The present work focuses on exploring the utility of Input-Output (I/O) models for studying the effect of sudden shocks and quantifying the associated risks. Economic Input-Output (EIO) models have been used for various purposes including exploring the effect of changes in final demand, taxes and other economic changes [1,2]. EIO model uses information contained in the detailed I/O tables of the economy. It uses a matrix representation of interindustry relations in a nation's (or a region's) economy. The matrix contains data about the monetary transactions between each pair of industrial sectors. Models based on the EIO model have also been developed for life cycle assessment by combining the EIO model with data about emissions and resource use. Economic Input-Output life cycle assessment (EIOLCA) mainly focuses on the impact of emissions and energy use by combining economic data with the emissions details for specific sectors and is mainly an output-side approach . More recently, Ecologically based life cycle assessment (Eco-LCA) has been developed which is novel and unique in its ability to quantify the contribution of ecosystem goods and services. [4,5]
We are using the Eco-LCA model to understand the impact of changes in the availability of natural resources including natural capital. This includes understanding the potential impact of loss of services such as pollination, water scarcities, and soil fertility. Such information is used to determine sectors that are likely to face maximum risk due to sudden disruptions. Since the EIO model considers a static and linear state of the economy, it is not able to simulate long-term effects of such disruptions. However, it is appropriate for gaining insight into the short-term effects of disruptions before any adaptation due to market forces or policies. Such simulation is relevant to understanding the effect of environmental changes as well as human-induced changes such as terrorism and natural disasters.
The utility of the proposed approach will be illustrated using case studies involving energy system transitions. The case studies involve the use of I/O models coupled with scenarios in a prospective dynamic analysis and with explicit treatment of uncertainty to evaluate the broader impact of technology transitions. The implications of the present work are to enhance the fundamental understanding and modeling and provide insights for resilient and sustainable technology transitions. Methodologically, the goal is to enhance and extend presently available tools and develop new modeling approach that explains the dynamics of complex systems with specific focus on emerging technologies. In the long term, this work is expected to complement the traditional static biophysical models and methods by including the dynamic behavior of complex adaptive systems, various uncertainties, risks, and study their implications for decision-making and sustainability.
1. R. E. Miller and P. D. Blair. Input-Output analysis. Foundations and extensions. Prentice-Hall, Inc., Englewood Cliffs, New Jersey, 1985.
2. W. W. Leontief. Input-Output Economics. Oxford University Press, 1985.
3. EIOLCA. www.eiolca.net, accessed on May 10, 2008.
4. N. U. Ukidwe and B. R. Bakshi. Industrial and ecological cumulative exergy consumption of the united states via the 1997 input-output benchmark model. Energy, 32(9):1560–1592, 2007.
5. N.U. Ukidwe and B.R. Bakshi. Thermodynamic Accounting of Ecosystem Contribution to Economic Sectors with Application to 1992 U.S. Economy. Environmental Science and Technology, 38(18):4810–4827, 2004.