Linking NAMEA and Input output for ‘consumption vs. production perspective’ analyses: Evidence on emission efficiency and aggregation biases using the Italian and Spanish environmental accounts

Abstract

We integrate input output and NAMEA tables for Spain and Italy in 1995, 2000 and 2005, in order to address the hot policy issue of sustainable consumption and production. A comparison of production and consumption perspectives may have relevant policy implications. We deal with the domestic technology assumption and primarily the aggregation bias that may result when calculating indirect emission using different sector aggregations in the analyses (e.g. 16, 30, 50). Extended Input Output Analysis provides analyses of the emissions embodied in domestic consumption and domestic production by considering the structure of intermediate inputs and environmental efficiency in each production sector. Our empirical findings show that different sectoral aggregation significantly biases the amount of emissions for the consumption perspective, though differently in the two countries. Italy surprisingly show consumption/production ratios around or lower than one, but in line with some major work at EU level. Our results thus suggest that special attention must be paid when interpreting the EE-IOA of country estimated amounts of embodied emissions, both in domestic final demand and those directly associated with the production sectors when the sectoral aggregation level has a low definition as considered in some recent similar studies.