Implementing macro-level MFAcc

Economy-wide MFAcc are relatively easy to compile, in particular as regards direct national input flows of used material i.e. flows entering the economy. Direct flows are observable at the boundary of the economy. The statistical sources are well known and often readily available; compilation methods are relatively well developed and harmonised. Main data sources are mineral extraction statistics, production statistics for agriculture, forestry and fisheries, and foreign trade statistics. Regarding the output side, complete coverage is more difficult to attain due to less

exhaustive information and to difficulties in estimating certain variables such as additions to stocks in physical terms. The statistical sources include data on products’ dissipative uses∗, waste statistics, water statistics, and air and GHG emission inventories. When macro-level accounts are set up mainly for the purpose of indicator development, the level of detail and the compilation effort

can be kept to a minimum. Experience however shows that when indicators derived from these accounts start to be used, this often creates a demand for additional data and analysis, which may lead to a subsequent expansion of the accounts in a multi-level and

multi-dimensional way. The highest level of detail, feasible with available resources, should therefore be considered when establishing the databases and accounts underlying the indicators. This facilitates their stepwise expansion to include for example a breakdown by industry sector, or a better coverage of trade flows by country or region of origin or destination. (Chapter 5).

Comprehensive economy-wide MFAcc also require information on indirect flows and unused extraction. These are less easy to estimate robustly and raise a number of methodological questions. Indirect flows are not accounted for in the SEEA and need to be estimated by the use of modelling and inclusion of additional data. MF aggregates integrating indirect flows are therefore not fully

compatible with national accounts aggregates. Also, economy-wide MFAcc are constructed according to the territory principle, as are energy statistics and balances and many environment statistics, whereas national accounts and the SEEA recommend the use of the residence principle. This should not be seen as a major obstacle, but may raise interpretation issues when the results are communicated in the form of indicators. It is therefore recommended to accompany economy-wide MFAcc with bridge tables.

4. MESO-LEVEL MFA

When applied at the meso level, MFA provides a more differentiated information tracking and analyses material flows at finer levels of detail within the economy, distinguishing not only categories of materials or individual materials but also industries or branches of production. This enables a more focused problem analysis, tailored to the respective material, industry or branch, which can be used to support material, industry- or branch-specific decision making and management.

Meso-level MF information is particularly useful to track structural changes at macro- and global level, to monitor developments in resource productivity and environmental performance at the meso level, and to support decision-making at these levels. It helps detect waste of materials, pollution sources and opportunities for efficiency gains in specific sectors, and serves as a basis for deriving related MF and RP indicators. It is most relevant for policies and decisions in areas such as integrated product

∗Dissipative uses refer to the dispersion of materials into the environment as a deliberate, or unavoidable consequence of product use (e.g. fertilisers and manure spread on fields, or salt, sand and other thawing materials spread on roads). Examples include: ♦ Austria ♦ Belgium ♦ Czech Republic ♦ Finland ♦ France ♦ Germany ♦ Italy ♦ Japan ♦ Korea ♦ Slovak Republic ♦ Spain ♦ Switzerland ♦ United Kingdom

policies, energy and climate change policies (control of air and GHG emissions, energy efficiency measures), integrated waste management policies, sustainable materials management. It is equally relevant for policies and decisions concerning water management.

4.1. Monitoring material flows at industry level:

Physical input-output tables, and NAMEA-type approaches

Main measurement tools to support meso-level MFA at industry level are physical input-output tables (PIOTs) and NAMEA-type tables20_{. Accounts following these approaches are compiled in a physical} accounting framework in the form of physical supply and use tables (PSUs) as described in the SEEA handbook. They can easily be combined with monetary data in hybrid accounting matrices and are largely compatible with the System of National Accounts (SNA). They reflect the physical interrelations of an economy and provide a comprehensive description of material flows between the environment and the economy, as well as within the economy.

PIOTs account for some or all material transactions within a national economy, i.e. material flows broken down by economic branch and final demand category (at the same degree of detail as monetary national accounts), and all material transactions with nature (i.e. raw material inputs and waste/emission outputs). They can equally be applied to selected industries and to selected materials or material groups. PIOTs are mass balanced at the industry level.

By providing an interconnected picture of inter-industry flows, data from PIOTs and NAMEA-type tables can be used to analyse physical flows, considering the economic activities and structural changes that lie behind these flows, and to construct industry-specific waste or materials accounts based on the material balance principle. They can further be used to generate information on the indirect material flows of final demand and imports; to analyse the economic determinants of materials use and assess the effectiveness of policies targeting their reduction or substitution.

If compiled in a coherent framework, PIOTs and NAMEA-type tables can be used in combination with EW-MFAcc to facilitate analysis of material flows and to break down MF and RP indicators by sector or by industry. They can be used in decomposition analysis and as an input into modelling work. PIOT and NAMEA-type tables are also major data sources for carrying out Environmental or extended Input- Output Analyses (eIOA) that provide additional insights on the determinants of environmental pressures. Environmental IOA can cover indirect material requirements of imports, analogous to the TMR approach of EW-MFAcc.

When combined with monetary I-O analysis, physical input-output analysis and environmental input- output analysis are particularly relevant for supporting structural policies with environmental implications, such as taxes, subsidies, trading systems.

They can be related to monetary supply-use and input-output tables (MIOTs) through the establishment of hybrid flow accounts, including full NAMEAs, in order to highlight the relationship between economic and physical phenomena and analyse them jointly. Hybrid accounts can be used to study a wide range of issues. Essentially any raw material (or energy) input or waste material (or energy) output for which physical statistics are available can be analysed through hybrid flow accounts. Because issues of material resource use and waste output are pervasive across economies, hybrid flow accounts are among the most commonly implemented environmental accounts. This is of particular value for economic analysis, including work on productivity, value chains, technology diffusion, global warming, and structural changes.