A still discreet but very useful tool for steering the transition
Each week, the Lab selects a document or project deemed particularly interesting and relevant and presents it in a few lines. This week, the Lab focused on the conclusions of the OECD report on material flow analysis tools. Indeed, material flow analysis offers numerous opportunities to support the transition to a circular economy.
Context of the report
The economic model prevailing since the industrial revolution is based on a linear resource use scheme (Extraction of raw materials > production > consumption > waste) responsible for a waste of natural resources and can lead to significant negative environmental externalities (pollutant emissions, dumping of waste materials in open landfills, etc.). However, another model exists that allows for the valorization of waste (recycling, reuse) and optimal resource use: it is the circular economy.
The transition to a circular economy cannot happen without a detailed understanding of the material flows involved. Current statistical indicators, primarily focused on GDP or the number of jobs, do not allow for the integration of such information [1]. They must therefore be complemented today by a material flow analysis (MFA). The OECD report aims precisely to propose a methodological framework for the development and measurement of the indicators necessary for the analysis of these material flows.
Strengths of the OECD method for flow analysis
Natural resources are essential to the economy. They provide essential services for human activities through the supply of raw materials, energy, food, water, and land. They also contribute to human well-being through environmental services (such as regulatory services including climate regulation or cultural services through the recreational use of ecosystems...).
However, the use and management of natural resources have a number of economic, social, and environmental consequences. They particularly affect:
- The renewal rate< of renewable resources, which depends on their stock level
- The environmental pressure associated with the extraction, use, transformation of materials, but also their discharge into nature
- The price of raw materials and trade exchanges
- The productivity and competitiveness of the economy
The AFM aims to schematically represent the flows of materials within an economy, but also between different economies. The AFM is based on the principle of conservation of matter developed by Lavoisier in the 18th century: "Nothing is created, nothing is lost, everything is transformed"; the sum of incoming resources must equal the sum of outgoing resources. The diagram below, taken from the OECD report, graphically presents the flows of materials within an economy.
The report has the merit of clarifying the different concepts and classifying the tools associated with AFM according to the objectives of political decision-makers.
The different levels of material flow analysis
The AFM presents several levels of analysis depending on the sectors and the economic products considered:
- At the scale of the economy: the AFM adopts macroeconomic concepts to present all material flows within a nation,
- The input-output analysis: focuses on an analysis of material flows at the meso scale (midway between macro and micro) taking into account the complexity of inter-industrial exchanges between economic activities,
- Life cycle analysis: aims to evaluate the quantity of materials used and the associated emissions throughout the life cycle of a product,
- At the company level<: the AFM studies material flows within a company but also with the rest of the world.
but also depending on the degree of integration:
- Material system analysis<: focuses on the study of certain materials or natural resources,
- Substance flow analysis: focuses on the flows of certain substances known to pose environmental and health risks,
- Local system analysis<: focuses on a geographic scale such as a city or an ecosystem.
The report outlines the interests and limitations of these different tools by specifying potential synergies with other tools and proposing areas of application. Even more interesting, the OECD report links the various tools of the MFA to the issues of the different policies implemented by public decision-makers, namely: i) economic, trade, and technological development policies, ii) natural resource management policies, and iii) environmental policies (pollution prevention and control, waste management).
A decision-making tool for public policies
For example, for the implementation of an environmental policy aimed at integrating pollution control and prevention, the AFM can allow:
- Mapping the flows of nutrients or contaminants in a region, country, or watershed responsible for environmental degradation,
- To estimate the environmental pressures from the extraction and production of metals by identifying the share due to the inefficiency of the production process,
- To evaluate the gains linked to the adoption of more efficient technologies or the development of recycling, as well as
- To monitor and help understand the flows of indirect and unused materials with their effects on the environment.
To address these issues, the appropriate tools include an AFM at the scale of the economy with a breakdown by materials, a substance flow analysis, or a materials system analysis in conjunction with waste accounts.
This report has contributed to the emergence and popularity of this tool. It has notably participated in the development of a methodology for constructing a material flow account by Eurostat [2]. Moreover, the material flow account is integrated into the Economic-Environmental Accounting System of 2012 developed by the UN [3].
Extension: Current attempts to develop a methodology for constructing a material flow account at the territorial level in France
One of the main challenges of the 21st century is to achieve economic development that is compatible both socially and environmentally. This requires a very rapid transformation of our production processes to limit global warming to +2°C while maintaining, or even improving, the state of natural capital. In this context, the European Union has made strong commitments to achieve ambitious environmental goals. For instance, regarding climate change, the European Union aims to reduce its emissions by 40% by 2030 compared to 1990 levels. Achieving these environmental goals requires the realization of several projects called "green projects" that will contribute to rapidly changing our production processes. The anticipated amount of investments for these green projects is estimated at €180 billion across the European Union. This raises the question of financing these projects through the creation of a specific market to capture funds for these green projects. This is the entire goal of green finance. The issue of financing green projects is not specific to Europe but common to all countries globally.
Research has been launched in France to build an accounting of material flows at the territorial level. We can mention various works conducted by Sabine Barles, a professor of urban planning and development at the University of Paris 1 for the regions of Île-de-France, Burgundy, and Midi-Pyrénées, as well as for most departments in these regions [5]. These works have demonstrated the ability of territorial material balances to incorporate territorial specificities.
The work of Vertigo Lab on material flows
As part of its work on territorial ecological transition (for the Grand Dax agglomeration, for example), Vertigo Lab develops economic-environmental models based on an analysis of material flows. These tools are useful for assessing the socio-economic impacts and material flow implications of implementing various measures aimed at promoting ecological transition.
References
- [1] See for example the article by Vertigo Lab "Biodiversity and Indicators"
- [2] Eurostat (2013) Economy-wide Material Flow Accounts (EW-MFA): Compilation guide 2013. Document available here: http://ec.europa.eu/eurostat/documents/1798247/6191533/2013-EW-MFA-Guide-10Sep2013.pdf
- [3] United Nations et al. (2014) Central Framework of the System of Economic and Environmental Accounting 2012. Document available here: http://unstats.un.org/unsd/envaccounting/seeaRev/CF_trans/SEEA_CF_Final_fr.pdf
- [4] Document available here: http://www.statistiques.developpement-durable.gouv.fr/publications/p/2101/1161/comptabilite-flux-matieres-regions-departements-guide.html
- [5] Barles Sabine (2014) Territorial ecology and the challenges of dematerialization of societies: the contribution of material flow analysis, Sustainable Development and Territories, Vol 5, pp. 2-18.
