How to measure environmental pressures from production and consumption?

Environmental pressures from European consumption and production shows how economic and environmental data can be integrated to analyse environmental performance and material efficiency of whole economies as well as their individual elements.

The analyses presented in the report provide policy makers with a tool to target economic incentives and information campaigns, encouraging a shift to more sustainable production and consumption patterns in order to reduce Europe’s global footprint.  The report discusses two analytical approaches.

The production-based method considers direct environmental pressures caused by European industries and service providers - for example, the extraction of material resources by the mining and quarrying sector, air pollutants from power stations, greenhouse gas emissions from agriculture and so on.

The consumption-based method focuses on the indirect environmental pressures caused by European consumers.  In this approach, the direct production-related pressures are attributed to broad groups of products and services, also taking into account pressures that are embodied in goods imported into the EU. Using Environmentally Extended Input Output Analysis (EE-IOA) it is possible to estimate the environmental pressures ultimately generated by individual product groups and also by European consumption as a whole.

Four types of environmental pressures are considered by the report: raw material use, greenhouse gas emissions, acidifying air emissions, and air pollutants leading to harmful ground-level ozone. However, the method has the potential to assess many other types of environmental pressure including land use, water use, waste generation and energy use.

Thanks to the conceptual consistency between the system of national economic accounts and environmental accounts, data on environmental pressures is directly comparable to economic expenditure. Policy makers can thus see which sectors have been most successful in decoupling environmental pressures from growth in their output. They can gain an overview of which product groups are most pressure intensive, including which groups lead to most emissions or material use per euro of purchase. Electricity, basic metal products, and agricultural products cause high amounts of environmental damage for every euro spent, for example, while most services cause low environmental pressures per euro.

The tool also allows the decoupling of pressures from GDP growth to be split up into contributing factors. Through so called ‘de-composition analysis’, it is possible to investigate reductions in environmental pressures and find out how much are due to improvements in production processes, such as energy savings, substitution of fuels and other inputs, or the use of end-of-pipe technologies. It is also possible to see much of the reduction is due to changes in the structure of the economy, including which types of products are being produced and consumed.  In Europe, the report concludes, decoupling of environmental pressures has mainly resulted from improvements in individual industries and production processes rather than changes in patterns of consumption.