Economic Models of Material-Product Chains for Environmental Policy Analysis

223 Pages·1999·7.17 MB·English

by  Patricia P. A. A. H. Kandelaars (auth.)

ECONOMIC MODELS OF MATERIAL-PRODUCT CHAINS
FOR ENVIRONMENTAL POLICY ANALYSIS
EGO-EFFICIENCY IN INDUSTRY AND SCIENCE
VOLUME4
The titles published in this series are listed at the end of this volume.
Economic Models
of Material-Product Chains
for Environmental Policy
Analysis
by
Patricia P.A.A.H. Kandelaars
Department of Spatial Economics,
Amsterdam, The Netherlands
•
S'P RINGER-SCIENCE+BUSINESS MEDIA, B.V.
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-90-481-5255-1 ISBN 978-94-017-6399-8 (eBook)
DOI 10.1007/978-94-017-6399-8
Printed on acid-free paper
All Rights Reserved
© 1999 Springer Science+Business Media Dordrecht
Originally published by Kluwer Academic Publishers in 1999
Softcover reprint of the hardcover 1st edition 1999
No part of the material protected by this copyright notice may be reproduced or
utilized in any form or by any means, electronic or mechanical,
including photocopying, recording or by any information storage and
retrieval system, without written permission from the copyright owner
CONTENTS
Preface ix
Part I: CONCEPTS
1. Introduction 1
1. 1. Motivation and approach 1
1.2. Economic analysis of material-product (M-P) chains 2
1. 3. Objective of the study 4
1.4. Outline of the study 5
2. Physical flows in natural and economic systems 7
2. 1. Introduction 7
2.2. Ecosystems, material cycles and evolution 7
2.3. Industrial metabolism, M-P chains and economic evolution 10
2.4. Thermodynamics and the material balance principle 12
2.5. Conclusions 14
3. Strategies and policies for M-P chains 15
3. 1. Introduction 15
3.2. Alternative approaches to environmental policy evaluation 15
3. 3. From chain analysis to chain management 18
3.4. Strategies to reduce environmental problems in M-P chains 20
3.5. Environmental policies for chain management 30
3.6. Policies focusing on materials and products in practice 36
3 . 7. Conclusions 40
Part II: THEORETICAL MODELS
4. A survey of physical flow models 43
4. 1. Introduction 43
4.2. A typology of modelling methods 43
4.3. Material flow analysis 46
4.4. Physical input-output analysis 48
4. 5. Life-cycle assessment 50
4.6. Physical flow analysis and M-P chain analysis 52
4. 7. Evaluation and discussion of methods and characteristics 54
4.8. Conclusions 56
5. A survey of material flows in economic models 59
5. 1. Introduction 59
5.2. Economic models of natural resources 59
5.3. Pollution models 64
5. 4. Environmental input- output models 69
5.5. Macroeconomic models 78
v
vi
5.6. Models of technological change and economic evolution 81
5. 7. Conclusions and prospect 84
Part III: APPLIED MODELS
6. A static optimization model for rain gutters 89
6.1. Introduction 89
6.2. A model with recycling, reuse and substitution 90
6.3. A static two-materials-one-product chain with exogenous prices 91
6.4. Endogenous price of reuse 95
6.5. Two production technologies in an M-P chain 95
6.6. Application for zinc and pvc rain gutters 98
6. 7. Conclusions 105
App. 6.1. List of symbols in Sections 6.3 to 6.5 107
App. 6.2. Lagrange conditions for the two-technologies M-P chain 108
App. 6.3. List of symbols in Section 6.6 109
7. A static general equilibrium analysis of an M-P chain 111
7. 1. Introduction 111
7 .2. A general M-P chain 112
7. 3 . Optimal tax rules 120
7 .4. Conclusions 124
Legend 126
App. 7.A. The market equilibrium 127
App. 7.B. The social welfare equilibrium 128
8. A dynamic analysis of rain gutters 129
8.1. Introduction 129
8.2. Rain gutters as a case-study 130
8. 3. The use of rain gutters over time 131
8.4. Model description 132
8.5. Scenarios, control variables and indicators 136
8.6. Results of the scenario analysis 138
8.7. Conclusions 145
App. 8. The equations of the model with explanation 147
9. A dynamic analysis and evaluation of window frames 151
9. 1. Introduction 151
9.2. Analysis of M-P chains for several products 151
9.3. Overview of studies on window frames 153
9.4. A dynamic model with economic and environmental indicators 155
9.5. Scenarios and policy instruments 158
9.6. Results of the scenario analysis 160
9.7. Conclusions 165
App. 9. The equations of the model with explanation 167
vii
10. Material flows in an applied general equilibrium model 171
10. 1. Introduction 171
10.2. Description of AGE models and the Taxinc-model 172
10.3. Integrating the material flow model 'Flux' with the Taxinc-model 174
10.4. Material and product policies 175
10.5. Results of the scenario analysis 179
10.6. Conclusions 186
Part IV: CONCLUSIONS
11. Summary, conclusions and prospect 189
11.1. Summary 189
11.2. General conclusions on M-P chain analysis 196
11.3. A comparative evaluation of M-P chain models 197
11.4. Prospect 200
References 203
Glossary 217
Preface
This monograph contributes to the quest for sustainability and environmental quality
from an environmental economic perspective. It examines the physical and economic
aspects of material and product flows, and the policies and strategies designed to
reduce related resource depletion and environmental pollution. Various theoretical
and applied models are presented that explicitly include physical dimensions. The
resulting analyses are economically consistent and physically feasible.
From 1994 to 1998 I have been working on this monograph at the department of
Spatial Economics of the Vrije Universiteit in Amsterdam. I have enjoyed joint
research with Hans Opschoor, Jeroen van den Bergh, Rob Dellink, Monique Jansen,
Fred Lambert and Jan van Dam. Various chapters are based on work with these
colleagues.
I am indebted to the Dutch Organization of Scientific Research (NWO) for
financial support that allowed me to perform this research at the Vrije Universiteit in
Amsterdam.
I would like to acknowledge the consent of various publishers to use material that
has appeared previous in journals.
Patricia Kandelaars
Amsterdam, March 1999
ix
CHAPTER 1
INTRODUCTION
1.1. Motivation and approach
Many important environmental problems can be traced back to the use of materials
and energy. These link environmental problems of scarcity and pollution to resource
extraction and waste emissions. Environmental economics has mainly focused on a
partial analysis of environmental problems, as illustrated by separate branches like
resource economics', dealing with depletion issues, and 'pollution economics',
addressing pollution externalities. As a result, environmental economics tends to
neglect the interdependence of environmental problems related to the particular
economic stages which occur between extraction of resources and pollution of the
environment. Without taking into account the linkages between the separate activities
between extraction and waste treatment, the indirect effects of policies may be
overlooked. For instance, a reduction in the use of one material to reach a certain
level for environmental indicator X may require less use of a particular product, but
this may trigger an increase in the use of another product providing the same service
but made of another material, and then environmental indicator Y may be negatively
affected. Therefore, for policy making it may be important to consider these trade-
offs explicitly.
Physical aspects of problems related to physical flows are studied by natural and
environmental scientists. However, their studies usually do not consider the
economic and behaviourial mechanisms underlying material flows. In policy design,
physical or technological possibilities, and economic aspects and behaviour really
need to be combined. For example, substitution between products can only take
place when it is technically possible and when the substitute product is not too
expensive or otherwise not attractive.
This study tries to integrate elements of these different areas. It presents an
approach that takes the interactions between depletion and pollution into account and
regards the economy as being composed of various stages between extraction and
emissions. This will involve linking the economic and physical aspects of the use of
materials. More in particular, this study aims to contribute to integrated model-based
analyses of resource and pollution problems for policy making. The approach here is
based on the concept 'material-product (M-P) chain'. An M-P chain can be defined
as a set of linked flows of materials and products so as to fulfil a certain service
(Opschoor, 1994). An analysis of an M-P chain can be defined broadly as an
analysis of an economic structure of connected material and product flows. In this
study an 'economic analysis of an M-P chain' is performed in which allocation and
economic processes are studied. In this analysis the interactions between demand,
1