Physical input-output models (PIOTs) provide a map of physical flows within economies and also between the economy and natural environment. PIOTs can be used to assess progress towards the circular economy by mapping material cycles within economies. However, these models can be difficult because physical data describing the economy is usually less detailed than monetary data, physical production data is often limited in the number of products covered, timeseries information contains gaps and data classifications change. We did some work to construct some PIOTs for Australia. The data limitations were overcome using an optimisation procedure that uses information from all published data sources and applies a conservation of mass principle.
The diagram below is shows simplified material in the PIOTs. The capital account is exogenous to the PIOT while interacting with it by acting as a sink for materials in new construction and a source of material from demolitions. RoW: rest of the world, RoE: rest of the economy. Once extracted from nature, some materials flow through the human-economy very quickly while others reside for extended periods, embedded in structures. However in the long-term, these materials embodied in building stock are returned to nature. On a geological time-scale, materials used by the human-economy are endognised to it and will eventually flow back to the natural environment.
One way to imagine the usefulness of PIOTs is to consider the construction industry. In the Australian economy, building construction is a significant driver of material consumption. If the magnitude and composition of these material flows were known, future resource requirements for building stock growth could be predicted. In addition, the availability of waste products from the dismantling of building stocks for use as inputs to new structures could be estimated. We could also determine if the domestic recycling infrastructure is sufficient to recover these wastes, and whether there are markets for recycled products.
In a circular economy, we are very interested in the flow of waste and secondary products back into new production. When waste displaces virgin material extraction from nature, many environmental impacts are avoided. Whether the substitution of waste for virgin material occurs in reality depends upon a number of factors, such as the relative costs of production inputs. There are technical limits to substitution, for example a high-quality and uniform glass waste stream is required for use in float-glass manufacturing. Domestic recycling infrastructure must also exist, for example in Australia, there is currently no suitable smelters for metal recovery from electrical and electronic equipment (e-waste) so this waste is exported internationally. The existence of domestic industries to soak-up the recycled products is also important.
The tables are available here: github.com/spottedquoll/aus-piots, for 1985 to 2012 at a resolution of 150 products/industries.
Resources
Isard, W. (1969). Some Notes on the Linkage of the Ecologic and Economic Systems. Papers in Regional Science, 22(1):85–96.
Duchin, F. and Levine, S. H. (2011). Sectors may use multiple technologies simultaneously: The rectangular choice-of-technology model with binding factor constraints. Economic Systems Research, 23(3):281–302.