An empirical example for ESIs: Material balances and intensities for the Austrian economy

We regard the materials intensity of economic processes as one of the basic general criteria for their environmental impact. Most of the current environmental damage is significantly connected with the extraction, transportation, processing, and use of materials. Therefore the aim is to devise a consistent set of macro-indicators for materials intensity, which should give information on the physical extension (and efficiency) of economic activity."

The suggested indicators for materials intensity trace the material flows from the environment through the economy and back into the environment. The concept of flows, as shown in figure 4, follows the laws of thermodynamics, which state that materials cannot be used up in a physical sense. Nothing gets lost. Macroeconomic material balances always end up with identical sums of material inputs and outputs in terms of mass. The concept of material flows is thus perfectly compatible with the monetary inputoutput cycles basic to the System of National Accounts (SNA).

The material balances include the total material throughput of the economy in millions of tons (as a measure of mass) per time period. Figure 5 presents a quantitative overview of the material throughput of the Austrian economy in millions of tons per year, calculated by Steurer from all sources available. The economy very much resembles a living system: 88 per cent of the throughput is water (more than half of that for cooling purposes), another 8 per cent is air (combustion only), and only 4 per cent consists of other materials. These other materials are mainly accounted for by construction materials, food, and energy carriers. Just 1.6 per cent of the yearly primary input adds to stock. The whole stock could be estimated to amount to no more than 80 per cent of the yearly throughput; more than 90 per cent of the stock consists of buildings and roads.

Fig. 4 The concept of material flows and stocks

Fig. 5 Material throughput of the Austrian socio-economic system, 1988

On the level of the whole socio-economic system, in effect almost all inputs are directly drawn from nature: even the imports are clearly dominated by primary inputs such as energy carriers, and most outputs are released into nature within the course of a year. This holds true for practically all water and air, and for about half of the other materials. The rest is either added to infrastructure (with an estimated durability of 30-50 years), invested in goods of somewhat greater than average durability (5-10 years), or exported. Thus, for the aggregate level of a national economy the distinction between primary and secondary inputs is not very meaningful. It is very meaningful, though, when looking at sectors within the economy.

Table 1 shows empirical material balance sheets for four selected branches of the Austrian economy, namely, extraction of crude petroleum and natural gas, manufacture of refined petroleum products, manufacture of pulp and paper, and the electrical industry. As a result of such material balances it is possible to create a consistent set of material indicators (or indicators for materials intensity) for each branch, which is shown in table 2. The balances are differentiated into primary input, secondary input, output in the form of goods, and output in the form of non-reused wastage.

Primary input is made up of directly extracted material inputs from nature, which constitute the main part of total input, particularly in basic industries. The proportion of primary input in the form of water is extremely high in all industries regarded: it varies between 44 per cent and 97 per cent of the total material input (see table 1). It makes sense, therefore, to distinguish between materials-intensity indicators that are inclusive and exclusive of water. It is interesting that water plays as dominant a role as a primary input to the industrial system as it does for ecosystems.

A very high proportion of total materials input consists of air (oxygen and nitrogen), which is consumed in all processes of combustion. However, we have not calculated that part of the primary input for this empirical presentation.

Secondary input means all material intermediary services within the economic system (from one branch to another). Secondary input can be divided into re-used waste material, renewable resource input, and direct packaging input. Secondary input in the form of durable capital goods or stocks of goods is not defined as material flow and therefore is not significant in terms of the flow concept, but forms part of the material stock balances.

One strategic gap in material flow balances is the difference between total input and total output in the form of goods. That difference is identical with the total material wastage (in gaseous, liquid, or solid form) of production, which will not undergo any further socioeconomic processing and is deposited in the environment in one form or another. The amount of that difference, i.e. the total wastage, has a high information value with regard to the checking, controlling, and completion of emission data; the current availability of such data in Austria, however, is very limited. According to table 1 the total material wastage amounts to 46-98 per cent of the total input (if water is included), and from less than 3 to 31 per cent (if water is excluded).

Table 1 Material balances for four selected branches of the Austrian economy, 1988 (in millions of tons)

		Extraction of crude petroleum natural gas	Manufacture of refined petroleum products	Manufacture of pulp paper	Electrical industry
Input
Primary input (intermediary services of nature)	Directly extracted resources	2.153	-	-	-
	Water	1.761	12.598	220.700	13.811
	Oxygen and nitrogen	?	?	?	?
	Other resources	-
	Energy carrier	0.063	0.664	0.386a	0.041
Secondary input (intermediary services of economy)	Otherb secondary input	0.005	8.247	5.427	0.686
	(Thereof: reused waste materials)	-	-	3.825c	0.005
	(Thereof: direct packaging input)	0.000	0.000	0.051	0.035
Total	3.982	21.509	226.513	14.538
Output
Goods	2.153	8.129	4.105	0.607
Total material wastage	1.829	13.380	222.408	13.931
Total material wastage (excl. water)	0.068	0.782	1.708	0.120
Total	3.982	21.509	226.513	14.538
Employees (annual average)	2.813	3.391	12.474	77.379
Production value in billions of AS	2.916	16.571	36.446	60.415

Source: Own calculations.

a. Excluding combustible waste material.

b. Including deliveries of unprocessed primary inputs by other branches.

c. Including combustible waste material.

Table 2 Indicators for material-intensity for four selected branches of the Austrian economy, 1988

		Extraction of crude petroleum natural gas	Manufacture of refined petroleum products	Manufacture of pulp and paper	Electrical industry
Total input per	Incl. water	1.416	6.343	18.159	201
employee (tons/em.)a	Excl. water	790	2.628	466	10
Total input related to production value (tons/1.000 AS)a	Incl. water Excl. water	1.37 0.76	1.30 0.54	6.22 0.16	0.24 0.01
Material wastage per	Incl. water	650	3.946	17.830	192
employee (tons/em.)	Excl. water	24	231	137	2
Material wastage related to production value (tons/1000 AS)	Incl. water Excl. water	0.63 0.02	0.81 0.05	6.10 0.05	0.23 0.00
Material efficiencyb	Incl. water Excl. water	0.54 0.97	0.38 0.91	0.02 0.71	0.04 0.83
Packaging intensityc		0 00	0.00	0.01	0.06

Source: Own calculations.

a. Excluding oxygen and nitrogen.

b. Percentage of material output in the form of goods to total material input.

c. Percentage of direct packaging input to material output in the form of goods.

In order to compare different industrial activities, time periods, and countries, we suggest the establishment of indicators such as those shown in table 2.

As can be seen from the table, the variability in material intensity between the branches of the economy is very high: whereas in the electrical industry only 10 kg of material input are needed to achieve a production value of 1,000 Austrian Schillings, in the petroleum extraction industry 790 kg correspond to this production value.

The indicator for material efficiency shows quite a different pattern. Here the manufacture of pulp and paper appears to be the most wasteful of the branches analysed, and the petroleum extraction industry the least wasteful. In these cases, therefore, there exists no positive correlation between the value of the input and the efficiency with which it is handled.

In order to be able to analyse and properly interpret data of this kind, it would be necessary to investigate several more branches of the economy and more points in time than is possible for the purposes of this example. As economic statistics in Austria are currently organized, it would be a tedious task to calculate a complete physical input-output matrix of this kind, let alone to reconstruct material flows within the economy. Nevertheless, we believe that such work is indispensable if one is to give an empirical description of "industrial metabolism."