(521d) Eco-Efficiency Assessment of EU Manufacturing Sectors Linking Multi-Regional Environmentally-Extended Input-Output Tables and Data Envelopment Analysis

In today’s globalized market where international trade plays a major role, assessing the environmental footprint of anthropogenic activities and allocating the corresponding environmental responsibilities among the parties involved have become very challenging tasks.

Multi-regional environmental extended input-output models (MREEIO) are gaining wider interest in this context, as they cover a wide variety of economic transactions and environmental loads that provide detailed information about the impact generated worldwide. Previous works have studied the impact of a single region following production and consumption-based assessment approaches, yet they failed to analyze the trade-off between economic wealth created and environmental impact caused (i.e. eco-efficiency).

In this work, we propose an approach that combines MREEIO tables with data envelopment analysis (DEA) for the assessment of the eco-efficiency of the main EU manufacturing sectors considering three environmental impacts -global warming potential (GWP), potential acidifying equivalent (PAE) and tropospheric ozone forming potential (TOFP)-, together with the total economic output. Besides distinguishing between efficient and inefficient sectors, our approach provides improvement targets for those found inefficient that if attained would make them efficient.

We firstly analyze the mismatch between the production and the consumption-based approaches, finding that consumption-based emissions are often higher than production-based ones. DEA is next applied, finding that five out of the 14 EU manufacturing sectors are efficient from a production-based perspective, while four are efficient from a consumption-based one (with only two repeating as efficient in both cases).

We argue that the combination of DEA with MREEIO is particularly appealing for policy making, since the former allows spotting inefficient sectors and determining improvement targets for specific impacts, while the latter informs on the ultimate drivers behind such impacts across international supply chains. Furthermore, the information provided by each accounting approach is complementary. Production-based accounting pinpoints sectors and contaminants that require regulations and/or investment in better technologies. Consumption-based accounting, on the other hand, helps identify ultimate sources of impact, a piece of information that can be used to select alternative cleaner suppliers.