THE CONCEPTS AND METHODS OF INTEGRATED ENVIRONMENTAL AND ECONOMIC ACCOUNTING

1.2 Material Flow Accounts: Assessing the Physical Metabolism of the Economy

Figure 2 can be viewed as the accounting interpreta­tion of the generic environment-economy interface of Fig. 1. It represents the material flow accounts (MFA), which Robert Ayres and others have char­acterized as picturing the physical metabolism of society. The MFA show material inputs from abroad and the natural environment, their accumulation as stock in infrastructures and other durable goods, and their output of wastes and residuals into the environment and (as exports) to other countries. The MFA were developed in Austria and Germany and mostly applied in industrialized countries. The statistical office of the European Union, Eurostat, prepared guidelines on economy-wide MFA for improving the international comparability of the accounts.

Adding up the material flows (in tons) obtains various indicators at different stages of throughput as shown in acronyms in Fig. 2. Table I elaborates on the definition and contents of these indicators. Perhaps best known is the total material requirement (TMR). The indicator is defined as the sum of primary material inputs, including their ecological rucksacks. These rucksacks are hidden flows, which do not become a physical part of any product but are associated with its production, use, and disposal (e. g., soil erosion from agriculture or forestry, or gangue from mining).

Scholars of the German Wuppertal Institute, who focused their work on compiling and analyzing material flow accounts, have argued that their indicators measure actual and potential, and possibly still unknown, environmental impacts. A downward trend of the TMR, together with the usual upward trend of economic output (GDP), would thus indicate a decoupling of environmental pressure from economic growth. This can be seen as a process of dematerialization of the economy, and hence of ecological sustainability, as defined previously.

Add. air and water

 

Water

vapor

 

 

environment

 

THE CONCEPTS AND METHODS OF INTEGRATED ENVIRONMENTAL AND ECONOMIC ACCOUNTING

FIGURE 2 Material flow accounts and indicators. Adding up material flows at various stages of throughput through the economy obtains different indicators of material input, accumulation, and output. From Matthews et al. (2000), ‘‘The Weight of Nations: Material Outflows from Industrial Economies,’’ Fig. 1, p. 5, World Resources Institute, Washington, DC, with permission.

The question is, how much dematerialization makes economic growth sustainable? Since physical material flows are not expressed in monetary units and are therefore not directly comparable to eco­nomic output or income, we can answer this question only by setting standards or targets for desirable rates of economic growth and necessary throughput reduction. The former president of the Wuppertal Institute, Ernst von Weizsacker advanced the ‘‘Factor 4’’ standard of halving material input into the economy while doubling wealth over a period of 3 to 5 decades. Factor 4 and other standards of even a higher order can be interpreted as de­materialization targets for global sustainable devel­opment.

Overall indicators like the TMR are relatively crude measures of environmental impact since they use the weight of material inputs for weighting the significance of potential environmental effects. Table I shows therefore also various output indicators of wastes and emissions. They do weigh impacts by weight but are closer to specific environmental pressures and impacts. Their decline is indicative of the detoxification of the economy as they address the sink/pollution concern of sustainability.