A New Global Database for Quantifying the Impact of Consumption and Trade

A New Global Database for Quantifying the Impact of Consumption and Trade

How is it possible to measure a nation’s environmental impact when half its goods are imported from China and other regions?

Over the past decade, a consortium of European researchers has developed a database that offers new clarity on the increasingly complex links between international trade, consumption, and environmental impact. Known as EXIOBASE 3, the database enables new insights to be drawn about the environmental impact that trade has had, who benefits, and who is harmed by increasing globalization.

In a new special issue, The Global Multi Regional Input Output Database “EXIOBASE,” Yale’s Journal of Industrial Ecology (JIE) examines how this database was designed and built. The issue shows how it will improve understanding of the effects of trade, inform efforts at resource efficiency, and provide a knowledge base for global policy. We spoke with Reid Lifset, editor-in-chief of the JIE, about the database and its potential implications.

What is EXIOBASE 3, and why is it important?

Reid Lifset: In short, it’s a new global database that gives researchers — and policymakers — the ability to see how international trade relates to resource use and environmental impacts. Articles in the new special issue demonstrate how the database can be used to assess not only the global impact of production of goods and services but also their consumption — that is, what is often called a “footprint” perspective. Instead of examining environmental impacts generated by country or territory, this approach reveals the resources used and environmental impacts brought about globally through consumption.

EXIOBASE 3 is an example of an input-output (I-O) table, a matrix or grid that shows what inputs go into industries within an economy and, vice versa, where the outputs of different industries are used within that same economy. I-O tables reveal the underlying structure and supply relationships within an economy. They are used by economists to assess employment or economic activity in cities and regions as well as to estimate GDP. These tables are also one of the components that feed into more elaborate economic frameworks, such as computable equilibrium models.

But EXIOBASE 3 is more than just your average I-O table. It’s a “multiregional input-output” (MRIO) database, because it encompasses input-output data from more than one country or region. In this way, MRIOs link the domestic economy structure of one country with those of a large number of trading partners.

Industrial ecologists have been hard at work for more than two decades adding quantitative environmental information to each stage of the production process captured in input-output tables — creating what are unpoetically called environmentally-extended input-output [EEIO] tables. By including information on the amount of, say, air pollution emitted in each stage of the production of a ton of steel, EEIO analysis quantifies not only overall levels of pollution in an economy from steelmaking, but also where in the production process and the various supply chains the pollution occurs. A multiregional approach — or more specifically an EE-MRIO — quantifies those same relationships while capturing the effect of trade.

What relationships between economic growth and the environment has EXIOBASE 3 revealed?

Lifset: As global economic activity, population and trade increase, we need to know whether economies can “decouple.” That is, can they grow without also escalating the amount of damage we do to the environment?

There is considerable research on decoupling from a country- or production-based perspective; typically, the amount of economic activity within a country is calculated. And then the associated resource use or environmental impact is quantified. This database allows that analysis to be turned upside down and ask those same questions in terms of consumption. Instead of quantifying the output of production in a country or regions, researchers quantify the amount and type of consumption. And then ask, what kind of resource use and environmental pressure does that create? And, because EXIOBASE is a global database, researchers can trace the impacts back through not just the supply chain within a given country, but also across borders. In a world of globalized trade, this is very important.

Sometimes countries will look very good on a production basis — with respect to the pollution that occurs within their borders. But in fact what’s happening is that the damaging activities are being exported. EXIOBASE 3 allows careful analysis of that.

What specific environmental impacts are studied in this special issue?

Lifset: One study examined the effect of international trade on the environment and the efficiency of resource use between 1995 and 2011 — specifically greenhouse gas emissions, energy use, water use, land use, and material use. It did so by quantifying the impact of producing and consuming 200 traded products from 163 industries from nine regions around the world.

The authors found some economic development decoupled from the impacts of environmental impacts of trade as well as a minor degree of improved resource efficiency. However, the achievement was limited and the efficiency has become worse, particularly for material use that increased at a faster rate than GDP. During the period from 1995 to 2011, material use went from 8.3 metric tons per capita to 11.3 metric tons per capita, a rise of 36 percent.

Some economists argue that international trade can promote resource efficiency by increasing competitiveness among countries and by providing more efficient access to resources. What this study revealed, in comprehensive, quantified terms, is that most growth in resource-intensive production is occurring in places with relatively light environmental regulation.

What are some of the other findings featured in the issue?

Lifset: Apart from the description of the database and key results, there are several articles on the future of research making use of this tool. Because large trade and development organizations are increasingly using such data, several articles in the issue present an agenda for connecting research and development of statistical datasets, focusing on both usability and robustness. One paper shows how country-specific analysis can be enhanced, explaining how the accuracy of results arising from the use of nationally-specific data and the global coverage of these models can be accommodated. Another paper confronts the challenge of EXIOBASE’s capability to generate several-hundred different indicators of environmental impact. The authors examine which indicators are really important and conclude that only a handful are actually needed.

What else does the new issue reveal about the potential from EXIOBASE 3?

Lifset: Global EE-MRIOs allow a more sophisticated examination of questions that are of keen interest to environmental researchers and policymakers. Now that this database is up and running, policy proposals can be assessed much more easily with geographic specificity, considerable detail on products and different countries and— as is typical in industrial ecology—the quantification of multiple environmental impacts, not just one. “What if” analyses can be conducted that give insights as to who are the winners and losers — and where changes in impacts will occur. For example, one article examines the potential for climate policy to decrease global emissions from diets and where there is the danger of “rebound effects” (where impacts counterproductively increase). In another study, the issue of food waste is tackled specifically, finding that measures to reduce consumer food waste could have a reduction on resources of around 10 to 11 percent along the value chain, and 2 to 7 percent in different environmental impact categories.

Both literally and figuratively EXIOBASE 3 provides a global perspective. It affords a rich level of breadth: many countries, a wide range of products, and multiple environmental endpoints. This special issue documents this powerful advance, explaining its origins and design and how it can be used to further our understanding of development.

The Journal of Industrial Ecology is an international peer-reviewed journal owned by the Yale Center for Industrial Ecology. It is edited in collaboration with the Tsinghua School of Environment and the Industrial Ecology Program of the Norwegian University of Science & Technology.