat
Eurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...
, together with the Wuppertal Institute and national statistical offices in Europe, developed the first statistical guideline for how to compile statistics and subsequent indicators on material flows.
Implementing EW-MFA
There is a link between the System of Integrated Environmental and Economic Accounting (SEEA)System of Integrated Environmental and Economic Accounting
System of Integrated Environmental and Economic Accounting is a framework to compile statistics linking environmental statistics to economic statistics. SEEA is described as a satellite system to the United Nations System of National Accounts . This means that the definitions, guidelines and...
and EW-MFA. Statistics are based on the same principles (the residence principle of the SNA) and thus become the EW-MFA a sub-component of the SEEA. The EW-MFA links the environment to the economy through the flows of materials extracted, processed and traded.
Compiling the statistics
The only international data collection on EW-MFA is conducted through EurostatEurostat
Eurostat is a Directorate-General of the European Commission located in Luxembourg. Its main responsibilities are to provide the European Union with statistical information at European level and to promote the integration of statistical methods across the Member States of the European Union,...
. In 2011 the European Council
European Council
The European Council is an institution of the European Union. It comprises the heads of state or government of the EU member states, along with the President of the European Commission and the President of the European Council, currently Herman Van Rompuy...
and European Parliament
European Parliament
The European Parliament is the directly elected parliamentary institution of the European Union . Together with the Council of the European Union and the Commission, it exercises the legislative function of the EU and it has been described as one of the most powerful legislatures in the world...
passed a statistical regulation for the compilation of annual statistics on material flows.
Most European statistical offices compile the statistics on EW-MFA through the use of existing statistics. Trade statistics, some agricultural statistics and other sources are used in combination to create EW-MFA statistics.
Compiling the indicators
The statistics on EW-MFA are usually combined in order to create indicators.The definitions explained below are extracted from the work of Eurostat and are applied by the national statistical officies who are following the framework of EW-MFA.
Input side: DE, DMC, and DMI
Output side: DPO
Direct Material Consumption (DMC) is defined as the total amount of material directly used in an economy, i.e. it equals domestic extraction plus imports minus exports . DMC does not include upstream hidden flows related to imports and exports of raw materials and products .
Domestic Material Input (DMI) summarizes domestic extraction of reources and the imports, i.e. all materials which are of economic value and are used in production and consumption activities, except balancing items . It should be noted that DMI is not additive across countries. Due to the inlclusion of trade within the EU double counting would occur if one would add several countries together .
Physical trade balance (PTB) equals physical imports minus physical exports. This means that in relation to monetary trade balances which is exports minus imports) the flows are the reverse. It measures the fact that in economies money and goods move in opposite direction. A physical trade surplus indicates a net import of materials, whereas a physical trade deficit indicates a net export .
Net Additions to Stock (NAS) measures the ‘physical growth of the economy’, i.e. the quantity (weight) of new construction materials used in buildings and other infrastructure, and materials incorporated into new durable goods such as cars, industrial machinery, and household appliances. Materials are added to the economy’s stock each year (gross additions), and old materials are removed from stock as buildings are demolished, and durable goods .
Domestic processed output (DPO) measures the total weight of materials which are released back to the environment after having been used in the domestic economy. These flows occur at the processing, manufacturing, use, and final disposal stages of the
production-consumption chain. Included in DPO are emissions to air, industrial and household wastes deposited in controlled and uncontrolled landfills, material loads in wastewater and materials dispersed into the environment as a result of product use
(dissipative flows). Recycled material flows in the economy (e.g. of metals, paper, glass) are not included in DPO .
See also
- Green accountingGreen accountingGreen accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations. It has been argued that gross domestic product ignores the environment and therefore decisionmakers need a revised model that incorporates green accounting.- Etymology :The...
- Material flow accountingMaterial flow accountingMaterial flow accounting is the study of material flows on a national or regional scale. It is therefore sometimes also referred to as regional, national or economy-wide material flow analysis.-Definition:...
- Material flow analysisMaterial flow analysisMaterial flow analysis is an analytical method of quantifying flows and stocks of materials or substances in a well-defined system. MFA is an important tool to assess the physical consequences of human activities and needs in the field of Industrial Ecology, where it is used on different spatial...
- System of Integrated Environmental and Economic AccountingSystem of Integrated Environmental and Economic AccountingSystem of Integrated Environmental and Economic Accounting is a framework to compile statistics linking environmental statistics to economic statistics. SEEA is described as a satellite system to the United Nations System of National Accounts . This means that the definitions, guidelines and...
- United Nations System of National AccountsUnited Nations System of National AccountsThe United Nations System of National Accounts is an international standard system of national accounts, the first international standard being published in 1953...