What drives material use in the EU? Evidence from club convergence and decomposition analysis on domestic material consumption and material footprint

Abstract

This study investigates the main driving forces behind material use of the EU in the case of heterogeneity between member states with paying special attention to the comparison of domestic material consumption (DMC) with material footprint (MF). To this end, we first classify countries into several clubs based on time-varying behavior of two material use indicators and analyse the degree of heterogeneity between the EU countries. Secondly, we identify main driving forces behind DMC and MF changes using the logarithmic mean Divisia index (LMDI) decomposition analysis and explore the specific characteristics of material use for each club. The empirical results suggest that (i) the EU member states do not converge to a unique steady state level and there are multiple equilibria for both indicators. However, the number of clubs for per capita DMC is greater than per capita MF; (ii) the increase in material use due to the income effect is the largest, followed by the population effect. While the structural effect has an inhibiting effect for both DMC and MF, the material intensity effect differs depending on the indicator used; (iii) the magnitude of effects significantly varies between clubs. Our findings indicate the requirement of consumption based climate mitigation tools. In this regard, carbon border adjustment and/or consumption charges on material use could be effective market based instruments.