6 SUMMARY OF METHODOLOGY AND DATA SOURCES
Methodology
6.1 The basic principle of the modelling is to allocate environmental impacts (production emissions or land/resource use) to end-use products at the point of consumption. In SEI's REAP model this is done using input-output analysis, which is an established macro-economic framework for assessing the impacts of demand on supply throughout an economy. 17
6.2 When trying to calculate the full environmental impact, say emissions, of a product you would ask a number of questions: Firstly does it directly release emissions? Secondly, does it use energy that released emissions during its generation? Thirdly, how was it manufactured, did this use energy which released emissions? Fourthly, did it use raw materials and were emissions generated in their extraction? And so on. This would be difficult to do for every single product. Tracking every product's full supply chain would be a challenge, but a necessary one if you wanted to calculate the impact of a good you are consuming, particularly if it has no obvious direct emissions (such as food). Input-output tables do this task automatically; by tracking financial flows they describe the movement of goods and services between all the individual sectors of an economy. By incorporating environmental data you can calculate total impacts of products along their full supply chain based on their interactions with other sectors for raw materials or services. The emissions are allocated to the products rather than the source. This is extending input-output analysis to include emissions data - a form of environmentally extended input-output.
6.3 One of the main advantages of this input-output method is that the whole economy is modelled, which means that the full supply chains of products are captured, not just the first, second or third level as in the example above. The output of this modelling is the total environmental impacts generated throughout the (global) economy to produce one unit of final demand, for example grams of CO 2 per pound spent on a particular product category. Added to this are the direct emissions of products, such as the direct emissions from a petrol engine.
6.4 Once the impacts per pound spent are understood the next stage is to measure spending (consumption) and this (along with direct emissions) provides an approximation of the total emissions from consumption activities.
6.5 There is also one further complexity, some of spend on products will be on those manufactured abroad. Therefore, further information about trade, how imported goods are used within supply chains and those that are provided directly to the consumer are required. The model must therefore be extended to include the flows of imported goods and their production impacts.
6.6 This level of modelling requires a number of different datasets. For example, input-output models of the economy and import flows are needed as the basis, along with the environmental impacts of the producers, the consumption level of the final consumers, the direct emissions and a way of allocating high level direct emissions to regions. Not all of these datasets are available specifically for Scotland, in some cases UK data has to be used. The different data sources are summarised below. A full explanation of these datasets and how they are used is provided in the full technical methodology in Annex A.
Data Sources
Scotland
United Kingdom
Rest of the world
- GTAP database (Rose and Lee, 2008)
- EDGAR database (van Aardenne et al., 2005)
- CO 2 emissions from fossil-fuel combustion ( IEA, 2006).
- GTAP input-output data Wilting, 2007(Nijdam et al., 2005; Wilting, 2007)