International Trade, Material Flows and Land Use: Developing a Physical Trade Balance for the European Union

The environmental impacts of globalization and further liberalization of international trade today are on the top of the policy agenda in a number of international organizations. While the trade relations between two countries or regions may be balanced in monetary terms, they may at the same time be characterized by a substantial inequality with regard to the flows of natural resources. Thus some regions may systematically exploit the ecological capacity of other regions by importing resource intensive products and exporting wastes. In the last 10 to 15 years there has been extensive research on material flows mainly on the national level. However, empirical studies on material flows in international trade so far are very limited. In the last few years studies have been presented, which link material flow accounting and input-output analysis (based on monetary input-output tables) for the calculation of indirect material flows through intermediate production. This procedure has also been applied for calculating direct and indirect land appropriation. The compilation of the first physical input-output tables for some western European countries in the 1990s opened new possibilities for linking physical accounting and input-output analysis. Physical input-output analysis has so far been applied only for selected materials in single-country studies. It has neither been used for assessments of material flows in international trade nor for any land-related studies. In this report first steps towards the elaboration of a physical trade balance for the EU-15 are undertaken. Concerning the methodology of input-output analysis, three alternative approaches will be presented and discussed. In the empirical part, a physical trade balance for direct material flows of the EU is presented, disaggregated by world regions as well as product and material groups. In order to assess indirect resource requirements induced by imports and exports, a physical input-output model for the EU-15 is developed, based on physical input-output tables already published. This model is then used for assessing the overall resource requirements for the production of exports from EU-15 to the rest of the world. By applying physical input-output analysis, direct and indirect resource requirements will be calculated concerning both material flows and land appropriation.