Environmental economics

Swales, Kim and Turner, Karen; ten Raa, Thijs, ed. (2017) Environmental economics. In: Handbook of Input–Output Analysis. Edward Elgar, Cheltenham, pp. 329-354. ISBN 9781783476312 (https://doi.org/10.4337/9781783476329.0001)

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The basic input-output model is first extended by differentiating industry outputs by region. The consequent interregional input-output matrix accounts for pollution footprints of final consumption, possibly even including household income effects, which further boost output and pollution. Another extension is the internalization of cleansing activities, to account for the social cost of emissions. Attempts at full integration of production and environmental accounting, following the "materials balance principle," are critically examined. Other environmental analyses follow. Water satellite accounts facilitate the analysis of water trade. Waste input-output models integrate waste creation and management options so that waste can be tracked. Energy efficiency improvements reduce costs, which in turn boosts demand for energy: the rebound effect. The rebound effect is related to the input-output multipliers that include the household consumption effects. The extension to general equilibrium analysis is introduced.