Input-Output Analysis in Environmental Economics

Input-Output Analysis in Environmental Economics provides a systematic framework to quantify the linkages between economic activities and environmental outcomes. Originally developed to trace intersectoral exchanges of goods and services, the method has been extended to incorporate environmental pressures—emissions, resource extraction, land use and biodiversity impacts—via environmentally extended input-output (EEIO) models. Through input-output tables at national and multi-regional scales, the framework captures direct and indirect supply-chain effects, enabling consumption-based accounting of environmental footprints. In an era of globalised trade, multi-regional input-output (MRIO) models have become indispensable for allocating environmental burdens to final consumers, revealing hidden upstream drivers of deforestation, greenhouse-gas emissions and ecosystem degradation. Innovations in dynamic modelling now incorporate temporal changes in capital stocks and evolving production structures, while advances in impact assessment translate environmental pressures into quantifiable ecosystem consequences. Input-Output Analysis thus underpins strategies for resource efficiency, sustainable supply chains and the alignment of corporate and governmental climate targets.

Research from Nature Portfolio

Recent studies have advanced biodiversity footprint assessment by combining multi-regional input-output frameworks with species-sensitivity metrics across land use and climate change. New models reveal that conventional land-area footprints underestimate impacts in species-rich regions and that methane emissions from food production exert a disproportionate toll on global biodiversity. A dynamic extension of consumption-based emissions accounting now integrates capital-stock change, demonstrating that traditional static models overstate current consumption-related emissions for many developed economies while highlighting the accelerating role of capital investment in fast-developing countries. Progress in ecosystem impact footprints employs life-cycle impact assessment within input-output frameworks to translate resource pressures into biodiversity loss, shifting the policy focus from pressure accounting towards quantifying actual ecosystem consequences across global supply chains.

Input-Output Analysis in Environmental Economics publication trend

The graph below shows the total number of articles in input-output analysis in environmental economics across all publications each year (not limited to Nature Index journals).

Technical terms

Input-Output Table: A matrix representation of inter-industry transactions within an economy, detailing the inputs required by each sector to produce its outputs.

Environmentally Extended Input-Output Analysis: An approach that augments traditional input-output tables with environmental data—such as emissions and resource use—to link economic activities with ecological impacts.

Multi-Regional Input-Output (MRIO) Model: A framework connecting input-output tables for multiple countries or regions, capturing international supply chains and transboundary environmental effects.

Consumption-Based Accounting: A method that attributes environmental pressures and emissions to final consumption, including both domestic production and imports.

Footprint: A consumption-based indicator quantifying the environmental impact—such as carbon, water, land or biodiversity loss—associated with goods and services throughout their supply chain.

References

1. Impacts of the global food system on terrestrial biodiversity from land use and climate change. Nature Communications (2024).
2. Sustainability performance of enhanced weathering across countries: A triple bottom line approach. Energy Economics (2024).
3. EXIOBASE 3: Developing a Time Series of Detailed Environmentally Extended Multi‐Regional Input‐Output Tables. Journal of Industrial Ecology (2018).
4. Consumption-based greenhouse gas emissions accounting with capital stock change highlights dynamics of fast-developing countries. Nature Communications (2018).
5. Methodology for the Construction of Global Multi‐Regional Hybrid Supply and Use Tables for the EXIOBASE v3 Database. Journal of Industrial Ecology (2017).
6. Resource footprints and their ecosystem consequences. Scientific Reports (2017).