Input-Output-Analysis

For the realisation of a national (European, global, regional) sustainabiltiy strategy it is important to know, which macro-economic effects (on growth, employment, budget deficit, interest rate etc., but also on ressorce use) different suggested measures will presumably have to derive a sustainable mixture of instruments. The evaluation of input output calculations permits fundamental statements about the effects of politic-induced changes of crucial variables (disaggregated to approximately 100 industries): Changes on demand and technology, the price relations, working time etc. can be measured in such a way in its effects on GDP, employment and resource use.

Modelling sustainable development requires not only the consern of economic development but also the integration of environmental and social dimensions in macro-economic objectives in a more explicit way. Therefore it is necessary to consider all interactions between economic development, sector structural change, environmental pollution, material and energy consumption as well as social development very carefully. Since input-output analysis is able to connect ecological, social and economic circumstances in a consistent way it is a suitable framework to reach this objective.

The methodology of input-output analysis enables a detailed view of the individual sectors with its corresponding indicators. The problem definition can be examined on sector level, whereby all production sectors and final demand categories are part of analysis. Thus the numerous relations between production and consumption units can be represented.

The basic idea of input-output analysis is to determine both the direct and the indirect demand effects. Conventional environmental economics and sustainability analyses mainly examine direct material inputs and pollution aspects, i.e. the resource use and/or pollution per unit output in a certain sector. Indirect material requirements and pollution effects, which arise during the production process due to multiple transactions, are ignored. These indirect effects also become visible by input-output analysis.

Additionally to monetary flows it is also possible to illustrate material flows within an economic area as well as between economy and environment. Applying an environmentally extended input-output model enables a comprehensive sector analysis with respect to financial flows on the one hand and resource flows on the other hand.

In order to include social components, also job-creating effects of given political measures can be analysed. In this way the modelling excercise comprises direct and indirect economical effects of political measures from economic, environmental as well as social point of view.