Capital Costs: Yale Research Offers Truer Calculation of ‘Footprint’ of Purchases
However, many of the models used to assess the impacts of purchases — known as “environmentally extended input-output” (EEIO) analyses — don’t incorporate data that would account for the contributions of these capital assets. As a result, most analyses underestimate the carbon, energy, and material footprints.
In order to get a more accurate estimate, Yale researchers have developed a new model using the most recent detailed economic data available, from the years 2007 and 2012. The model incorporates those capital assets into the production supply chains, providing a more comprehensive understanding of the environmental impacts associated with a range of sectors, from mining to government to media. According to their analysis, use of capital assets for production in 2012 accounted for 13 percent, 19 percent, and 40 percent of the economy-wide carbon, energy, and material footprints, respectively.
The findings are published in the Journal of Industrial Ecology.
By combining supply-chain data on a range of products and services with industry-level emissions data, EEIO models reveal important insights into the life cycle environmental impacts of a particular product — or any group of products. But since EEIO models use data from trade between companies in services and consumable inputs, long-lived capital assets are usually omitted.
According to their findings, the products most affected by capital, in terms of overall economy-wide carbon footprint, are housing, government services, gasoline production, and healthcare. Construction assets, as expected, are key contributors to the housing sector. Metals, vehicles, and machinery are critical components for such sectors as federal defense.
As part of this effort, the authors also developed a spreadsheet-based tool that allows users to quickly estimate carbon, energy, and material footprints associated with purchase of more than 400 products and services that drive the U.S. economy.
This tool will be useful to researchers and students as well as organizations looking to reduce their environmental impacts.
“It allows those involved in a purchasing or producing a particular good to get a better sense of, say, how much a thousand dollars spent on that good compares on average environmentally with a thousand dollars spent on another,” said Reed Miller, a Ph.D. candidate in the Yale School of Engineering and Applied Science and co-developer of the model. “It also enables one to identify the potential ‘hotspots’ they might want to focus on if they want to reduce their footprints.”
“If you’re targeting efforts to reduce the impact of something and you’re not considering the capital aspects, then you might miss opportunities for improvements.”
Berrill, Peter, T. Reed Miller, Yasushi Kondo, and Edgar G. Hertwich. 2019. “Capital in the American carbon, energy, and material footprint.” Journal of Industrial Ecology. DOI: 10.1111/jiec.12953.
Miller, T. Reed, Peter Berrill, Paul Wolfram, Ranran Wang, Yookyung Kim, Xinzhu Zheng, and Edgar G. Hertwich. 2019. “Method for Endogenizing Capital in the United States Environmentally-Extended Input-Output Model.” Journal of Industrial Ecology. DOI: 10.1111/jiec.12931.
PUBLISHED: December 3, 2019