Environmental and Resource Economics

, Volume 23, Issue 3, pp 357-378

First online:

Structural Decomposition Analysis of Physical Flows in the Economy

  • Rutger HoekstraAffiliated withDepartment of Spatial Economics, Free University
  • , Jeroen C.J.M. van den BerghAffiliated withDepartment of Spatial Economics, Free University

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Many environmental problems can be attributedto the extraction and emissions of physicalsubstances. Increasing our understanding of theeconomic and technological driving forcesbehind these physical flows can contribute tosolving the environmental problems related tothem. The input-output framework is a usefulsetting in which to integrate detailedinformation about economic structure andphysical flows. In this article a specificmethod in input-output analysis is reviewed,namely Structural Decomposition Analysis (SDA).It is based on comparative static analysis,which decomposes historical changes of a policyvariable into determinant effects. SDA has beenapplied, for example, to analyze the demand andtechnological driving forces of energy use,CO2-emissions and various other pollutantsand resources. This article examines thetheoretical aspects of structuraldecomposition, in particular those concerningphysical flows and environmental issues.Furthermore, the article includes an extensivesurvey of empirical studies.

CO2-emissions comparative static analysis energy use environmental analysis input-output analysis material flows physical flows structural change technological change