L04 Slide 31 Alternative Use An Economic Model 1 Determine the cost of a

# L04 slide 31 alternative use an economic model 1

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L04 Slide 31 Alternative: Use An Economic Model 1. Determine the cost of a product 2. Determine the purchaser price inputs to each industrial sector (using an economic model) 3. Determine environmental impacts (per unit economic activity) within each industrial sector (i.e. emission factors) Total Impact = Σ [sector input * sector emission factors]

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L04 Slide 32 Economic Sectors
L04 Slide 33 Economic Sectors

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L04 Slide 34 Economic Input-Output (EIO) Model Wassily Wassilyevich Leontief (1906 1999) EIO table of the US economy Various inputs required to produce a unit of output in each sector Total sales and purchases from one sector Shows interdependency between sectors in Economics in 1973 For EIO Model Noble Prize
L04 Slide 35 IO Transactions Table Input to Sectors Intermediate output Final Demand Total Output Output from sectors 1 2 3 n 1 Z 11 Z 12 Z 13 Z 1n O 1 Y 1 X 1 2 Z 21 Z 22 Z 23 Z 2n O 2 Y 2 X 2 3 Z 31 Z 32 Z 33 Z 3n O 3 Y 3 X 3 n Z n1 Z n2 Z n3 Z nn O n Y n X n Intermediate input I I 1 I 2 I 3 I n GPD (Gross Domestic Product) Value added V V 1 V 2 V 3 V n Total output X X 1 X 2 X 3 X n Production recipe for making output from sector 1 Y X Z ij Input to sector j from sector i X i & X j Total output of sector i O i Outputs being sold by sector i to other producers to make other goods I j Sum of inputs coming from other sectors to sector j Y i Final demand V j Value added

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L04 Slide 36 IO Transactions Table
L04 Slide 37 Model of the economy Economic output Economic demands Economic Input-Output Model X = [I - A] -1 * Y \$1 Flour \$2 Sugar \$7 Butter \$5 Chocolate chips \$0.20 Baking powder \$ Wheat growing \$ Dairy farming \$ Fertilizer production \$ Flour mills \$ Rail transport \$ Petroleum \$ Electricity generation etc Top-down approach

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L04 Slide 38 “When you make bread, you need eggs, flour, and milk. And if you want more bread, you must use more eggs. There are cooking recipes for all the industries in the economy.”
L04 Slide 39 Example - IO Unit Process for Cars [I + A]Y X

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L04 Slide 40 2002 EIO Model U.S. economy is broken down into 428 sectors Thus, the U.S. economy is represented as a 428 x 428 input-output matrix Examples of sectors Motor vehicles Electric services Computers Primary aluminum High resolution economic models take time to build, and are not constructed frequently
L04 Slide 41 EIO LCA Model Economic Input Output Life cycle Assessment Model free & online at Data sources for 2002 model from: Bureau of Economic Analysis (IO table) EPA (Air pollution, Toxics, non-CO 2 GHGs) DOE (Energy and CO 2 ) DOT (Transportation energy data)

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L04 Slide 42 Example: Bed for the Ford F-150 Pickup Steel vs. Aluminum?
L04 Slide 43

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L04 Slide 44 EIO LCA Inputs 2a) 2b)
L04 Slide 45 1. Choose a model

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