Sector aggregation bias in environmentally extended input output modeling of raw material flows in Finland

Abstract

This paper presents the impact of sector aggregation bias in Environmentally Extended Input Output (EEIO) models, focusing on raw material flows. Finnish industries are aggregated in different ways and causes of bias are studied. The results show that industries with high raw material use deserve special attention in EEIO models. For Finland, particularly problematic is the aggregation of biomass extractive sectors, since the relative importance of forestry causes noticeable deviations. Sources and strategies to prevent errors are described separately for biomass and mineral raw materials. A brief comparison between raw material flows and greenhouse gas emissions is also made. It is shown that aggregation of extractive sectors biases more in material flow analyses. This issue might be of significance in the near future, owing to the foreseeable changes in the European Union accounting framework.