ACCOUNTING FOR
ENVIRONMENTAL DAMAGE BY
MATERIAL PRODUCTION AND USE
A comparison of seven Western European countries
Background Report
Corjan Brink, Eric Drissen, Herman Vollebergh and Harry
Wilting
June 2020

Accounting for environmental damage by material production and use. A
comparison of seven Western European countries
© PBL Netherlands Environmental Assessment Agency
The Hague, 2020
PBL publication number: 3512
Corresponding author
corjan.brink@pbl.nl
Authors
Corjan Brink, Eric Drissen, Herman Vollebergh and Harry Wilting
Acknowledgements
We thank Sander de Bruyn (CE Delft), Robin Hamerlinck, Jenny Montanus and Mark
Overman (Ministry of Infrastructure and Water Management) and Frank Dietz and Rob
Weterings (PBL) for comments on earlier versions of this report.
Ultimate responsibility
PBL Netherlands Environmental Assessment Agency
Graphics
PBL Beeldredactie
Production coordination
PBL Publishers

This publication can be downloaded from: www.pbl.nl/en. Parts of this publication may be
reproduced, providing the source is stated, in the form: Brink et al. (2020), Accounting for
environmental damage by material production and use. A comparison of seven Western
European countries. PBL Netherlands Environmental Assessment Agency, The Hague.
PBL Netherlands Environmental Assessment Agency is the national institute for strategic
policy analysis in the fields of the environment, nature and spatial planning. We contribute to
improving the quality of political and administrative decision-making by conducting outlook
studies, analyses and evaluations in which an integrated approach is considered paramount.
Policy relevance is the prime concern in all of our studies. We conduct solicited and
unsolicited research that is both independent and scientifically sound.

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Contents
SUMMARY AND FINDINGS

5

1

10

INTRODUCTION

2
MATERIALS, ENVIRONMENTAL DAMAGE AND THE CIRCULAR
ECONOMY

12

2.1
2.2
2.3

12
13
14

Natural resource use in the economic system
The production-based and production-chain perspective
Scope of the study

3
ENVIRONMENTAL ACCOUNTING FOR MATERIAL PRODUCTION
AND USE
16
3.1
3.2

Computing monetary environmental damage
Physical environmental damage from the two perspectives

16
17

3.2.1
3.2.2

17
18

Environmental damage from a production-based perspective
Environmental damage from a production-chain perspective

3.3

Monetary environmental damage estimates

19

4

COMPARISON OF SEVEN COUNTRIES

22

4.1
4.2
4.3

Economic sector structure
22
Environmental damage in the seven countries, from a production-based perspective 23
The role of the material-related sectors in the seven economies
24

5

PRODUCTION-BASED ANALYSIS

26

5.1

Overview of the environmental damage caused by material-related industries and
waste

26

5.1.1
5.1.2
5.1.3
5.1.4
5.1.5
5.2

Environmental damage caused by raw material extraction (Phase 1)
27
Environmental damage caused by material production (Phase 2a)
27
Environmental damage caused by manufacturing of products (Phase 2b) 28
Environmental damage in phases 1, 2a and 2b by type of pollutants, over
time
28
Environmental damage caused by waste management (Phase 4)
29

Environmental efficiency of material-related industries

31

5.2.1
5.2.2

31
32

Overview of environmental damage, per industry
Overall performance per country

5.3

Environmental damage from material production

33

6

PRODUCTION-CHAIN ANALYSIS

36

6.1

Overview of the environmental damage caused along the production-chain of materials
and products
36
6.1.1

Environmental damage from extracted raw materials

37
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6.1.2
6.1.3
6.1.4
6.2

6.3

Environmental damage from manufactured materials
Environmental damage from manufactured products
Environmental damage in phases 1, 2a and 2b by type of pollutants

38
39
41

Comparison of environmental damage, per material

42

6.2.1
6.2.2
6.2.3

42
43
44

Overview of environmental damage, per material
Performance per country
Explanation of differences in production-chain damage per country

Detailed results for four groups of basic materials

44

6.3.1
6.3.2
6.3.3
6.3.4

44
45
46
47

Coke and refinery products
Chemicals and chemical products
Basic metals
Other mineral products

6.4

Globalisation of supply chains

48

7

COMPARISON AND VALIDATION

50

7.1
7.2

Comparing the production-based results with the production-chain results
Comparison of direct environmental damage

50
51

8

KEY FINDINGS, IMPLICATIONS AND CONCLUSIONS

54

8.1

Key findings of the comparative analysis

54

8.2.1
8.2.2
8.2.3

56
57
59

Accounting for environmental damage
Environmental damage and pricing policies in production
Options for additional instruments

REFERENCES

62

APPENDICES

64

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Summary and findings
The environmental impact related to the production and use of materials is one of the main
motives behind the wide interest in the transition to a circular economy. This study looks at
the relationship between the production and use of materials and environmental impacts in
seven EU countries (Austria, Belgium, Denmark, Germany, France the Netherlands and the
United Kingdom) to find out which materials cause what and how much damage in the chain
from extraction to waste. To this end, we calculated the monetary environmental damage
from the production and use of materials in these countries as far as this is related to
emissions to the atmosphere. The result provides insight into the differences and similarities
between these countries both as far as their environmental damage is concerned and how
this damage is associated with the production and use of materials.
This study investigates the environmental damage of the production and use of materials in
different phases of the material chain, namely the extraction of resources (phase 1), the
production of materials (phase 2a), the manufacturing of products and construction (phase
2b), and waste management (phase 4). Our focus is on the environmental damage related to
emissions to the atmosphere. Damage from other environmental externalities, such as noise,
land use and the impact of microplastics, was not included in these estimates because of
data limitations and large uncertainties with regard to the environmental impacts and their
value. Taking into account these additional externalities would add to the environmental
damage presented in this study.
In order to obtain a useful comparative overview of the environmental impact at different
phases of production and use of materials in the seven countries, this report presents two
different types of analyses. First, we employed a production-based perspective that uses
data from the national and environmental accounts as published by Eurostat to provide
insight into how these countries differ in terms of their economic structure and the
associated environmental pressure and environmental damage, in particular with respect to
the production sectors related to the extraction, use and disposal of materials.
Second, we also investigated the emissions and damage of material extraction and
production from a production-chain perspective. This production-chain analysis considers the
environmental pressures and damage over the complete production chain of a material or
product up to the moment that the product is sold. This approach therefore not only takes
into account the environmental damage caused by emissions directly occurring during the
production of a certain product, but also damage related to emissions that occur throughout
the production chain both within the country and abroad. Moreover, by using data from
EXIOBASE for this approach, we were able to make a distinction between emissions related
to fuel combustion and emissions related to other activities, including the non-energy use of
fuels and industrial processes such as cement production.
The key findings that follow from both the production-based and production-chain analysis
can be summarised as follows:
•

The overall monetary environmental damage was found to have been considerable in all
seven countries, varying from 4% to 18% of GDP in 2015, which implies a direct welfare
loss of between 1500 and 2000 euros per capita for most countries (Figure 4.2).

•

Air pollutants, such as NOx and SO2, contributed for more than two thirds to total
environmental damage in countries with an upward outlier of 91% for Denmark (Figure
4.3).

•

The most important sectors contributing to this damage were agriculture, transport,
households and manufacturing (Figure 4.2).

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•

Despite a considerable decline between 2008 and 2015, in 2015 the environmental
damage was still mainly related to air quality and to a lesser extent to greenhouse gas
emissions (Figure 4.3).

•

The share of the material-related sectors (extraction of raw materials and the production
and use of materials) in gross value added was on average around 20%, in 2015, while
the share of environmental damage varied from less than 5% for Denmark to almost
40% for Belgium (Figure 4.4).

•

For all countries, except Denmark and Germany, the share of these sectors in
environmental damage was considerably larger than in gross value added. Material
producing industries (phase 2a), in particular, were responsible for the overall
environmental damage caused by the material-related sectors, whereas their
contribution in terms of gross value added was relatively small (Figures 4.4 and 5.4).

•

Sectors using materials in the manufacturing of products and construction (phase 2b)
also contributed considerably to the overall damage in 2015, whereas the contribution by
the extraction (phase 1) and waste sectors (phase 4) was much smaller and more
country-dependent (Figures 4.4 and 5.4). For instance, the relative damage from the
extraction industry (mainly mining and quarrying) in Austria and the United Kingdom was
much larger than its contribution to GDP in narrow economic terms (see also Figure 5.1),
whereas the opposite is true for Denmark and the Netherlands.

•

The industries mainly responsible for the environmental damage from material
production in 2015 varied considerably between the countries and clearly reflected
international specialisation (Figure 5.2). Dominant polluters were the chemical industry
and refineries (in particular, in Belgium and the Netherlands), the manufacturing of basic
metals (in particular, in Austria) and the manufacturing of other materials (in particular,
in Austria and Belgium). These four industries contributed more or less equally in both
Germany and France.

•

The sector that by far dominated the contribution to environmental damage in phase 2b
was the construction sector (Figure 5.3). In Germany and the United Kingdom, the
composition of the contribution was very different, with a substantial role for the
automotive industry (Germany) and rubber and plastics industry (United Kingdom).
Manufacturing of metal products was also relatively important, in all of the countries. The
contribution of the waste sector appeared to have been quite modest (Figure 5.5).

•

There was rather a large variation in environmental efficiency in both the extraction and
certain material-producing industries (see Figure 5.7). The variation was largest for the
manufacture of wood and wood products, basic metals and other minerals, and for
refineries. In particular, France showed the lowest environmental efficiency for the
materials production industries and made modest improvements, between 2008 and
2015 (Figures 5.9–5.12).

•

The results of the production-chain analysis show considerably greater environmental
damage from material production and manufacturing of products, compared to that from
the production-based analysis. This result can be expected, because the production-chain
analysis also includes damage of upstream domestic origin and from other countries
(Figure 7.1).

•

The production of coke and refinery products, chemical products and basic metals
contributed significantly to total environmental damage of material production,
regardless of whether emissions upstream in the production chain were included (Figure
6.3) or not (Figure 5.2).

•

The damage caused by construction dominated phase 2b, according to the productionbased approach (Figure 5.3), but would be much smaller if the damage caused by
upstream sectors would also be included (Figure 6.5). The contributions by other sectors,
in particular the automotive sector, other equipment and metal product manufacturing,

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was found to be much more important in most countries under the production-chain
approach. This reflects the significant contribution of upstream emissions, such as from
the production of materials, to the overall environmental damage caused by the
production chains in these sectors. Germany stands out in this analysis, because of the
relatively large share of the manufacturing of motor vehicles and other machinery in its
economy (Appendix C).
•

The production-chain analysis also shows relatively large variation in environmental
efficiency for extracted raw materials and for manufactured materials (see Figure 6.8).
The variation in the environmental damage per euro of product value was particularly
large for the extraction of fossil fuels. Variation was much smaller for manufactured
products, similar to that in the production-based analysis.

•

A closer look at some of the manufactured materials, such as coke and refinery and basic
metals, also shows variations in the findings for the various countries. Apparently, in
2007, comparable materials were produced with differing environmental damage per
euro of product value (see Figures 6.9–6.12).

Our detailed data also allow for several other important conclusions relevant for circular
economy considerations:
•

Clear indications were found that, in 2007, a considerable share of overall emissions
from raw material extraction and material producing industries was not directly linked to
combustion but to ‘other activities’, including industrial processes and non-energy use of
fuels (Figures 6.2 and 6.4). On average, about 40% of the environmental damage was
not related to combustion. A relatively large share was found to relate to the production
of chemicals and basic metals (Figures 6.10–6.13).

•

In general, the share of direct emissions related to combustion, in 2007, was also
relatively large for material production (see Figure 6.4). This was true in particular for
the production of basic metals and other mineral products (Figures 6.12 and 6.13). This
result is indicative for the fact that material processing plays an important role in
environmental damage related to both combustion and other use.

•

The contribution of ‘other activities’ to environmental damage was considerably smaller
in the manufacturing industry. In addition — and not surprisingly — most of the damage
from those activities occurred outside this sector, even often abroad (Figure 6.6).

Government policies could give incentives to reduce the environmental damage related to
the production and use of materials. Obvious candidates to reduce environmental damage
are policies that cover multiple or all sectors. Such policies may have more impact than
those focusing specifically on one sector or that are unidimensional. One set of cross-cutting
instruments concerns pricing policies such as environmental taxation. Most countries have
implemented environmental taxes, but for all countries, the monetary environmental damage
was substantially greater than the revenues from those taxes, which implies that current
prices of fossil fuels, natural resources and materials do not reflect the entire amount of
environmental damage caused by the extraction, processing, use and consumption of natural
resources.
In summarising our key findings, in the search for a proper pricing policy, we conclude:
-

Environmental damage during the first phase of the production chain (the extraction of
raw materials), was much smaller than that caused during the second phase. In
particular, producing materials was most polluting. Not only the direct environmental
damage, but also the damage upstream the production chain — as revealed in the
production-chain analysis — was relatively great for material production. In most
countries, the share of the material production industries in total gross value added was
much smaller than their share in total monetary environmental damage.

-

Note that, furthermore, the largest part of the environmental damage considered in this
study was found to be related to air pollutants. This applies to both the production-based
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and production-chain analysis and implies also that most of the damage directly affected
the population of the country from where these emissions were generated.
-

Environmental damage from material production was not only related to combustion of
fossil fuels, but also to a large extent to non-energy use of fuels and other industrial
processes.

From these key findings of the comparative analysis we derive the following suggestions for
policies that aim to internalise environmental damage in relation to circular economy
considerations:
-

Pricing of emissions is the first-best strategy for the circular economy to work properly.
As much of the damage was found to be directly related to the use of fossil fuels, the
most effective cross-cutting policy is likely to implement pricing of fossil fuel use over the
entire base of its usage, i.e. both emissions from combustion and from non-energy use
of fuels. 1

-

A substantial part of installations within the material production (phase 2a) as well as
large production installations in phase 2b, is part of the EU Emissions Trading System
(EU ETS). The EU ETS, however, only prices the direct emissions of greenhouse gases.
Emissions of air pollutants, that according to our findings contribute to more than 50% of
the environmental damage of these industries, are not explicitly priced by the EU ETS.

-

Taxes on energy not only implicitly put a price on CO2 emissions, but also other
emissions related to energy use. Most energy taxes, however, only apply to
consumption-based fossil fuel use, such as heating from natural gas in households or
motor fuels in cars. In general, energy taxes for energy-intensive industries are relatively
low compared to energy taxes paid by households (Parry and Vollebergh, 2017).

-

The scope of the pricing approach should go beyond the pricing of CO2 emissions from
combustion only and also apply to emissions from the non-energy use of fuels and other
industrial processes. Our findings show that, in 2007 and 2015, in particular four sectors
were responsible for the main part of the environmental damage in the materials
production sector: basic metals, other mineral materials, refinery and chemicals. A
substantial part of the environmental damage caused by these industries came from
energy use (combustion), but another part related to the non-energy use of fossil fuels,
such as the use of natural gas in the production of ammonia and the use of coking coals
for the production of iron and steel. Moreover, in these industries several industrial
processes not related to fossil fuel use contributed to environmental damage, such as the
production of non-ferrous metals and cement.

-

The environmental damage from other activities than the combustion of fossil fuels also
relates to other substances than greenhouse gases which fall beyond the scope of the EU
ETS. The EU ETS, therefore, not necessarily contributes to reduced emissions of air
pollutants. Whereas the resulting air quality improvements would lead to a direct
improvement of the welfare of European citizens, the reduction of greenhouse gases
primarily contributes to welfare improvements for world citizens in the long run.
Therefore, an obvious candidate for better environmental pricing is to increase the
stringency of policies that are directly or indirectly aiming at emissions related to air
quality, such as emission standards on car exhausts and other installations as well as
energy taxes.

-

This study shows that, also in their extraction phase, fossil fuels were mainly responsible
for the estimated damage. As explained before, crude oil and natural gas extraction were
responsible for considerable damage in both Denmark and the United Kingdom and, to a
lesser extent, also in the Netherlands. Although pricing of extraction of fossil fuels may
be advisable from a theoretical perspective (i.e. tax an activity on the place where the
damage occurs), it might not be from a practical perspective. More downstream pricing

1 Section 2.2 describes the various emissions related to the non-energy use of fuels.

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measures, such as EU ETS and energy taxes, also contribute to lower levels of upstream
damage, as higher fuel prices reduce the demand for fossil fuels, and may more easily be
enforced.
-

In refineries and the chemical industry, for example, part of the carbon contained in
fossil fuels remains stored in the products, such as in motor fuels, plastics and lubricants.
Substances are emitted during the use of those products and their disposal by way of
incineration (see also Section 2.2). Pricing the total input of fossil fuels in these
industries based on their carbon content, therefore, would not only put a price on the
direct emissions, but also on downstream emissions of CO2 (note that the major part of
these emissions was not included in the analysis in Chapter 6). To avoid a double pricing
of the emissions related to coke and refinery products, downstream CO2 emissions, for
example, from fuel used in transportation and from plastic waste incineration, should not
be priced again, in this case. Emissions of other substances, however, may still justify
pricing downstream emissions.

-

Our estimates of the environmental damage to the air from waste management are
relatively low compared to the damage from the other phases in the material production
chain. Pricing measures in the waste management phase should account properly for
both the direct and indirect damage. Part of the CO2 emissions might be exempted as
long as this compensates for carbon captured from the atmosphere earlier in the
production chain, which is true for biowaste in particular, but should not apply to damage
caused by other substances. Also, the fossil-carbon part of the waste, such as plastics,
should be priced as long as these products or materials were not taxed earlier in the
production chain.

-

Markets for basic materials and also for the manufacturing of products are, in general,
global markets. Pricing of (the inputs of the) products in these markets, may have
harmful impacts on the competitiveness of companies that produce these materials or
products. Such negative impacts, however, can be mitigated by implementing pricing in
a coalition of countries, for example in (a part of) the European Union (Parry and
Vollebergh, 2017). Other ways of mitigating the impact on the competitiveness include
introducing import tariffs on comparable materials or products from abroad or recycling
environmental tax revenues by reducing corporate taxes or providing a subsidy on
environmentally friendlier production processes (Vollebergh et al., 2019). In any case, a
gradually increasing pricing level may be more efficient as it stimulates innovations and
the switch to cleaner production processes. Note that the current EU ETS price is
substantially lower than the environmental price for greenhouse gases as used in this
study (57 euros per tonne CO2).

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1 Introduction
The ever-stronger use of natural resources and its impact has triggered a wide interest in
what is called a circular economy these days. The focus of a circular economy is a reduction
in the use of natural resources and the production of waste, i.e. a smaller uptake of
resources and less waste at the end of the life cycle of physical goods and services. Apart
from concerns over the strategic role and availability of resources in the international arena,
natural resource use also has many environmental impacts. For instance, the use of raw
materials has serious consequences for climate change through greenhouse gas emissions,
and for air pollution through emissions of, for example, nitrogen oxides, sulphur dioxide and
particulate matter, with a harmful impact on human health and ecosystems. Also,
biodiversity losses are closely linked to the use of materials, varying from direct reduction in
natural areas because of land use for extraction to quality deterioration of ecosystems
through pollution of water and soil.
The reduction in environmental impacts because of the use of raw materials is one of the
main objectives behind the transition to a circular economy. What is usually less clear
however, is which materials cause what and how much damage in the chain from extraction
to waste. To help policy makers to identify the environmental effectiveness of policies aimed
at improving the circular economy we studied the relationship between the use of raw
materials and the overall monetary damage of environmental pressure in the chain from
extraction to waste for the Dutch economy (Vollebergh et al., 2017). The use of monetary
estimates not only enables direct comparisons of overall damage from many different
emissions related to specific production and consumption processes, but also to identify their
relevance from a narrow economic perspective measured by their overall value added or
value of production. Accordingly, the analysis not only shows where the main damage
occurred in the overall production chain of the economy from extraction to waste, but also
helps to identify the main sectors responsible for this damage. Note, however, that the focus
both in their as well as this study is – due to data limitations – on the environmental damage
related to emissions to the atmosphere.
From this earlier study about the relationship between the production and use of materials
and environmental impacts, we know that, for the Dutch economy, a large environmental
impact measured in monetary terms arises from the production of materials, such as steel,
plastics and fertiliser, in heavy industries (Vollebergh et al., 2017). However, production of
these materials takes place in industries that operate internationally. Unilateral policy
measures therefore affect the competitiveness of these industries. One way to prevent the
negative effect on competitiveness is to form a coalition of countries to take such policy
measures jointly, for instance with some neighbouring countries (Ministerie van
Infrastructuur en Waterstaat 2019). For that purpose, it is useful to gain insight into the
differences and similarities between these countries both as far as their environmental
damage is concerned and how this damage is associated with the production and use of
materials. Therefore, this study focusses on those European countries that either are an
important player or an important competitor for the Netherlands in the markets for specific
materials and products, or have the intention to develop policy measures to reduce the use
of raw materials. After consulting the Ministry of Infrastructure and Water Management, the
following EU countries were selected for comparison with the Netherlands in this study:
Austria, Belgium, Denmark, Germany, France and the United Kingdom.
In order to obtain a useful comparative overview of the environmental impact at different
phases of the production and use of materials across the seven countries we used two
different types of analysis. First, we employed a production-based perspective to gain insight
into how the countries differ in terms of their economic structure and its associated
environmental pressure and environmental damage. This perspective provides data on
relevant economic variables, such as value added and production value as well as the

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monetary environmental damage estimates caused by the direct emissions using data from
the environmental accounts. Apart from an overall picture per country we also analysed the
production sectors that are related to the extraction of raw materials, the production of basic
materials and semi-finished and finished products, and the final phase of the materials cycle,
waste management. When possible and considered useful, we also present developments
over time by showing results for both the years 2008 and 2015. Note that our focus is on the
different phases in the production and consumption chain of materials.
Second, we also investigated the emissions and damage caused by material extraction and
production from a production-chain perspective. The production-chain analysis considers the
environmental pressures and damage over the production chains of materials or products.
Hence, this approach shows both the direct and the indirect impacts in production chains,
including those abroad. Moreover, the database used for this approach allowed us to make a
distinction between emissions related to fuel combustion and emissions related to other
activities. Both distinctions are important when considering effective and efficient policy
measures.
The next chapter (Chapter 2) discusses the relationships between natural resources,
economic activities and the environment, and explains the two perspectives in more detail.
Chapter 3 explains the methodology we used to obtain a useful comparative overview of
countries using environmental accounting measures based on the environmental impact of
emissions, in relation to the flow of materials from extraction to waste, throughout the
economy. In particular, it explains in more detail how we calculated the monetary damage
caused by environmental pressures, for the two perspectives. Chapter 4 compares the seven
EU countries with respect to their economic sector structure and the overall monetary
damage caused by the environmental impacts related to emissions of greenhouse gases and
air pollutants. Chapter 5 presents our results from the production-based perspective and
shows how the environmental damage is related to the economic activities in various sectors
relevant for the material flows within the economies. Subsequently, Chapter 6 presents
results from the production-chain perspective. This shows the supply-chain-related damage
caused by different materials and products. Chapter 7 discusses the differences and
similarities of both approaches and some limitations. Finally, Chapter 8 provides a tentative
discussion of possible implications of the outcomes for policy application, such as the option
to tax emissions associated with production and use of materials.

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2 Materials, environmental
damage and the circular economy
In this chapter we describe in more detail how the extraction, production and use of
materials is related to environmental pressure. For that purpose, it is essential to understand
how resource use from extraction to disposal is linked to activities in the economic system.
In particular, understanding what natural resources are used where for what purpose
contributes strongly to better targeting of circular economy policies that aim to reduce
resource flows and their associated environmental damage. The first section explains the
usefulness of this identification procedure and the second section relates this procedure to
our two approaches, i.e. the production-based and production-chain analysis.

2.1

Natural resource use in the economic system

In order to gain more insight in the transition to a circular economy, it is important to take
the physical aspects of the production processes into account. All resource units used for
consumption pass through a number of phases, namely those of resource extraction,
resource processing into materials and usable semi-finished products and finished products
and services, followed by the end use (including repairs and reuse via the second-hand
market) and the final phase where they end up as waste (Figure 2.1). Each of these phases
also creates a waste flow.
Figure 2.1

Moreover, in many cases natural resource use at a certain point involves environmental
pollution. The distinction of the various phases is useful to identify where environmental
damage of natural resource use is caused precisely in the chain from extraction to disposal
and how large this damage is relative to the economic importance of the sectors causing it.
Subsequently we subdivided Phase 2 in this study into two sub-phases, i.e. the processing of
raw materials into usable materials (Phase 2a) and the processing of materials in semifinished and finished products (Phase 2b). 2

2 Due to composed product groups and sectors in the classifications in the data sources used, the allocation to
Phase 2a or Phase 2b is not always obvious. Appendix A.1 presents the allocation applied in this study.

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The materials used in production processes can only originate from two sources: either they
have been newly extracted from nature (the ‘primary flow’), or they have been recovered
from material or are reused from product parts in the waste flows of products produced
earlier (the ‘secondary flow’). Proponents of a more circular economy argue that current
market economies do not lead to sufficient levels of recycling and reuse, which is why they
aim to reduce primary resource consumption in order to reduce the impacts on the
environment. This involves the important question where and how environmental damage is
related to the chain from extraction to disposal. After all, the production and disposal of each
and every product causes environmental damage that leads to a decrease in the quality of
that environment (e.g. air pollution and surface water flooding due to climate change).
Without government intervention, production processes use the environment ‘for free’, in
addition to the natural resources they apply. As long as polluters do not pay the full cost to
society, i.e. pay for the externalities to which they contribute, natural resource use is likely
to be well above the social optimal levels.

2.2

The production-based and production-chain
perspective

Environmental damage from material use is the consequence of harmful emissions and
polluting substances. These harmful emissions are created during and after the use of
natural resources and materials, in combination with energy use. In this study, we focused
on environmental damage from the use of metal and other minerals (e.g. metal ore and
rock) and fossil fuels as material input.
As explained in the introduction we employed two different methods to obtain a more
detailed comparative overview of the environmental impact at the different phases of
material use across the seven countries. The production-based analysis (Chapters 4 and 5)
uses the systemwide inventory of emissions and their allocation to the economic sectors
from which they are emitted (e.g. mining, agriculture, manufacturing, services, households
and waste management). Accordingly, this approach covers all economic sectors including
households and can be used to account for the overall environmental damage and relate this
to the national economic accounts (Muller et al., 2011).
Apart from this overall estimate for the national economy, we also used the inventory of
emissions to determine which material-related sectors are responsible for which amount of
direct environmental damage within a country. Moreover, the environmental damage was
linked to circular economy aspects of resource flows by allocating the relevant sectors to the
different phases of material flows as described in the previous section. Accordingly, we
identified the main sectors responsible for environmental damage related to materials.
The production-chain analysis (Chapter 6) takes account of environmental damage over the
whole upstream production chain. For every material or product used at a specific stage in
the chain from extraction to the end product, the analysis computes the environmental
damage for all stages in its production chain up to the moment that the product is sold
(‘from cradle to gate’). Hence, contrary to the production-based approach, the productionchain approach not only takes into account emissions within the relevant sector and country,
but also emissions in other sectors and emissions in other countries as far as they are part of
the production chain of the material or product. An additional advantage for this study is that
the database used for the production-chain analysis also allowed for a distinction between
the environmental damage that is related to energy use and damage that is caused by other
activities including, for instance, the non-energy use of fossil fuels or industrial processes.
More specific, the environmental damage from energy use is related to the combustion of
fossil fuels and biomass. Non-energy use of fuels relates to (i) the use of fossil fuels as
feedstocks, such as naphtha in the petrochemical industry and natural gas in the production
of ammonia; (ii) the use of fossil fuels as reductant, such as coke used in the production of
PBL | 13

iron and steel; and (iii) the use of non-energy products derived from fuels, such as lubricants
and bitumen. Emissions from the use of fuels as feedstocks in some cases directly occur
during the production process (e.g. CO2 emissions during the production of ammonia), but in
other cases part of the carbon contained in the feedstock remains largely stored in the
products (e.g. plastics) and emissions do not occur until these products are disposed of by
incineration (EEA, 2018). For non-energy products derived from fossil fuels, substantial
emissions occur during their recovery and during disposal by incineration, while for the use
of fuels as reductant generally only a very small amount of carbon remains fixed in the
products for a longer time and the larger part of the carbon is emitted as CO2 during the
reduction process (EEA, 2018). In addition, several industrial processes not related to fossil
fuel use also contribute to environmental damage, such as the production of non-ferrous
metals and cement.
In addition, globalisation has strongly intertwined natural resource and material chains. In
each of the phases discussed above, there are large global import and export flows.
Resources are often extracted in developing countries, while processing occurs mainly in the
developed countries. In various stages of processing — from the primary industry to semifinished products and end products — there is also a large amount of trade. This implies that
it is not easy to obtain a clear insight into the processing and consumption of resources,
materials and end products, per country. Special modelling approaches are necessary to
obtain reliable estimates of those linkages in the entire production chain. Such an analysis
requires a model that follows physical material uses from extraction to its final application in
end products. The model we used for this analysis will be explained in more detail in the next
chapter.

2.3

Scope of the study

For this study, we compared the environmental damage caused by material use and
production in seven countries, namely Austria, Belgium, Denmark, Germany, France, the
Netherlands and the United Kingdom. Therefore, we were primarily interested in the overall
production chain of physical products that links natural resources, materials, semi-finished
and finished products, and, finally, the waste product.
In this study, we focused on the environmental damage related to emissions to the
atmosphere. Because of limitations to the available data, environmental damage related to
emissions to water were included only for a limited number of substances and environmental
damage related to emissions to soil were not taken into account. Moreover, possible
environmental damage of substances for which the environmental impacts are largely
unknown, such as microplastics, was not included in this study. Also, damage from other
environmental externalities, such as noise and land use, and non-environmental
externalities, such as congestion, was not included in the estimated environmental damage.
Drissen and Vollebergh (2018a) find that, for emissions of 171 substances to air, water and
soil in the Netherlands, in 2015, 98% of their total environmental damage was related to the
emissions of greenhouse gases and air pollutants included in our calculations.
As a starting point, Chapter 4 presents the overall environmental damage in each of the
seven countries included in our analysis, including also environmental damage related to the
production of food, electricity, transport and other services, as well as environmental
damage directly caused by households. This overall picture allows us to put the role of the
specific sectors engaged in material processing into perspective. In the more detailed
comparisons in Chapters 5 and 6, however, materials that are only used for food and feed
were not taken into account. Biomass as a resource for materials and consumer products,
such as wood for timber and furniture or cotton for clothes, was included in this study, but
the use of biomass for food or energy was not.

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In Chapter 5, we present environmental damage for 21 sectors that are the most relevant
for the transition to a circular economy, because their production processes are mainly
responsible for the extraction, production and use of materials. Following the phases
presented in 2.1, these sectors include two raw material extraction sectors (phase 1), seven
material producing sectors (basic industry, phase 2a) and twelve sectors using materials in
the manufacturing of finished products and in construction (phase 2b). In addition, Chapter 5
also presents the environmental damage related to the processing of waste (phase 4).
In Chapter 6, we present the environmental damage using the production-chain approach for
25 materials and products from these sectors, including five raw materials (phase 1), eight
materials (phase 2a) and twelve semi-finished and finished products (phase 2b). In contrast
to Vollebergh et al. (2017) we did not include environmental damage from waste
management because of data reliability issues. 3 Note also that sectors that only produce
biomass for food and feed were not taken into account (see also Appendix A). Finally, the
use of other natural resources, such as land, fresh water or biodiversity, was not included in
this study even if they were used in the production chain of physical products.

3 The product based estimates for the damage from waste management, however, indicate that damage of
emissions to the atmosphere is relatively small compared to the processing stages (see Chapter 4).

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3 Environmental accounting for
material production and use
Following Vollebergh et al. (2017), we aim to identify the environmental effectiveness of
policies aimed at improving the transition to a circular economy by studying the relationship
between the use of raw materials and the overall value of the damage caused by
environmental pressure in the entire production chain from extraction to waste. This
monetary environmental damage based on environmental accounting (see Muller et al.,
2011) represents the direct loss of economic welfare caused by the environmental pressure
due to these economic activities. Such a descriptive analysis requires a lot of detailed
information on the quantities of different resource flows and their interaction with other used
resources such as fossil fuels and bioenergy in all four phases from extraction to disposal.
Moreover, physical environmental damage must be quantified for each of these phases as
well, and these quantities have to be transformed into monetary value estimates by using
environmental prices. 4 We explain these different steps in Section 3.2 and 3.3 respectively.
We start with a short explanation of how monetary environmental damage estimates can be
obtained.

3.1

Computing monetary environmental damage

The extraction and use of raw materials is associated with environmental pressures, such as
emissions to air, soil and water. These environmental pressures on their turn have impacts
on biodiversity and nature in terms of biodiversity losses, but also on human health in terms
of lost years of life. The valuation of such impacts (or physical damage) in monetary terms
enables the comparison of impacts from emissions of different substances and makes it
possible to calculate overall damage caused by economic activities or physical processes by
adding environmental impacts from emissions of different substances.
Monetary environmental damage is calculated with environmental prices that represent the
environmental damage per kilogram of emission for a certain substance in monetary terms.
These environmental prices include the impacts on all impact categories, such as biodiversity
and human health, and vary widely per substance. By calculating the monetary
environmental damage per substance and aggregating over all substances emitted during
the production of a product or in a sector, the total monetary environmental damage caused
by such an economic activity can be calculated.
As explained in the previous chapter, we computed the monetary environmental damage (i)
from the emissions from all industries and households, per country, from a production-based
perspective; and (ii) from the emissions associated with the extraction of raw materials and
the production of materials and products from a production-chain perspective. For the
production-chain perspective all upstream production-chain-related contributions to the
environmental impact were included and aggregated (‘cradle to gate’). Accordingly, both
environmental accounting exercises produce monetary environmental damage estimates for
each country or group of countries by simply multiplying the physical amount of emissions
identified in each approach with country-specific environmental prices.

4 The environmental price of a substance, sometimes also referred to as a shadow price, represents the
monetary value of the change in environmental quality due to the emission of the substance. As environmental
quality is not traded directly in markets, these prices must be derived from studies on human preferences for
avoiding the impacts of pollution (Muller et al., 2011; CE Delft, 2018). Section 3.3 further discusses the
environmental prices used in this study.

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3.2

Physical environmental damage from the two
perspectives

3.2.1

Environmental damage from a production-based perspective

Environmental damage from the production-based perspective includes all environmental
damage directly related to all activities from firms and households in a country. National
environmental accounts usually report emissions that lead to the environmental damage
from sectors and households from a production perspective. Information on the emissions
within the countries that are analysed in this study, were taken from the Eurostat
environmental accounts (Eurostat, 2019a). This data set presents environmental information
broken down into 64 industries (classified by NACE Rev. 2) plus households (see Appendix
A.1). The concepts and principles in the environmental accounts are the same as in national
accounts that are residence-based including all activities from domestic firms and
consumers, within or outside the borders of a country. 5
In order to determine the environmental damage from emissions, all substances that were
available in the Eurostat database were included in this study. The Eurostat environmental
accounts only report on emissions to air (Eurostat, 2019b), including greenhouse gases and
pollutants contributing to air pollution that are targeted in the National Emission Ceilings
(NEC) Directive (Table 3.1). 6 Note that, in accordance with the UNFCCC emission inventory
guidelines, CO2 emissions from biomass were not included in the damage calculations.
Environmental damage related to emissions of other substances, such as particulate matter
from biomass combustion, were included (Eurostat, 2015).
For particulate matter we distinguished between two groups in this study: particulates
smaller than 2.5 micrometres (PM2.5) and particulates with a size between 2.5 and 10
micrometres (PM2.5–10), because their impact on health, differs. 7 We derived the latter
group from the Eurostat data by subtracting the category PM2.5 (particulates smaller than
2.5 micrometres) from the category PM10 (particulates smaller than 10 micrometres). We
compared emission data between the years 2008 and 2015 in the production-based analysis
in order to assess developments in environmental pressures and impacts in this period. The
year 2008 is the first year for which data are available from the Eurostat database for all
seven countries in our analysis. Eurostat contains no air emission data on Austria, France
and Germany for years before 2008.
Table 3.1
Substances included in the production-based and the production-chain
perspectives
Substancesa

Production-based perspectiveb

Production-chain perspectivec

Greenhouse gases

CO2, CH4, N2O, HFC, PFC, NF3/SF6

CO2, CH4, N2O, SF6, HFC, PFC

Air pollutants

SO2, NOx, NH3, NMVOC, PM2.5,
PM2.5–10

SO2, NOx, NH3, NMVOC, PM2.5,
PM2.5–10

Other air pollutants

CO

CO, PAHs, PCBs, dioxin, benzene,
heavy metals

Emissions to water

-

Nitrogen, Phosphorus

a See Appendix B.1 for a complete list of substances.

b The production-based analysis used data from the Eurostat environmental accounts.
c The production-chain analysis used data from EXIOBASE 2.2.

5 Accordingly this study differs from Drissen and Vollebergh (2018a), who start from a territorial approach
based on air emission inventories including all emissions inside Dutch borders, either caused by domestic
companies or consumers or by foreign companies or consumers.
6 This also differs from Drissen and Vollebergh (2018a) who include substances emitted to soil and water as
well. In their calculations, however, only two percent of the total monetary environmental damage relates to
substances emitted to soil and water.
7 Note, that only PM2.5 is part of the NEC Directive.

PBL | 17

3.2.2

Environmental damage from a production-chain perspective

To calculate the production-chain-related environmental damage of materials and products
we used a multi-regional input-output (MRIO) model. Such an MRIO model not only takes
the emission of environmental damaging substances that directly take place at extraction
and production of raw materials and materials into account, but also indirect environmental
pressures throughout the production chain both within and outside the country where the
specific material or product is produced (see also Appendix B.2).
The MRIO approach used in this study is similar to the method used to calculate the
environmental damage of raw materials and materials produced in the Netherlands in 2007
(Vollebergh et al., 2017) and is based on the method to calculate environmental footprints of
industries (Wilting and Van Oorschot, 2017). 8 In this study, only the upstream emissions
that occur in the life cycle up to the moment that the product is sold were taken into account
(‘from cradle to gate’). The production chain includes both a domestic part and a foreign
part. The use of an MRIO model enabled a specification of the foreign part of the production
chain by (a group of) countries where upstream production and emissions take place. This
analysis is not only relevant for identifying the relative role of domestic pollution and how
this is related to materials processing, but also for a correct valuation of the environmental
damage (see Section 3.3).
The MRIO database used in this study is EXIOBASE, version 2.2, with data for the year 2007
(Wood et al., 2014). Although an updated version of EXIOBASE 2.2 became publicly available
in 2018, i.e. version 3.4 with data for the period 1995–2011 (Stadler et al., 2018), we
abstained from using this newer version. Initial analysis of the outcomes for 2007 from both
EXIOBASE versions showed significant differences and we learned from a comparative
analysis of both databases that the data in EXIOBASE2 correspond better to the official data
from Eurostat than the data in EXIOBASE3 (De Koning, 2018). Our choice to use EXIOBASE2
implies that the environmental damage from the production-chain approach was calculated
for a year that is relatively far back in time, i.e. 2007.
In EXIOBASE the required information for the determination of the environmental damage
from a production-chain perspective, is available for products but also for sectors
("industries"). Products and sectors to a large extent correspond, but there are differences
related to by-products. For example, the product information for the material aluminium
contains all aluminium regardless of the production sector of origin. This not only includes
the environmental damage related to aluminium produced by the sector aluminium
production (i.e. firms that primarily produce aluminium), but also the environmental damage
related to the aluminium produced as by-product in other sectors. The industry information
of the sector aluminium contains the environmental damage caused by all firms that have as
their main product aluminium, including environmental damage related to various byproducts these firms may produce. The environmental damage related to aluminium
produced as a by-product is not assigned to the industry aluminium, but to the sectors based
on the firms’ main product. Following Vollebergh et al. (2017), here we focused on the
product classification.
Although EXIOBASE distinguishes 200 different products and product groups (goods and
services), we used a more aggregated allocation to 59 product groups because this level of
aggregation matches reasonably well with the sector classification in the analysis from a
production-based perspective. Therefore, we aggregated the 200 product groups in
EXIOBASE to these 59 product groups. 9
8 Wilting and Van Oorschot (2017) systematically investigated the supply-chain-related impacts of Dutch
economic sectors on worldwide biodiversity by exploring the contribution of direct and indirect suppliers to
these impacts.
9 Note that Vollebergh et al. (2017) used the differentiation in 200 product groups.

PBL | 18

Both direct and indirect emissions for our production chain estimates were based on
EXIOBASE2. Since in the production-chain analysis we included all substances for which
EXIOBASE2 includes data on emissions to air and water, more substances were included in
this approach compared to the production-based perspective (see Table 3.1). 10 Like the
production-based perspective, we accounted for differences between particulate matter
smaller than 2.5 micrometres and with a size between 2.5 and 10 micrometres by
subtracting the category PM2.5 in EXIOBASE from the category PM10. For some products, for
instance air transport in several countries, this difference was negative. For those cases, the
emission of PM2.5–10 was set to zero.
Furthermore, EXIOBASE distinguishes emissions from fossil fuel combustion and emissions
from other sources. This distinction is relevant when identifying possible policy measures and
their effectiveness with respect to reducing environmental damage related to materials (see
Chapter 8).

3.3

Monetary environmental damage estimates

The next step in the valuation exercise to obtain monetary environmental damage estimates
from overall direct emissions (for the production-based perspective) or more specifically the
use of certain materials and products (for the production-chain perspective) is to multiply the
amount of physical substances emitted with an environmental price (see also Vollebergh et
al., 2017; Drissen and Vollebergh, 2018a). In that study we were able to link emissions to
air, water and soil of over 100 substances to environmental prices that are representative for
current knowledge on the aggregated environmental impacts on health and biodiversity.
For the substances included in this study, we used environmental prices expressed in euros
per kilogram emission of a certain substance from the Handbooks on Environmental Prices
with data for the Netherlands (CE Delft, 2017) and the EU28 (CE Delft, 2018). All
environmental prices are in euros from 2015 and representative for the Dutch and EU28
situation, respectively. These environmental prices reflect the value of the damage of one
additional kilogram emission of the specific substance. Table 3.2 summarises the
environmental prices for the most important emissions used in our accounting exercise. 11
The Handbooks include both central values for environmental prices as well as upper and
lower values. In this study we only used the central values which provide the best possible
estimate of the environmental damage given the uncertainties of the valuation of the
impacts at the end points such as health and biodiversity. 12
The environmental prices for greenhouse gases as presented by CE Delft do not directly
reflect the so-called social cost of carbon, i.e. the estimated climate change damage. Instead
these prices are based on a so-called prevention cost approach, i.e. an estimate of the
abatement cost necessary to obtain a certain predefined climate goal such as the current EU
target of a 40% reduction in greenhouse gas emissions. More ambitious targets, such as
limiting global warming to 2 °C or less, would imply higher abatement cost and therefore a
higher environmental price, in this approach (CE Delft, 2018; Aalbers et al., 2016)). Note
that environmental prices are subject to large uncertainties and would require a sensitivity
analysis. However, this was beyond the scope of this study. 13

10 This difference also partly explains the differences between both approaches (see also Chapter 7)

11 Appendix B.1 presents the full list of environmental prices included in this study. See also CE Delft (2018) for
an explanation of their approach.
12 The upper and lower values provide some insight into the uncertainty range of the central values of the
environmental prices. For a comprehensive uncertainty analysis of the environmental damage caused by the
production and use of materials in the Netherlands, see Vollebergh et al. (2017).
13 Drissen and Vollebergh (2018a) provide an extensive sensitivity analysis for the environmental prices they
use to calculate the environmental damage in the Netherlands.

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Table 3.2
Environmental prices for some key substances for the Netherlands and the EU
(central values in euros2015 per tonne)
NL

EU

CO2

57

57

CH4

1,750

1,750

SOx

24,930

14,974

NOx

34,660

14,800

NH3

30,530

17,500

PM2.5–10

4,930

2,399

PM2.5

79,530

38,700

PM2.5 road

149,350

72,675

Nitrogen (N) to water

3,110

3,110

Phosphorus (P) to water

1,900

1,900

Source: CE Delft (2017), CE Delft (2018)

The prices for greenhouse gas emissions were assumed to be similar for all countries and
regions. The reason is that climate change caused by greenhouse gases is a global problem
irrespective of where the greenhouse gases are emitted. Therefore, the environmental
damage caused by greenhouse gases and their valuation are not location-specific.
For non-greenhouse gases, we considered the higher Dutch environmental prices more
representative for the countries neighbouring on the Netherlands than the EU28
environmental prices. Dutch environmental prices are higher than the EU28 average because
both the physical damage from emissions and the income levels are higher. Physical damage
to health and biodiversity differs between countries due to differences in population density,
age profile, biodiversity present in a country and atmospheric conditions. The valuation of
environmental damage differs because higher income levels justify higher prices. 14 Both
physical damage and income levels are relatively great for the Netherlands (CE Delft, 2017),
which implies that the environmental prices are higher for the Netherlands than for the EU28
(CE Delft, 2018).
For all countries, other than the seven countries compared in this study, the EU28
environmental prices used for the damage by non-greenhouse gas emissions were corrected
for income differences to account for differences in the valuation of environmental damage.
The correction for income differences was based on GDP (Gross Domestic Product) per capita
in international dollars PPP-corrected (World Bank (2017)) and accounted for an income
elasticity of 0.85. We did not correct environmental prices for income changes over time,
which implies that the same environmental prices were used for 2007, 2008 and 2015. Table
B.2 (Appendix B) presents the correction factors for each country and group of countries
distinguished in EXIOBASE.
For the finer fraction of particulate matter (PM2.5), the Handbooks on Environmental Prices
(CE Delft 2017, 2018) distinguish between emissions from road traffic and emissions from
other activities. The environmental damage per kilogram of PM2.5 emissions from road
Countries with higher income levels usually value the same physical damage at higher levels due to the
higher income elasticity of environmental goods relative to other products. The Dutch and EU28 Handbooks of
CE Delft did not assign a positive income elasticity of environmental quality as it was argued that such a
phenomenon would be compensated by the diminishing marginal utility of an additional life year at the end of a
person’s life. This is in line with the recommendations of the Werkgroep Discontovoet (Ministry of Finance,
2015). While this may be valid when considering the impacts of income elasticities over time, they may be less
valuable for intercountry comparisons. Therefore, in this study we follow CE Delft and Infras (2019), on the
valuation of EU28 transport emissions, who loosen the assumption of an income elasticity of zero and calculate
values using an income elasticity of 0.85.
14

PBL | 20

traffic is much greater than the damage from PM2.5 emissions from other sectors. Therefore,
we used a higher environmental price for the particulate matter emissions from road traffic
(PM2.5, combustion), which is a weighted average of the environmental prices for urban and
rural areas, as presented in the Handbooks of CE Delft.
Emissions from international shipping mainly occur on open sea where no people live. This
reduces the damage of emissions on human health significantly, in particular for emissions of
substances that mainly lead to health damage on a local scale (particulate matter, CO, PAHs,
PCBs, dioxin, benzene and heavy metals). We assumed for these substances that emissions
from sea shipping on the open sea have no impacts on health for emissions beyond 1000
kilometres offshore and a reduced impact of, say, 50% between 500 and 1000 kilometres
offshore. 15 Because approximately 80% of the emissions from international shipping occurs
beyond 1000 kilometres offshore and 10% occurs between 500 and 1000 kilometres
offshore, effectively only 15% of these substances emitted by international shipping lead to
direct health damage (Vollebergh et al., 2017). For substances that travel long distances
(which is the case for SO2, NOx, NH3 and NMVOC), we assumed that all emissions lead to
environmental damage. Because greenhouse gases contribute to global warming irrespective
of where they are emitted, these were also fully included.
It should be noted that the results from the production-chain analysis for the Netherlands are
slightly different from those in Vollebergh et al. (2017), because of the use of newly
published environmental prices for the EU28 and a different allocation of environmental
prices to countries outside the Netherlands. Only the environmental damage caused by
greenhouse gas emissions is similar, since the same environmental prices were applied for
greenhouse gas emissions in all countries.
Vollebergh et al. (2017) show results for total production in the Netherlands, but, here, we
also present relative damage per unit of production or product value (in euros) to enable
comparisons between countries. All prices, GDP and production values are in 2015 prices
(Table B.3 presents deflators used for the 2008–2015 period).

15 A similar reasoning as for international shipping can be applied to international aviation. There are, however,

indications that the environmental damage of emissions of aviation on high levels is much higher than on
ground level. Therefore, we assumed that all emissions of aviation lead to environmental damages.

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4 Comparison of seven countries
This chapter compares the seven EU countries with respect to their economic sector
structure and the monetary damage of the environmental impacts related to emissions of
greenhouse gases and air pollutants. The focus is on the environmental damage caused by
direct emissions in the sectors related to the production and use of materials. We present
results for both 2008 and 2015 if useful in order to also observe recent changes over time.

4.1

Economic sector structure

Figure 4.1 shows the per-capita gross value added of various sectors in the seven countries
in 2015. Together, the sum of gross value added in all sectors is equal to the gross domestic
product (GDP) 16 of a country. Of the seven countries compared in this study, Denmark had
the highest level of GDP per capita, about 40% higher than per-capita GDP in France, which
was the lowest level. Services was the dominant sector in all the countries by creating
almost two thirds of total GDP in Austria and Germany and up to three quarters in the United
Kingdom.
Countries with large shares of services had small shares of manufacturing and vice versa.
Manufacturing in the United Kingdom had only a share of 10% of GDP, while in Germany and
Austria, the manufacturing sector contributed 23% and 19% to value added in 2015. For this
report, relevant sectors are manufacturing, other material sectors (including forestry, mining
and construction), and waste management. Section 4.3 discusses the role of the materialrelated sectors in the total economy, for each of the seven countries.
In most countries, GDP per capita remained about the same in the period between 2008 and
2015, except for Germany where it increased by 8%. The share of services slightly increased
in all countries.
Figure 4.1

16 GDP in basic prices.

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4.2

Environmental damage in the seven countries, from a
production-based perspective

Figure 4.2 shows the computed monetary environmental damage from economic activities in
the seven countries calculated based on the emission data provided by the Environmental
Accounts (from Eurostat). This overall damage estimate therefore represents the direct
environmental damage of all activities of households and businesses of a country according
to the residential principle, both domestically and abroad.
While the services sector in all countries was the dominant sector in terms of gross value
added, the environmental damage by this sector was relatively small. The agricultural and
transportation sector significantly contributed to the environmental damage, while these
sectors were relatively small in terms of gross value added. The large amount of per-capita
environmental damage caused by the transport sector in Denmark is striking. This accounted
for about 80% of the total environmental damage from Denmark and was mainly related to
water transport. Indeed, Denmark has a number of large companies that transport
containers by sea and their worldwide emissions were included in these computations.
Belgium had the largest amount of per-capita environmental damage caused by
manufacturing and Denmark the smallest. In France, Austria and Belgium, the per-capita
environmental damage caused by the energy sector was relatively small because of their
relatively large share of nuclear energy (France and Belgium) and renewable energy sources
(Austria) in electricity production. Per-capita environmental damage caused by households,
which includes private transportation, was least in the Netherlands, while households in
Denmark caused the most damage per capita. 17 The environmental damage caused by the
material-related sectors analysed in this study varies considerably across the countries and
will be discussed in more detail in Section 4.3.
Figure 4.2

As Figure 4.3 shows, Denmark is also the country with the strongest decrease in the percapita environmental damage between 2008 and 2015, with a decrease of approximately
30%. In Germany, the decrease in per-capita environmental damage was the weakest, with

17 In most countries, more than half of the environmental damage by households results from private

transportation, mainly due to PM2.5 emissions.

PBL | 23

approximately 14%. This is not surprising since Germany is the only country where percapita gross value added increased substantially between 2008 and 2015. Both in Denmark
and the United Kingdom, the environmental damage by the energy sector decreased
considerably, between 2008 and 2015, with policies supporting cleaner power production.
For all countries, except Austria and Germany, per-capita environmental damage caused by
the manufacturing sector was reduced more than the total environmental damage of those
countries between 2008 and 2015.
Another important observation from the data is that, in all countries, the environmental
damage from air-polluting substances was much greater than from greenhouse gases.
Denmark had the largest share, with 90% (Figure 4.3), which is not surprising because of
the large share of water transport in Denmark and the related SO2 emissions. Denmark also
had relatively large per-capita environmental damage from greenhouse gas emissions.
Figure 4.3

The reduction in damage of air-polluting substances was more substantial than the reduction
in damage of greenhouse gases between 2008 and 2015. The reduction in per-capita CO2
emissions between 2008 and 2015 ranged from less than 10% in the Netherlands and
Germany to approximately 25% in Denmark and the United Kingdom. The reduction in percapita air pollution ranged from 15% in Germany to almost 30% in Denmark, the
Netherlands and the United Kingdom. These differences reveal that reductions in emissions
of CO2 and air pollutants not necessarily go together, which relates to EU air quality policies
that focus on reducing emissions of air pollutants by end-of-pipe measures (Bollen and Brink,
2014).

4.3

The role of the material-related sectors in the seven
economies

Our report focuses on sectors responsible for material extraction, production and use,
including forestry, mining, manufacturing of materials and finished products, and waste
disposal. It distinguishes 2 raw material extraction sectors (phase 1), 7 material producing
sectors (phase 2a), 12 sectors using materials in the manufacturing of finished products and

PBL | 24

in construction (phase 2b), and 1 sector on processing of waste (phase 4). 18 Figure 4.4
presents the shares of gross value added and monetary environmental damage of these
sectors per phase in the national totals. Together, their shares in total gross value added
varied from 14% (in France) up to 25% (in Germany), in 2015.
The shares of the material-related sectors (in phases 1, 2a, 2b and 4) in total environmental
damage due to production ranged from 3% in Denmark to 39% in Belgium (Figure 4.3.b).
Except for Germany and Denmark, the share in environmental damage of these sectors
exceeded the share in gross value added. The small share in Denmark is due to the high
value for the environmental damage related to water transport, as described above. While in
all countries, sectors in phase 2b contributed more to total gross value added than those in
phases 1, 2a and 4 together, the environmental damage was mainly caused by the sectors
that produce materials (phase 2a).
Figure 4.4

18 See Appendix A.1 for the sectors included.

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5 Production-based analysis
This chapter presents the environmental damage caused by direct emissions in the sectors
related to the production and use of materials from a production-based perspective. The
monetary environmental damage from the production-based perspective was calculated
based on the emission data provided by the Environmental Accounts (from Eurostat). First,
we present the environmental damage in phases 1, 2a, 2b and 4 in the seven countries.
Next, we analyse the differences in the environmental efficiency of the various sectors
between countries and finally we present a more detailed analysis of the four most polluting
industries. We present the environmental damage for 2015, but also analyse changes over
time by comparing 2008 and 2015 data and have a closer look at the contribution of
different types of pollution.

5.1

Overview of the environmental damage caused by
material-related industries and waste

This section presents environmental damage estimates by industries related to raw material
extraction (phase 1), material production (phase 2a), manufacturing of products using
materials and construction (phase 2b) and waste management (phase 4). The section ends
with an analysis of the contribution of greenhouse gases and air pollutants to the
environmental damage in the different phases and changes therein between 2008 and 2015.
We compare the damage in this section in environmental damage in euros per euro of GDP
rather than population since our focus here is on production activities. 19
Figure 5.1

19 We used GDP in market prices in all production-based and production-chain calculations of the materialrelated sectors and products. Presenting the environmental damage per capita will give a similar picture,
although there are small differences because of differences in GDP per capita between countries.

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5.1.1

Environmental damage caused by raw material extraction (Phase 1)

The Eurostat database distinguishes only two industries that extract raw materials: forestry
and mining. The latter showed the largest environmental damage related to GDP per country
(Figure 5.1). In all countries, the mining sector had a larger environmental damage than
forestry. The differences between countries in the damage per euro of GDP were large, since
the mining sector is very diverse with mining of ores, solid fuels, crude oil and natural gas
that all have their specific environmental pressures and externalities. In the United Kingdom
and Denmark, the two countries with the largest environmental damage per euro of GDP
caused by raw material extraction, the mining sector was dominated by the extraction of
crude petroleum and, to a lesser extent, by the extraction of natural gas.

5.1.2

Environmental damage caused by material production (Phase 2a)

In the industries that produce basic materials, Belgium showed with a value of 11 euros per
1000 euros of GDP the largest environmental damage in 2015 (Figure 5.2). Especially, the
production of chemicals and other minerals contributed to this. The importance of industries
varied considerably between the countries, with the smallest share for the manufacturing of
textiles, wood and paper. Refineries showed a large share in Denmark, the Netherlands and
the United Kingdom, while the share of the manufacturing of chemicals was relatively large
in Belgium, Denmark and the Netherlands. The manufacturing of other minerals was
relatively important in Germany and the manufacturing of basic metals showed large shares
in Austria and Germany. These differences can to a large extent be explained by differences
in the share of these sectors in the respective economies (see Appendix C). Differences may
also relate to differences in the environmental damage per unit of material produced. These
differences will be analysed in Sections 5.2 and 5.3. In line with the relatively large size of
the forestry sector in Austria and France (Appendix C), wood production had a significant
share in the environmental damage in these countries. Furthermore, in Austria, paper
manufacturing showed a share of 11% in the environmental damage caused by the basic
industry, per euro of GDP.
Figure 5.2

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Figure 5.3

5.1.3

Environmental damage caused by manufacturing of products (Phase
2b)

In all seven countries considered here, the environmental damage caused by the industry
using materials in the manufacturing of products and construction (Phase 2b) was much less
than that in the basic industry producing these materials (Phase 2a) (Figures 5.2 and 5.3).
The environmental damage per euro of GDP for construction (which largely relates to
emissions from non-road mobile machinery) was greater than the total environmental
damage related to all manufacturing of products, combined, in each of the countries, with
the exception of Germany. Germany and the United Kingdom showed the largest amount of
environmental damage per euro of GDP from product manufacturing. In Germany, the
manufacturing of motor vehicles, which is also an important sector in economic terms
(Appendix C.1), substantially contributes to the environmental damage of the industries
manufacturing products, with a share of almost 30%. In the United Kingdom, manufacturing
of rubber and plastic products was the main contributor, also with a share of almost 30%.
Manufacturing of metal products and machinery are other industries that showed relatively
large shares in the environmental damage in most countries, in 2015.

5.1.4

Environmental damage in phases 1, 2a and 2b by type of pollutants,
over time

Figure 5.4 presents the environmental damage caused by the sectors in the phases 1, 2a
and 2b in 2015 as presented in the previous sections and extends this by the environmental
damage calculated for 2008. Moreover, the figure distinguishes into various types of
pollutants contributing to the environmental damage.
In all countries, except for the Netherlands, the share of air pollutants in the environmental
damage was above 50% in each of these phases. Only in Phase 2a, in 2015 more than half
of the environmental damage in the Netherlands (57%) related to emissions of greenhouse
gases. Greenhouse-gas-related environmental damage in these phases was mainly related to
emissions of CO2.
In all countries, the environmental damage per euro of GDP decreased, between 2008 and
2015. In this period, the environmental damage from air pollutants decreased faster than the

PBL | 28

Figure 5.4

damage from greenhouse gas emissions. Emission standards for air pollutants from large
combustion plants set out in EU legislation plausibly contributed to fewer emissions of air
pollutants. While reductions in emissions of CO2, in general, require a decrease in the use of
fossil fuels, emissions of air pollutants can largely be reduced by emission control
technologies. This implies that reductions in energy use are not required and CO2 emissions
are not necessarily reduced as a co-benefit of policies to reduce air pollution (Bollen and
Brink, 2014).
It is obvious, from Figure 5.4, that the environmental damage of material-related industries
was mainly related to sectors attributed to Phase 2a. Strong decreases in environmental
damage between 2008 and 2015 could be observed for Belgium (38%), the United Kingdom
(38%) and France (35%), while Austria (10%) showed the weakest decrease.

5.1.5

Environmental damage caused by waste management (Phase 4)

In the Eurostat air emission accounts (Eurostat 2019b) only one sector is related to the
processing of waste (phase 4), namely the sector of ‘sewerage, waste management and
remediation activities’ which includes all types of waste processing. The environmental
damage per euro of GDP of this sector is below 1 euro per 1000 euros of GDP in all countries
in 2015 (Figure 5.5).
Unlike in phases 1, 2a and 2b, in phase 4 non-CO2 greenhouse gas emissions had the largest
share in the environmental damage. Methane emissions were by far the main contributor to
this environmental damage. Methane emissions in the waste sector occurred mainly from
waste landfilled in the past and it is expected that these emissions will decrease further
because the volumes of biodegradable waste that is landfilled will further reduce in the next
decades in most countries (Figure 5.6). CO2 emissions from waste combustion, even if
incineration of waste is used for energy purposes, were included as far as they result from
incineration and open burning of carbon in waste of fossil origin (e.g., plastics, certain
textiles, rubber, liquid solvents, and waste oil). CO2 emissions from combustion of biomass
materials (e.g., paper, food, and wood waste) contained in the waste are not considered net
emissions. Emissions of all other substances related to biomass combustion were included in
the environmental damage calculations.
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Figure 5.5

Figure 5.6

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5.2

Environmental efficiency of material-related
industries

The differences in monetary environmental damage between countries have various causes.
Not only differences in the production volume of a sector, but also differences in the
environmental efficiency of production, that is the environmental damage per unit of material
or product, can explain variations in environmental damage. This section presents a
comparison between the countries of the environmental damage of the production in sectors
that produce and use materials, including raw material extraction, material production and
industries manufacturing products. The environmental efficiency is here defined as the
monetary environmental damage per euro of production value of the industry itself using the
production value as a measure, although an imperfect proxy, for the physical material
content of production directly contributing to the environmental damage.

5.2.1

Overview of environmental damage, per industry

Here we compare the environmental efficiency between countries for the 21 material-related
sectors in 2015. For every sector, a range for the environmental efficiency is given from the
country with the least environmental damage per unit of production to the country with the
most environmental damage. The mark in this range gives the median environmental
efficiency for this sector.
Figure 5.7

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The results reveal a large variation in the environmental efficiency of sectors that in Section
5.1 were found to contribute significantly to total environmental damage in most countries:
raw material extraction and the basic industry (Figure 5.7). The three sectors with the
greatest median monetary environmental damage per unit of production are mining and
quarrying, the production of basic metals and the production of other minerals (mainly
construction materials such as cement, bricks and glass). In mining and quarrying, the
United Kingdom was an upward outlier, with a relatively large amount of monetary damage
per unit production (0.12 euros/euro) whereas the Netherlands was a downward outlier
(0.02 euros/euro). The difference can be explained by differences in the emission of air
pollutants from the extraction of crude oil and natural gas. According to Eurostat data,
emission levels of air pollutants per unit of energy extracted were much lower in the
Netherlands than in the United Kingdom. The environmental damage caused by other
material extraction and material production sectors was significantly less. Refineries, which
had a significant share in total environmental damage in most countries (Figure 5.2), also
had a large range in environmental efficiency. The United Kingdom was here an upward
outlier with a relatively large amount of monetary environmental damage per unit
production. The sectors of textiles, wood products and paper products, which had a relatively
small share in the total environmental damage caused by material production (Figure 5.2)
were also the sectors with the least environmental damage per euro of production value. The
large range found for the environmental efficiency in the manufacturing of wood and wood
products was due to a very high value in France as compared to other countries (0.13
euros/euro).
The amount of environmental damage per euro of production value in the manufacturing of
products was relatively small, compared to that caused by raw material extraction and
material production. Among the sectors using materials, the environmental damage per unit
of production was the largest for construction with a value of 0.01 euros per euro production
value. The median environmental damage for other industries manufacturing products per
euro production value was more than a factor two smaller. The variation between countries
was also relatively small for these sectors, except for the manufacturing of rubber and plastic
products. Especially the United Kingdom showed a large value (0.03 euros/euro) compared
to other countries for this sector.

5.2.2

Overall performance per country

The overall performance of countries in raw material extraction and production and use of
materials was determined by dividing total environmental damage per phase with total
production per phase. For every country the average performance on environmental
efficiency was determined for three phases extraction, material production, manufacturing of
products and waste management. In the Netherlands, raw material extraction (phase 1)
caused a relatively small amount of environmental damage per unit of production value,
compared to that in the other countries (Figure 5.8). The United Kingdom had a relatively
large amount of environmental damage, in this phase. Note, however, that this was based
on only two industries, since the Eurostat database distinguishes only two sectors of raw
material extraction (forestry and mining and quarrying). In the Netherlands extraction of
natural gas dominated this phase. Denmark, the Netherlands and Germany showed minor
environmental damage per unit of production value for material production. The
environmental damage from manufacturing of products was relatively small compared to the
other phases. The United Kingdom showed largest environmental damage per euro of
production for industries manufacturing products (phase 2b). Per euro of production value,
the environmental damage from waste management in France was more than twice as large
as the damage from waste management in Austria and Germany.

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Figure 5.8

5.3

Environmental damage from material production

This section presents a more detailed analysis of the environmental damage caused by the
four material-producing sectors with the largest amount of monetary environmental damage
per unit of production (Figure 5.7): basic metals, other mineral materials, refineries and
chemicals.
UK coke and refined petroleum product manufacturing had by far the largest amount of
damage per unit of production, in 2008. France and the Netherlands were able to
considerably reduce the environmental damage per unit of production caused by this sector,
Figure 5.9

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Figure 5.10

between 2008 and 2015, due to a decrease in the environmental damage attributable to air
pollutants. In Austria, Germany and Denmark, environmental damage caused by this sector
increased, significantly, over the same period.
The environmental damage per unit of production associated with the production of basic
chemicals and chemical products (excluding pharmaceuticals and rubber and plastic
products) was much smaller in Denmark than in the other countries considered in this study.
In Denmark the share of basic chemistry, which was much more polluting per unit of
Figure 5.11

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Figure 5.12

production than the processing chemistry, was relatively small. Austria and the United
Kingdom and, to a lesser extent also France, showed large increases in the environmental
efficiency of the chemical industry, which was expressed by the relatively strong reduction in
the monetary environmental damage per unit of production, between 2008 and 2015. As a
result, the amount of monetary environmental damage per unit of production in the chemical
industry of Austria and the United Kingdom, in 2015, was smaller than in Belgium, Germany
and the Netherlands, while it was substantially larger in 2008.
What is most striking in Figure 5.11 is that the amount of environmental damage per unit of
production from the manufacturing of basic metals was by far the smallest in Denmark. This
is not surprising, as Denmark is the only country that produces steel only using electric arc
furnaces, which is a production process with relatively few direct emissions due to the use of
electricity. Moreover, it should be noted that this sector is very small in Denmark and in
2015 contributed less than 0.1% to the total environmental damage in Denmark (Figure
5.2). While, in Belgium and the United Kingdom, the environmental damage per unit of
product from the basic metal sector decreased by approximately one third, in Austria,
Germany, France and the Netherlands, the environmental damage per unit of production
increased, between 2008 and 2015. In these four countries, the damage from CO2 emissions
increased. In Austria, Germany and France, the environmental damage from air pollutants
increased, as well.
In all countries, except for the Netherlands, the environmental efficiency of the production of
non-metallic mineral materials decreased between 2008 and 2015. Reductions in the United
Kingdom and Belgium were even more than 20%, which was mainly due to reductions in the
emission of air pollutants.

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6 Production-chain analysis
Whereas the previous chapter presented the environmental damage caused by direct
emissions in the sectors themselves (from a production-based perspective), this chapter
presents the results of the production-chain analysis. The production-chain analysis is an
extension of the production-based perspective and includes the environmental damage along
the production chains of materials and products. In this study, only the upstream
environmental damage, occurring in the production chain up to the point that a material or
product is sold (cradle to gate), was taken into account. The production-chain-related
damage was calculated with an MRIO model with data from EXIOBASE2 at the level of 59
products (goods and services) for 2007 (see Section 3.2.2). The use of an MRIO model
provides insights into the contributions of countries and regions in the production-chainrelated environmental damage of materials and products.
This chapter presents the results of the environmental damage calculations per material and
product per country. The production-chain analysis has been performed for 25 products,
which can be further divided in five raw materials, eight materials and twelve finished
products (see Appendix A.1). These products largely correspond with the 21 sectors that
Sections 5.1 and 5.2 focus on. In order to be able to explain the most important differences
between environmental damage of materials and products in the seven countries, we
selected the main outcomes for this report.

6.1

Overview of the environmental damage caused along
the production-chain of materials and products

First the environmental damage from a production-chain perspective is presented for
extracted raw materials (phase 1), manufactured materials (phase 2a) and manufactured
finished products (phase 2b) in the seven countries, where the damage is presented for each
phase separately. The results are presented in unit of GDP, as in Section 5.1. The
production-chain perspective also implies that environmental damage related to other
activities, such as power production and transportation, is also taken into account as far as
these activities contribute to the relevant production chain. Part of this environmental
damage will occur within the country, but another part will occur abroad. Note that the
production-chain-related damage caused by products (phase 2b), therefore, also includes
damage from raw materials (phase 1) and materials (phase 2a) that occur upstream in the
production chain. For instance, basic metals are input to the manufacturing of vehicles, so
the environmental damage of the production chain of motor vehicles (phase 2b) also includes
the environmental damage caused by the production of basic metals (phase 2a). As these
basic metals are produced from raw materials such as iron ore and bauxite, the
environmental damage during the extraction of these raw materials (phase 1) is also
included in the environmental damage of the production chain of motor vehicles. Also, other
activities contribute to the environmental damage, such as the transport of the raw materials
and the basic metals and the production of electricity that is used at different stages in the
production chain. If the raw materials and basic metals are imported, the related
environmental damage occurs predominantly abroad.
In presenting the results for the various phases in this section, the environmental damage
caused by the production chains of several materials or products within each phase are
added up. This might lead to some double counting in case production chains partially
overlap. For instance, the production chains of rubber and plastic products and motor
vehicles (both in phase 2b) in a country may overlap when the rubber and plastic products
produced in this country are used in manufacturing the vehicles in this same country. Further

PBL | 36

analysis would be required to identify the relevance of this possible overlap, but it is
expected that this double counting within the same phase is relatively small.
Since EXIOBASE distinguishes emissions from combustion processes and other activities, we
present monetary environmental damage for both types of sources. This is relevant when
considering effective and efficient policy measures (Chapter 8). Furthermore, we show the
environmental damage from the extraction and manufacturing of the materials and products
themselves (direct), the environmental damage from the production of other goods and
services in the same country (upstream) and the environmental damage from the production
of other goods and services in other countries (upstream in other countries). The direct
environmental damage is largely comparable with the production-based environmental
damage from sectors as presented in Chapter 5, although the use of different data sources
(i.e. Eurostat for the production-based analysis, EXIOBASE for the production-chain analysis)
may lead to differences in the related environmental damage as calculated (for a discussion
of the differences, see Chapter 7).

6.1.1

Environmental damage from extracted raw materials

Just like the production-based perspective (5.1), the production-chain perspective also
shows large differences between the countries, with respect to the environmental damage
per euro of GDP caused by extracted raw materials (phase 1). With a value of over 7 euros
per 1000 euros of GDP, the extraction of raw materials in Denmark caused the greatest
amount of damage, 93% of which from the extraction of crude oil and natural gas (Figure
6.1). In the United Kingdom and the Netherlands, oil and natural gas also had a large share
in environmental damage, compared to other extracted products. Emission levels of air
pollutants from the extraction of oil and natural gas were relatively high in the United
Kingdom and Denmark, compared to those in the Netherlands (see also Section 5.2.1).
Moreover, in Denmark, the share of this sector in the total economy was larger than in the
United Kingdom (see Appendix C). Only in Germany, solid energy carriers (mainly coal and
lignite) had a substantial share (53%) in the environmental damage of raw materials. In
Austria and France, on the other hand, the environmental impact from timber was relatively
large because the share of this sector in GDP was also somewhat larger than in other
countries (Appendix C.1). According to the EXIOBASE data, substantial amounts of metal
ores were extracted only in Austria and Belgium. Other mining products, including materials
Figure 6.1

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Figure 6.2

such as stone and sand, substantially contributed to the environmental damage by raw
materials in Belgium, France and Austria.
Emissions from combustion had a relatively small share in the environmental damage of raw
materials extracted in Germany, while methane emissions from coal and lignite mining and
handling had a large share. Eighty-six per cent of the monetary damage from raw materials
extracted in Denmark was related to direct emissions from the extraction itself, two thirds
from combustion processes (CO2 and NOx) and one third from other processes (CH4 and
NMVOC). In the other countries, except for the Netherlands, the share of direct emissions
direct from extraction itself was also above 50%. The Netherlands shows the largest share of
environmental damage from combustion upstream in the own country in the productionchain-related damage of raw materials (39%). The production-chain-related environmental
damage abroad was between 5% for Denmark and 39% for Belgium. Chapter 7 discusses
how the direct environmental damage related to raw materials was production-based, as
calculated in Chapter 5.

6.1.2

Environmental damage from manufactured materials

In all countries, the amount of environmental damage from manufactured materials was
much larger than from extracted raw materials, not only because we included the
environmental damage upstream in the production chains, such as raw material extraction,
but also because of the large amount of direct environmental damage from the
manufacturing of the materials, as also described in Chapter 5. The amount of environmental
damage caused by manufactured materials per unit of GDP was the largest in Belgium
(almost 70 euros per 1000 euros of GDP) (Figure 6.3). In all countries, chemical products,
basic metals and refinery products had the largest contribution to the environmental damage
caused by material production. The contribution of other mineral materials (with cement as
an important contributor) to the environmental damage of materials was between 4% and
16%. Austria had a relatively large amount of damage from wood and paper, which is in line
with the relatively extensive direct environmental damage in the wood and paper
manufacturing sectors, as described in the previous chapter (Figure 5.2), and also with the
relatively large amount environmental damage from forestry. The damage from Austrian
forestry products (Figure 6.1) partly belongs to the production chain of wood and paper
materials.
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Figure 6.3

Around 30% to 50% of environmental damage is caused directly by the manufacturing of the
materials itself, the other 50% to 70% occurs in upstream production activities (Figure 6.4).
The environmental damage caused by material production that takes place abroad lies
between 25% (Denmark) and 60% (the Netherlands). The production chains of refined and
chemical products manufactured in the Netherlands show relatively substantial
environmental damage from upstream processes abroad, compared to the production chains
of such products manufactured in other countries (Sections 6.3.1 and 6.3.2).

6.1.3

Environmental damage from manufactured products

Finally, this section presents the environmental damage from manufactured products and
construction work (phase 2b) in the seven countries (Figure 6.5). Construction work had a
large share in environmental damage in most countries except for Germany. In Germany,
Figure 6.4

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Figure 6.5

Denmark and the United Kingdom, the amount of production-chain-related monetary
environmental damage from products was larger than the damage from the production of
materials (phase 2a). In the other four countries, the damage from materials was greater.
Germany, with a damage of slightly more than 40 euros per 1000 euros of GDP, had the
greatest monetary environmental damage per euro of GDP. This is due to the importance of
the product manufacturing industries in the German economy, such as the automotive and
machinery industry.
Figure 6.6 shows that in all countries the environmental damage directly caused by the
production of the manufactured products was only a small part of the total production-chainrelated environmental damage. The share of the direct environmental damage was largest in
Belgium (13%), which means that a large part of the environmental damage occurred
upstream in the production chains. This is different from raw and basic materials, where the
share of the direct environmental damage was larger than 50%. For all countries, more than
Figure 6.6

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50% of the environmental damage related to the production of manufactured products
occurred abroad. This is due to the interdependence of countries as a result of international
trade. Semi-finished and finished products are traded in large amounts. 20

6.1.4

Environmental damage in phases 1, 2a and 2b by type of pollutants

For products in all of the phases 1, 2a and 2b, the monetary environmental damage on
average consisted of slightly more than 50% of damage caused by air pollutants (Figure
6.7). The rest of the monetary environmental damage was mainly due to the emission of
greenhouse gases. The contribution of other pollutants (see Table 3.1) was negligible for the
environmental damage from raw materials in most countries and on average about 6% for
products in phases 2a and 2b.
With slightly more than 50%, the Netherlands had a relatively large share of greenhouse gas
emissions in the monetary environmental damage from materials. Main contributions were
CO2 emissions from abroad, caused by upstream combustion processes of chemicals and
refined oil products and methane emissions from non-combustion processes in the upstream
production chain of refined oil products. In all other countries, air pollutants, such as NOx
and SO2, formed the largest share.
For all countries, the share of air pollutants in the production-chain-related environmental
damage was larger than that of greenhouse gas emissions. This damage was mainly caused
by emissions from combustion.
Figure 6.7

20 A complete analysis of the degree of globalisation of the production chains of materials and products was

beyond the scope of this study. We elaborated on this in Section 6.4 for basic metals and motor vehicles as an
example.
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6.2

Comparison of environmental damage, per material

The differences in monetary environmental damage between countries have various causes.
One of these causes is the environmental efficiency of production, which is here defined as
the environmental damage per unit of product value. In this section the environmental
efficiency of materials and products is compared between the seven countries. As we have
seen in Chapter 5, differences in the environmental efficiency between countries not only
result from differences in production technologies used, but may also relate to variations
within the product categories we distinguish. Moreover, environmental efficiency is not the
only reason that the monetary environmental damage per euro of GDP differs between
countries. Section 6.2.3 presents some other explanations for differences in environmental
damage between countries.

6.2.1

Overview of environmental damage, per material

A comparison of the environmental efficiencies of materials and products between countries,
should preferably be done by comparing the production-chain-related environmental damage
(cradle to gate) per physical unit (e.g. kilogram) of materials and products. Unfortunately,
this was not possible, since the calculations with the MRIO model are based on monetary
data. Therefore, the monetary environmental damage per euro of product value was used for
the comparison between countries.
Figure 6.8

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The monetary environmental damage from raw materials was found to vary significantly
between the countries (Figure 6.8). Especially, the extraction of fossil fuels showed a large
variability, where Germany and Denmark had the largest amount of damage, per euro of raw
material. The materials with the largest amount of environmental damage per unit of product
(based on the median of seven countries) were all basic materials: refined products,
chemical products, basic metals and other mineral materials. The amount of environmental
damage caused by other materials was significantly smaller. Wood products and textiles
were the manufactured materials with the smallest amount of environmental damage per
unit of material (euros) among the materials distinguished in this study. Austria had the
largest amount of environmental damage per euro for pulp and paper products.
The amount of environmental damage per euro of product was relatively small, compared to
that of raw materials and basic materials. In general, the costs of materials and therefore
the related environmental damage formed only a small part of the total production costs of
these products (Wilting and Hanemaaijer 2014). The products with the largest environmental
damage per unit of product were found to be the manufactured metal products and motor
vehicles, although the differences with other products are small. The range of values across
countries for other transport equipment was larger than for the other products. Especially
Belgium showed a large damage (0.19 euros/euro) compared to other countries for other
transport equipment. Wearing apparel, office machinery and computers, and radio and
television devices were among all countries the products with the least environmental
damage per unit of product.

6.2.2

Performance per country

As in Chapter 5 for the production-based perspective, the performance of countries for the
production-chain perspective was determined by dividing total environmental damage and
production per phase. Figure 6.9 shows the performance for the three production phases raw
material extraction (phase 1), manufacturing of materials (phase 2a) and manufacturing of
products (phase 2b). For phase 1, the Netherlands revealed a relatively small amount of
environmental damage per unit of raw material, compared to that in the other countries,
which was also found in the production-based calculations (Figure 5.8). In contrast, the
Netherlands had the most environmental damage in phase 2a, the production of materials.
Of all seven countries, the United Kingdom showed the least environmental damage from the
production of materials. In all countries, the environmental damage per euro of product for
Figure 6.9

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manufactured products was substantially less than for the production of materials, and
differences between countries were relatively small. France and the United Kingdom showed
the least environmental damage per euro of product, for manufactured products.

6.2.3

Explanation of differences in production-chain damage per country

In Section 6.2.2, an overview of the production-chain-related environmental damage in the
various phases of the economy was presented. There are many possible explanations for the
differences in these environmental damage between countries: 21
-

Differences in environmental prices per country: Although the same environmental prices
were used for the seven countries in this comparative analysis, the environmental prices
for other regions and countries differ due to a correction for income. Different
contributions to the material supply chains from various regions may result in different
amounts of material-related damage between countries.

-

Differences in value per kilogram of material: All environmental damage was related to
production in monetary values.

-

Differences in product mix: The materials and product groups are not homogeneous. For
instance, the category basic metals includes iron and steel, aluminium, copper, and so
on. All these metals differ in their value but also in the energy use and environmental
pressures caused during their production.

-

Differences in production efficiency: For example, primary versus secondary production,
differences in emission intensities or energy use per material.

-

Differences in production chains: Production chains may differ in contributions from
different direct and indirect suppliers (at different locations) that have differences in their
production processes.

Specific techniques, such as structural decomposition analysis, are required to further
decompose the damage and specify explanations of the differences, per material. However,
this is not included in this research.

6.3

Detailed results for four groups of basic materials

For all materials and products more detailed results of the production-chain-related
environmental pressures and damage are available including breakdowns in substance,
location of emission and so on. This section presents detailed results for the four materials
with the largest environmental damage per euro of product value: coke and refinery
products, chemicals and chemical products, basic metals and other mineral products. These
materials correspond to the sectors discussed in Section 5.3.

6.3.1

Coke and refinery products

Coke and refinery products consist of a broad range of products produced from solid and
liquid fuels, such as coke, gasoline, kerosene, LPG, naphtha and bitumen. Belgium and the
Netherlands had a relatively large production of these products (Appendix C.2) and hence
also a relatively large amount of environmental damage (per unit of GDP; Figure 6.3).
Despite the large number of products included in this product group, the differences in the
aggregate production-chain-related environmental damage between countries were
remarkably small (Figure 6.10). The United Kingdom and France had the least damage per
euro of product value. The environmental damage in the other countries was about 0.25
euros per euro of product value.

21 We refer to Chapter 7 for an explanation of the differences between the outcomes from the production-based
and the production-chain approaches.

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Figure 6.10

The share of greenhouse gases in environmental damage, for most countries, was between
40% and 55%, with the Netherlands as an upward outlier (67%). Only a small part of the
environmental damage was caused by direct emissions from the production of coke and
refinery products, with a share varying from 17% in the Netherlands to up to 50% in
Denmark. For most countries, the main share of the environmental damage from coke and
refinery products was caused upstream in the production chain and for the Netherlands,
Belgium, Austria and France this upstream damage came for more than 50% from abroad.
About 80% of the environmental damage caused by Dutch refined products took place in
other countries, as the Dutch refineries process crude oil that mostly is imported from
abroad.

6.3.2

Chemicals and chemical products

Chemicals and chemical products are a diverse group that includes plastics, fertiliser and
biofuels. As they do for coke and refinery products, Belgium and the Netherlands also
produced a relatively large amount of these products (Appendix C.2) resulting in relatively
large environmental damage (per unit of GDP; Figure 6.3). In the United Kingdom, the
amount of environmental damage per unit of GDP was the smallest compared to that in the
other countries, partly due to the small amount of environmental damage per euro of
product (Figure 6.11). The production of chemicals and chemical products in Austria, the
Netherlands and Denmark caused the largest amount of environmental damage per euro of
product value, with a relatively large share of damage caused by non-combustion processes
related to the production itself. The main contributors to this damage were emissions of SO2
and NOx.
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Figure 6.11

The share of greenhouse gases in the environmental damage was for most countries not
larger than 40%, which implies that the environmental damage from chemicals was mainly
caused by air pollutants. Between one third and two thirds of the environmental damage
from chemicals and chemical products was caused by production itself, which implies that
between one third and two thirds of that damage was upstream damage. For all countries,
less than 55% of the damage caused by chemicals and chemical products was caused
outside the country.

6.3.3

Basic metals

Basic metals include the production of all types of metals, such as iron and steel, aluminium,
copper, lead, zinc, tin and precious metals. Belgium, Austria and Germany had a relatively
large share of basic metals in the total environmental damage of their economies (Figure
6.3). These countries, together with the Netherlands and the United Kingdom, had the
greatest damage per euro of product (Figure 6.12). The environmental damage of basic
metals per unit of product value of basic metals produced in France and Denmark was
considerably less than in the other countries.
For all countries the majority of the environmental damage was caused by air pollutants and
for most countries a significant part of the environmental damage took place abroad. A large
part of the environmental damage during production in the Netherlands and to a lesser
extent in Austria occurred from emissions caused by other (non-combustion) processes in its
own sector, which were mainly emissions of CO2 and Pb (lead).

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Figure 6.12

6.3.4

Other mineral products

The other (non-metallic) mineral products mainly consist of construction materials, such as
cement, plaster, bricks, tiles and glass. Compared to the other basic materials, the
contribution of the other mineral products to the total environmental damage was relatively
small in the countries analysed (Figure 6.3). In Germany and Denmark, other mineral
products had the largest amount of production-chain-related environmental damage per euro
of product value. In these two countries, the damage ratio was almost 80% higher than in
the Netherlands (Figure 6.13). Especially air pollutants (SO2, NOx and PM2.5) caused more
damage in Germany and Denmark.
The shares of production-chain-related damage in most countries were caused by emissions
within their own country with a downwards outlier for the Netherlands (61%).

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Figure 6.13

6.4

Globalisation of supply chains

Production of materials and products is not limited to environmental damage on a national
level, but also leads to environmental damage in other countries. The previous section
already showed that the supply chains of products had a larger share of their environmental
damage abroad than the supply chains of raw and basic materials. This section shows how
the seven countries are intertwined with their production chains of basic metals and motor
vehicles.
Between a third and a half of the environmental damage caused by the production of basic
metals took place during the production itself (Figure 6.14). For all countries, between 30%
and 40% of the production-chain-related environmental damage from basic metals took
place in countries outside Europe. About 10% of the environmental damage from basic
metals in Austria and Denmark took place in Germany.

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Figure 6.14

Less than 10% of the environmental damage caused by the production of motor vehicles
took place during the production itself (Figure 6.15). For all countries, more than 50% of the
environmental damage caused by the production of motor vehicles took place outside the
home country, especially in non-OECD countries outside Europe. Germany is an important
link in the manufacturing industry of many of the other countries, especially in the motor
vehicle industry. As a consequence, 10% or more of the environmental damage caused by
car production in each of the other six countries, was generated in Germany.
Figure 6.15

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7 Comparison and validation
The monetary environmental damage of material-related economic sectors in seven
countries (from a production-based perspective), was presented in Chapter 5. The monetary
environmental damage of materials and products (from a production-chain perspective) was
presented in Chapter 6. This chapter compares the results from both perspectives, in order
to validate and further explain the differences between the countries.

7.1

Comparing the production-based results with the
production-chain results

Figure 7.1 summarises the per-country results for the production-based as well as for the
production-chain perspective for the three phases in our analysis. The figure combines the
results of Figures 5.4 and 6.7. 22 Furthermore, we distinguish for the production-chain
environmental damage, the damage caused from production in the corresponding sectors
themselves and the upstream damage from the production-chains of these sectors. Note that
the environmental damage from the producing sectors in Figure 7.1 not only includes the
direct emissions of these sectors, but also the damage from the upstream emissions as far
as they occur within the sectors themselves. In this way, for each phase this part of the
environmental damage from the production-chain perspective relates to the total emissions
of the relevant producing sectors within this phase and therefore can be compared with the
emissions in the production-based analysis.
Figure 7.1

22 To have more comparable numbers, Figure 7.1 presents the environmental damages from the production-

based perspective for 2008 while Figure 5.4 presents results for 2015.

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The confrontation of the results from the production-based analysis (in Chapter 5) and the
production-chain analysis (in Chapter 6) provides more insight into the similarities and
differences per phase and country between these two approaches. Here, we summarise the
major findings. First of all, in both approaches, the environmental damage from the
producing sectors mainly occurred during the material production (phase 2a), except for
Denmark, where the environmental damage from the production-based perspective was of
comparable magnitude in both phases 2a and 2b. Damage from raw material extraction
(phase 1) was relatively small in all countries.
Second, in all countries, the environmental damage from emissions in other sectors had a
significant share in the total environmental damage of all phases in the production-chain
analysis. Particularly in the manufacturing of products (phase 2b), the share of the emissions
in the producing sectors was relatively small, 9% on average. Much of the environmental
damage in phase 2b thus resulted from emissions by other sectors both domestically and in
other countries. In phases 1 and 2a, the average share of the emissions in the producing
sectors in total environmental damage was much larger, 61% and 39% respectively, with
large variations between countries for phase 1, with shares ranging from 30% in the
Netherlands to 86% in Denmark.
Third, differences between countries in environmental damage per unit of GDP are
remarkable, in particular, in phase 1. Both from the production-based and the productionchain perspective, the environmental damage per unit of GDP in phase 1 was the least in
Belgium and most in Denmark and the United Kingdom. In phase 2a, the environmental
damage was largest in Belgium (more than twice the average from both perspectives), as
production in this phase had a relatively large share in the Belgian economy (Appendix C). In
the production-based analysis, the amount of environmental damage in phase 2a was the
smallest in Denmark while, in the production-chain analysis, it was smallest in the United
Kingdom. For the Netherlands, the amount of environmental damage in phase 2a was
relatively large from the production-chain perspective, but close to the average from the
production-based perspective. A relatively large share of phase 2b industries in the German
economy, as well as a relatively large amount of upstream damage caused the
environmental damage in phase 2b for Germany to be the greatest.
One would expect the environmental damage as calculated in the production-based analysis
to be in line with the damage caused by emissions from the sectors producing the products
in the same phase in the production-chain analysis. For some countries, however, there are
substantial differences. Section 7.2 discusses the possible reasons for these differences.

7.2

Comparison of direct environmental damage

The comparison of the monetary environmental damage from the production-based with the
damage from the emissions of the producing sectors in the production-chain analysis reveals
substantial differences between the results of both approaches (see Figure 7.1). For several
countries, the environmental damage from the emissions by the producing sectors in the
production-chain analysis was larger than the calculated damage from the production-based
analysis. This is in particular the case for phase 2a, with the exception of France and the
United Kingdom. For phase 2b, it is just the opposite, environmental damage from the
production-based analysis being larger than for the producing sectors in the production-chain
analysis, with the exception of Belgium and Germany. For Denmark, differences are
remarkable for phases 1 and 2a, the direct environmental damage in the production-chain
analysis being more than 3 and 4 times larger than in the production-based analysis
respectively.
A couple of reasons might explain these differences. First, the production-chain approach
includes more substances in the calculation of the environmental damage than the
production-based analysis (see Table 3.1). The contribution of these additional substances is
PBL | 51

substantial for the environmental damage of some production processes, such as the
emission of lead in the production of basic metals in the Netherlands and Austria (see 6.3.3).
Figure 7.2 compares the environmental damage based on emission data from Eurostat and
EXIOBASE only for those pollutants that are included in both databases and therefore
excludes differences that may result from the extra substances included in the productionchain analysis. The comparison in Figure 7.2 shows that even for the same pollutants there
are substantial differences between the two databases.
Second, the two approaches differ as the production-based analysis used the sector
classification, while the production-chain analysis used the product classification, as
explained in Section 3.2.2. Although sectors cannot be compared one to one with products,
differences because of the different classifications are expected to be small. Differences may
be due to the fact that sectors have by-products in their production and that some materials
are produced as by-product in other sectors. We expect that at the level of phases, where
sectors (production-based analysis) and products (production-chain analysis) within the
same phase are aggregated, these differences are cancelled out, but did not investigate this
further.
Third, the production-based analysis calculated environmental damage on the basis of 2008
emission data, while the production-chain analysis was based on 2007 emission data. The
production-based analysis used 2008 data, because Eurostat has no air emission data for
Austria, France and Germany for years before 2008, while the production-chain analysis used
EXIOBASE data which are for 2007. To control for the effect of using different years in both
data sets, as much as possible, Figure 7.2 presents the environmental damage for 2007, for
those countries for which 2007 emission data are available in Eurostat (i.e. Belgium,
Denmark, the Netherlands and the United Kingdom).
From the comparison of the 2007 and 2008 emission data from Eurostat for those countries
that have data for both years, we discovered that environmental damage had decreased due
to considerable reductions in emissions. This was in particular the case in phase 2a, where
the amount of environmental damage in 2008 was 8% (the Netherlands) to 17% (Denmark)
smaller than in 2007, mainly because of fewer emissions of sulphur dioxides, nitrogen oxides
and carbon dioxide. For phase 2b, in Belgium, this was just the opposite, as environmental
damage increased by 5%, mainly due to an increase in the same emissions.
Finally, differences result from the fact that different data sets are used for the two
approaches. The environmental damage from the production-based perspective was
calculated by using Eurostat data based on ‘official’ data from national statistical institutes.
The production-chain analysis used data from the EXIOBASE database which, in turn, is a
compilation of data from various sources. In order to include national data in a consistent
multi-regional database, the original data had to be changed; for example, because national
supply and use tables and trade data are inconsistent. These changes resulted in deviations
from the official statistics, for example, with respect to the allocation of emissions to sectors
and countries (e.g. De Koning, 2018).
Figure 7.2 illustrates the differences between the emission data from EXIOBASE and
Eurostat. This comparison of both data sources confirms that the emission data differ
considerably.23 Figure 7.2 shows the relative contribution of different substances to the
environmental damage in the phases for only those substances that are included in both
databases. For each country, the environmental damage calculated from Eurostat data was
set at 100% and the environmental damage based on EXIOBASE emission data is presented
relative to the environmental damage based on Eurostat.

23 Vollebergh et al. (2017) also observe substantial differences between emission data in EXIOBASE and official
data sources for the Netherlands.

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Figure 7.2

A closer look at the environmental damage per substance shows that the differences
between both databases vary widely per country and phase. In several countries, non-CO2
greenhouse gas emission levels are higher in EXIOBASE than in Eurostat, which particularly
in phase 1 contributed to greater environmental damage. Also, emission levels of SOx and
PM2.5 are higher in EXIOBASE than in Eurostat, in several countries, which particularly
contributed to greater environmental damage in phases 2a and 2b. However, the opposite is
true for France and the United Kingdom, where EXIOBASE reports lower emission levels for
SOx and PM2.5 than Eurostat, in various phases. Emission levels of NOx are lower in
EXIOBASE than in Eurostat, in most countries and phases, with phase 1 in Belgium and
phase 2a in Denmark and the Netherlands being notable exceptions. For CO2, the
comparison gives a mixed picture, where for some countries EXIOBASE is rather in line with
Eurostat (Austria, France and the Netherlands) while in other countries EXIOBASE clearly
deviates from Eurostat.
Figure 7.2 thus shows that the emission data from EXIOBASE differ substantially from the
data from Eurostat. This largely explains the differences in the calculated environmental
damage in Figure 7.1. We recommend to take the outcomes of the production-based
perspective as leading, since they are based on ‘official’ statistics. The production-chain
analysis on the basis of EXIOBASE can then be used to indicate the environmental damage
that occurs upstream in the production chain, but when it comes to the results for specific
sectors or substances, one should be aware of the substantial deviations of EXIOBASE from
the official statistics.

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8 Key findings, implications and
conclusions
In the previous chapters we analysed the environmental damage caused by material
production and use in Austria, Belgium, Denmark, Germany, France, the Netherlands and the
United Kingdom. Investigating the environmental damage from two different perspectives
provided a wide view on the sources of environmental damage related to material production
and use. Moreover, as the reliability of the outcome depends on the quality of underlying
data, which are subject to large uncertainties and depend on various assumptions, using two
data sources side by side provided more robust insight into the various sources of
environmental damage and their relative contribution.
Our focus is on the environmental damage related to emissions to the atmosphere. Note that
the damage from other environmental externalities, such as noise, land use and the impact
of microplastics, was not included in these estimates, because of data limitations and large
uncertainties with regard to the environmental impacts and their value. Taking into account
these additional externalities would add to the environmental damage presented in this
study.

8.1

Key findings of the comparative analysis

We summarise the key findings from the previous chapters as follows:
•

The overall monetary environmental damage was found to have been considerable in all
seven countries, varying from 4% to 18% of GDP in 2015, which implies a direct welfare
loss of between 1500 and 2000 euros per capita for most countries (Figure 4.2).

•

Air pollutants, such as NOx and SO2, contributed for more than two thirds to total
environmental damage in countries, with an upward outlier of 91% for Denmark (Figure
4.3).

•

The most important sectors contributing to this damage were agriculture, transport,
households and manufacturing (Figure 4.2).

•

Despite a considerable decline between 2008 and 2015, in 2015 the environmental
damage was still mainly related to air quality and to a lesser extent to greenhouse gas
emissions (Figure 4.3).

•

The share of the material-related sectors (extraction of raw materials and the production
and use of materials) in gross value added was on average around 20%, in 2015, while
the share of environmental damage varied from less than 5% for Denmark to almost
40% for Belgium (Figure 4.4).

•

For all countries, except Denmark and Germany, the share of these sectors in
environmental damage was considerably larger than in gross value added. Material
producing industries (phase 2a), in particular, were responsible for the overall
environmental damage caused by the material-related sectors, whereas their
contribution in terms of gross value added was relatively small (Figures 4.4 and 5.4).

•

Sectors using materials in the manufacturing of products and construction (phase 2b)
also contributed considerably to the overall damage in 2015, whereas the contribution by
the extraction (phase 1) and waste sectors (phase 4) was much smaller and more
country-dependent (Figures 4.4 and 5.4). For instance, the relative damage from the
extraction industry (mainly mining and quarrying) in Austria and the United Kingdom was

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much larger than its contribution to GDP in narrow economic terms (see also Figure 5.1),
whereas the opposite is true for Denmark and the Netherlands.
•

The industries mainly responsible for the environmental damage from material
production in 2015 varied considerably between the countries and clearly reflected
international specialisation (Figure 5.2). Dominant polluters were the chemical industry
and refineries (in particular, in Belgium and the Netherlands), the manufacturing of basic
metals (in particular, in Austria) and the manufacturing of other materials (in particular,
in Austria and Belgium). These four industries contributed more or less equally in both
Germany and France.

•

The sector that by far dominated the contribution to environmental damage in phase 2b
was the construction sector (Figure 5.3). In Germany and the United Kingdom, the
composition of the contribution was very different, with a substantial role for the
automotive industry (Germany) and rubber and plastics industry (United Kingdom).
Manufacturing of metal products was also relatively important, in all of the countries. The
contribution of the waste sector appeared to have been quite modest (Figure 5.5).

•

There was rather a large variation in environmental efficiency in both the extraction and
certain material-producing industries (see Figure 5.7). The variation was largest for the
manufacture of wood and wood products, basic metals and other minerals, and for
refineries. In particular, France showed the lowest environmental efficiency for the
materials production industries and made modest improvements, between 2008 and
2015 (Figures 5.9–5.12).

•

The results of the production-chain analysis show considerably greater environmental
damage from material production and manufacturing of products compared to that from
the production-based analysis. This result can be expected, because the production-chain
analysis also includes damage of upstream domestic origin and from other countries
(Figure 7.1).

•

The production of coke and refinery products, chemical products and basic metals
contributed significantly to total environmental damage of material production,
regardless of whether emissions upstream in the production chain were included (Figure
6.3) or not (Figure 5.2).

•

The damage caused by construction dominated phase 2b, according to the productionbased approach (Figure 5.3), but would be much smaller if the damage caused by
upstream sectors would also be included (Figure 6.5). The contributions by other sectors,
in particular the automotive sector, other equipment and metal product manufacturing,
was found to be much more important in most countries under the production-chain
approach. This reflects the significant contribution of upstream emissions, such as from
the production of materials, to the overall environmental damage caused by the
production chains in these sectors. Germany stands out in this analysis, because of the
relatively large share of the manufacturing of motor vehicles and other machinery in its
economy (Appendix C).

•

The production-chain analysis also shows relatively large variation in environmental
efficiency for extracted raw materials and for manufactured materials (see Figure 6.8).
The variation in the environmental damage per euro of product value was particularly
large for the extraction of fossil fuels. Variation was much smaller for manufactured
products, similar to that in the production-based analysis.

•

A closer look at some of the manufactured materials, such as coke and refinery and basic
metals, also shows variations in the findings for the various countries. Apparently, in
2007, comparable materials were produced with differing environmental damage per
euro of product value (see Figures 6.9–6.12).

Our detailed data also allow for several other important conclusions relevant for circular
economy considerations:
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•

Clear indications were found that, in 2007, a considerable share of overall emissions
from raw material extraction and material producing industries was not directly linked to
combustion but to ‘other activities’, including industrial processes and non-energy use of
fuels (Figures 6.2 and 6.4). On average, about 40% of the environmental damage was
not related to combustion. A relatively large share was found to relate to the production
of chemicals and basic metals (Figures 6.10–6.13).

•

In general, the share of direct emissions related to combustion, in 2007, was also
relatively large for material production (see Figure 6.4). This was true in particular for
the production of basic metals and other mineral products (Figures 6.12 and 6.13). This
result is indicative for the fact that material processing plays an important role in
environmental damage related to both combustion and other use.

•

The contribution of ‘other activities’ to environmental damage was considerably smaller
in the manufacturing industry. In addition — and not surprisingly — most of the damage
from those activities occurred outside this sector, often even abroad (Figure 6.6).

8.2 Environmental damage and pricing policies for
materials
8.2.1

Accounting for environmental damage

Our analysis of environmental damage from the production and use of materials accounted
for direct welfare losses in the seven different countries. Using the production-based
analysis, we could simply aggregate the overall environmental damage from the different
sectors related to the extraction and the use of materials in production. Figure 8.1 provides a
rough estimate relative to GDP. With the exception of Denmark, in 2007 and 2015,
environmental damage from emissions to the air for all countries was around 5% of GDP.
Although this damage declined considerably between 2007 an d2015, still it was found to
have been considerable in 2015. Moreover, one should note that the damage caused by the
emission of polluting substances to the air is not the only externality relevant for
environmental damage. There is also damage from other environmental externalities that
were not included in these estimates, such as noise, land use and litter (including the plastic
soup), as well as non-environmental externalities, such as congestion.
In principle, the environmental damage could be reduced by using fewer primary resources.
This could be achieved through more efficient use of natural resources, as well as by
increased levels of recycling and reuse of products and materials. Reusing products means
that fewer products need to be manufactured, which in turn means a reduction in the
amount of natural resources extracted. Recycling of products into secondary resources
means that primary resources are being substituted with secondary resources. This usually
requires less energy compared to the manufacturing of materials and products from primary
resources. Thus, a further closing of resource loops would save energy and reduce
environmental damage. This is also the reason that striving for a circular economy is closely
related to the energy transition and to climate policy.
Government policy could give incentives to improve production processes with respect to the
environmental damage they cause and hence reduce environmental pressure caused by
product use. In many cases, current prices of fossil fuels, natural resources and materials do
not reflect the entire environmental damage caused by the extraction, processing, use and
consumption of natural resources. Government policies, such as taxation and regulation,
could then particularly contribute to reducing the environmental damage. In short, when not
all environmental damage is incorporated into the prices of the primary flow, insufficient use
will be made of the secondary flow, which is when we speak of a relatively linear economy.

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Figure 8.1

8.2.2

Environmental damage and pricing policies in production

Obvious candidates to reduce environmental damage are policies that cover multiple or all
sectors. Such policies may have more impact than those focusing specifically on one sector
or that are unidimensional. One set of cross-cutting instruments are pricing policies such as
environmental taxation. Figure 8.2 summarises revenues from existing environmental taxes
for the seven countries in our comparison.
Most countries have implemented environmental taxes, with revenues between somewhat
below 2% (Germany) and 4% (Denmark) of GDP in 2015. Revenues relative to GDP
decreased in Denmark, the Netherlands, Germany and also in Belgium, and only slightly
increased in the other countries between 2008 and 2015. More importantly, in all seven
countries, in 2008 and 2015, revenues were mainly obtained from taxes on energy use,
including taxes on fuels for transport. In Denmark, the Netherlands and to a lesser extent in
Austria and Belgium the contribution of transport taxes, such as taxes on car sales, was also
substantial. However, the contribution of pollution and resource taxes was rather small for all
countries. The tax revenues as a percentage of GDP were the highest in the Netherlands
(approximately 0.5%) while in Denmark, Belgium and France, this was no more than 0.1%
of GDP.
Tax revenues as a percentage of GDP can be directly compared with the monetary
environmental damage caused by the emissions of polluting substances to find out whether
the material using sectors pay for their damage. The environmental damage as calculated in
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Figure 8.2

Note 1: Energy taxes include also taxes on fuel for transport and on greenhouse gases. Transport taxes
are without taxes on fuel for transport. Pollution taxes consist of taxes on the emission of other
substances than greenhouse gases to the air, water or soil, on noise and on waste management,
including taxes on specific waste products such as packaging. Resource taxes consist of taxes on the
extraction of raw materials, on the harvesting of biological resources (such as logging, hunting, fishing),
on water abstraction and on landscape changes.
Note 2: in Belgium, France and the Netherlands, pollution and resource taxes are not differentiated
Source: Eurostat (June 2019)

the Chapters 5 and 6 typically relates to the tax base and rate of so called corrective
Pigouvian prices, such as environmental taxes. For all countries, the monetary environmental
damage was substantially greater than the environmental tax revenues. Although this socalled Pigouvian price gap decreased between 2008 and 2015, for all countries, it was still
substantial in 2015. This gap even remains if the revenues from other pricing instruments,
such as the EU ETS CO2 price, would also be taken into account. Under this cap-and-trade
programme, companies also have to pay for their greenhouse gas emissions. The ETS price
was about 24 euros per tonne CO2 in 2008, and 8 euros per tonne in 2015. Recently the
price considerably increased to approximately 25 euros per tonne, in the second half of
2019, but this price is still substantially lower than the social cost of carbon estimate for the
environmental damage caused by greenhouse gases. We therefore conclude from our
comparison of the monetary environmental damage with the revenues of environmental
taxes, that a Pigouvian gap exists and social welfare would increase if emissions would be
priced according to the damage they cause to society.

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8.2.3

Options for additional instruments

The Pigouvian price gap indicates there is room for additional pricing policies to better
internalise the environmental damage, in particular in relation to the extraction and use of
materials in the economy. Implementing pricing policies such as taxes, levies or other pricebased instruments to reduce environmental damage requires insight into existing
environmental market-based policies. Vollebergh et al. (2017), for instance, show that taxes
in the Netherlands are mainly related to the burning of fossil fuels, but that the main part of
environmental damage from using raw materials is still untaxed (except for waste).
A next logical step is to investigate to what extent (‘scope’) and how strongly (‘stringency’)
environmental damage is priced in the different countries and how this differs across these
countries. This step, however, is beyond the aim of this study. The rough comparison of the
overall country specific damage and its current tax base suggests that the findings for the
Netherlands are likely to carry over to the other countries in this comparison.
In summarising our key findings, in the search for a proper pricing policy, we conclude:
-

Environmental damage during the first phase of the production chain (the extraction of
raw materials), was much smaller than that caused during the second phase. In
particular, producing materials was most polluting. Not only the direct environmental
damage, but also the damage upstream the production chain — as revealed in the
production-chain analysis — was relatively great for material production. In most
countries, the share of the material production industries in total gross value added was
much smaller than their share in total monetary environmental damage.

-

Note that, furthermore, the largest part of the environmental damage considered in this
study was found to be related to air pollutants. This applies to both the production-based
and production-chain analysis and implies also that most of the damage directly affected
the population of the country from where these emissions were generated.

-

Environmental damage from material production was not only related to combustion of
fossil fuels, but also to a large extent to non-energy use of fuels and other industrial
processes.

From these key findings of the comparative analysis we derive the following suggestions for
policies that aim to internalise environmental damage in relation to circular economy
considerations:
-

Pricing of emissions is the first-best strategy for the circular economy to work properly.
As much of the damage was found to be directly related to the use of fossil fuels, the
most effective cross-cutting policy is likely to implement pricing of fossil fuel use over the
entire base of its usage, i.e. both emissions from combustion and from non-energy use
of fuels. 24

-

A substantial part of installations within the material production (phase 2a) as well as
large production installations in phase 2b, is part of the EU Emissions Trading System
(EU ETS). The EU ETS, however, only prices the direct emissions of greenhouse gases.
Emissions of air pollutants, that according to our findings contribute to more than 50% of
the environmental damage of these industries, are not explicitly priced by the EU ETS.

-

Taxes on energy not only implicitly put a price on CO2 emissions, but also other
emissions related to energy use. Most energy taxes, however, only apply to
consumption-based fossil fuel use, such as heating from natural gas in households or
motor fuels in cars. In general, energy taxes for energy-intensive industries are relatively
low compared to energy taxes paid by households (Parry and Vollebergh, 2017).

-

The scope of the pricing approach should go beyond the pricing of CO2 emissions from
combustion only and also apply to emissions from the non-energy use of fuels and other

24 Section 2.2 describes the various emissions related to the non-energy use of fuels.

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industrial processes. Our findings show that, in 2007 and 2015, in particular four sectors
were responsible for the main part of the environmental damage in the materials
production sector: basic metals, other mineral materials, refinery and chemicals. A
substantial part of the environmental damage caused by these industries came from
energy use (combustion), but another part related to the non-energy use of fossil fuels,
such as the use of natural gas in the production of ammonia and the use of coking coals
for the production of iron and steel. Moreover, in these industries several industrial
processes not related to fossil fuel use contributed to environmental damage, such as the
production of non-ferrous metals and cement.
-

The environmental damage from other activities than the combustion of fossil fuels also
relates to other substances than greenhouse gases which fall beyond the scope of the EU
ETS. The EU ETS, therefore, not necessarily contributes to reduced emissions of air
pollutants. Whereas the resulting air quality improvements would lead to a direct
improvement of the welfare of European citizens, the reduction of greenhouse gases
primarily contributes to welfare improvements for world citizens in the long run.
Therefore, an obvious candidate for better environmental pricing is to increase the
stringency of policies that are directly or indirectly aiming at emissions related to air
quality, such as emission standards on car exhausts and other installations as well as
energy taxes.

-

This study shows that, also in their extraction phase, fossil fuels were mainly responsible
for the estimated damage in 2007 and 2015. As explained before, crude oil and natural
gas extraction were responsible for considerable damage in both Denmark and the
United Kingdom and, to a lesser extent, also in the Netherlands. Although pricing of
extraction of fossil fuels may be advisable from a theoretical perspective (i.e. tax an
activity on the place where the damage occurs), it might not be from a practical
perspective. More downstream pricing measures, such as EU ETS and energy taxes, also
contribute to lower levels of upstream damage, as higher fuel prices reduce the demand
for fossil fuels, and may more easily be enforced.

-

In refineries and the chemical industry, for example, part of the carbon contained in
fossil fuels remains stored in the products, such as in motor fuels, plastics and lubricants.
Substances are emitted during the use of those products and their disposal by way of
incineration (see also Section 2.2). Pricing the total input of fossil fuels in these
industries based on their carbon content, therefore, would not only put a price on the
direct emissions, but also on downstream emissions of CO2 (note that the major part of
these emissions was not included in the analysis in Chapter 6). To avoid a double pricing
of the emissions related to coke and refinery products, downstream CO2 emissions, for
example, from fuel used in transportation and from plastic waste incineration, should not
be priced again, in this case. Emissions of other substances, however, may still justify
pricing downstream emissions.

-

Our estimates of the environmental damage to the air from waste management are
relatively low compared to the damage from the other phases in the material production
chain. Pricing measures in the waste management phase should account properly for
both the direct and indirect damage. Part of the CO2 emissions might be exempted as
long as this compensates for carbon captured from the atmosphere earlier in the
production chain, which is true for biowaste in particular, but should not apply to damage
caused by other substances. Also, the fossil-carbon part of the waste, such as plastics,
should be priced as long as these products or materials were not taxed earlier in the
production chain.

-

Markets for basic materials and also for the manufacturing of products are, in general,
global markets. Pricing of (the inputs of the) products in these markets, may have
harmful impacts on the competitiveness of companies that produce these materials or
products. Such negative impacts, however, can be mitigated by implementing pricing in
a coalition of countries, for example in (a part of) the European Union (Parry and

PBL | 60

Vollebergh, 2017; Text box 1). In any case, a gradually increasing pricing level may be
more efficient as it stimulates innovations and the switch to cleaner production
processes. Note that the current EU ETS price is substantially lower than the
environmental price for greenhouse gases as used in this study (57 euros per tonne
CO2).
Text box 1 Unilateral pricing policies and industrial competitiveness
Differences between countries in the stringency level of their environmental policies may affect the
competitiveness of industries. For example, policies that put a price on greenhouse gas emissions are
likely to increase the production cost of emissions-intensive industries, while their competitors in other
countries might not be confronted with this additional cost. As a result, these companies may lose
international market shares due to lower export levels, higher import levels, and, in the long run, relocation
of production to countries with less stringent environmental policies. An alternative view is that
environmental regulation could actually trigger innovation and may thus have a net positive effect on
corporate competitiveness (Porter and Van der Linde, 1995). Empirical evidence to support this so-called
Porter hypothesis is, however, inconclusive (Ellis et al., 2019; Ambec et al., 2013). More in general, there
is also little evidence, to date, of environmental regulations having a large adverse effect on
competitiveness (Ellis et al., 2019; World Bank Group, 2019).
Dechezleprêtre and Sato (2017) provide an extensive review of ex-post empirical studies on the impact of
environmental regulations on industrial competitiveness. They concluded that ‘implementing ambitious
environmental policies can lead to small, statistically significant adverse effects on trade, employment,
plant location, and productivity in the short run, particularly in pollution- and energy-intensive sectors.’
(Dechezleprêtre and Sato, 2017, p. 201). The sectors most vulnerable to adverse effects on
competitiveness were found to be the basic industries in phase 2a of the current study, such as the
manufacture of basic metals, other minerals, chemicals and paper, and refineries, because they compete
mostly on international markets. Dechezleprêtre and Sato also concluded, however, that ‘the scale of these
impacts is small compared with other determinants of trade and investment location choices’
(Dechezleprêtre and Sato, 2017, p. 201).
Another, related issue is that, in the case of global environmental problems such as climate change,
environmental benefits of unilateral policies are also at risk if domestic emission reductions are offset by
increasing emission levels in other parts of the world (e.g. Verde, 2020). However, the larger the size of
a country coalition implementing policies to reduce emissions, the smaller the potential magnitude of such
emission leakages (Burniaux and Oliviera Martins, 2012; Böhringer et al., 2014). Extending coalitions,
therefore, would increase the environmental effectiveness of unilateral emission pricing policies.
Alternatively, if a coalition fails, countries may introduce measures to counter emission leakages, such as
a border charge on imports, a border rebate for exports, or compensation for the additional costs incurred
by the affected industries (Böhringer et al., 2014). Such compensation may consist of tax exemptions and
rebates and free allocation of emission allowances in the case of cap-and-trade systems. Compensating
companies for cost increases by subsidising investments in emission-reducing technologies may also
reduce emission leakage. Bollen et al. (2019) show that carbon leakage, i.e. the increase in CO2 emissions
elsewhere in the world, as a result of a carbon tax on the energy-intensive industry in the Netherlands
alone, can be reduced by 80% if tax revenues would be recycled by providing a subsidy on emission
abatement to the industry rather than by a lump sum transfer to households. Brink and Vollebergh (2019)
compare the impacts of unilateral carbon pricing in the Netherlands with carbon pricing in a coalition of
north-western European countries. They analysed the impacts of a carbon tax on the power sector and
the energy-intensive industry, in addition to the price of EU ETS emission allowances by simulations with
a global computable general equilibrium model. They found the carbon leakage rate to be 60% lower if
the Netherlands would implement such carbon pricing together with Belgium, Germany and France,
compared to the leakages that would occur if the same carbon price would be implemented unilaterally.

PBL | 61

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PBL | 63

Appendices
A Classifications
A.1 Sectors, materials and products
Table A.1
Overview of the sectors, materials and products that were included in the
production-based (Chapter 5) and production-chain analysis (Chapter 6).

Phase
1

Sectors (Eurostat)

Materials and products (EXIOBASE)

Mining and quarrying

Coal lignite peat

Forestry and logging

Products of forestry

Crude petroleum and natural gas
Metal ores
Other mining and quarrying
2a

Manufacture of textiles, wearing apparel,

Textiles

leather and related products
Manufacture of wood and of products of wood

Wood and wood products

and cork, except furniture; manufacture of
articles of straw and plaiting materials
Manufacture of paper and paper products

Pulp paper and paper products

Manufacture of coke and refined petroleum

Coke and refinery products

products
Manufacture of chemicals and chemical

Chemicals and chemical products

products
Manufacture of other non-metallic mineral

Other mineral products

products
Manufacture of basic metals

Basic metals
Secondary raw materials

2b

Wearing apparel leather
Printing and reproduction of recorded media
Manufacture of basic pharmaceutical products
and pharmaceutical preparations
Manufacture of rubber and plastic products

Rubber and plastic products

Manufacture of fabricated metal products,

Fabricated metal products

except machinery and equipment

Office machinery computers

Manufacture of computer, electronic and

Radio television etc

optical products
Medical and other instruments
Manufacture of electrical equipment

Electrical machinery

Manufacture of machinery and equipment

Machinery and equipment other

n.e.c.
Manufacture of motor vehicles, trailers and

Motor vehicles

semi-trailers
Manufacture of other transport equipment

Other transport equipment

Manufacture of furniture; other

Furniture, other manufactured goods

manufacturing
Construction
4

Sewerage, waste management, remediation
activities

PBL | 64

Construction work

A.2 Countries and regions
Table A.2
EXIOBASE countries and regions
Aggregated regions

EXIOBASE regions

Countries in analysis

Austria, Belgium, Germany, Denmark, France, Netherlands, United
Kingdom

Rest of Europe

Bulgaria, Cyprus, Czech Republic, Estonia, Spain, Finland, Greece,
Hungary, Ireland, Italy, Lithuania, Luxembourg, Latvia, Malta,
Norway, Poland, Portugal, Romania, Sweden, Slovenia, Slovak
Republic, Switzerland, Rest of Europe

Rest of OECD

Australia, Canada, Japan, Mexico, South Korea, Turkey, United States

Rest of the world

Brazil, China, India, Indonesia, Russian Federation, South Africa,
Taiwan, Rest of Asia and Pacific, Rest of America, Rest of Africa, Rest
of Middle East

PBL | 65

B Data and the MRIO model
B.1 Environmental prices, correction factors and deflators
Table B.1
Environmental prices per substance for the Netherlands and the EU (central values
in euros2015 per tonne)

CO2
CH4
N2O
SOx
NOx
NH3
CO
PAHs
Benzo(a)pyrene
Benzo(b)fluoranthene
Benzo(k)fluoranthene
Indeno(1,2,3-cd)pyrene
Other PAH
PCBs
Dioxin (as PCDD_F)
Benzene (HCB)
NMVOC
PM2.5–10
PM2.5
PM2.5 road
Heavy metals
Arsenic (As)
Cadmium (Cd)
Chromium (Cr)
Copper (Cu)
Mercury (Hg)
Nickel (Ni)
Lead (Pb)
Selenium (Se)
Zinc (Zn)
SF6
HFC (as CO2)
PFC (as CO2)
Nitrogen (N)
Phosphorus (P)
Source: CE Delft (2017), CE Delft (2018)

PBL | 66

Netherlands
57
1750
15010
24930
34660
30530
96

Europe
57
1750
15010
14974
14800
17500
53

11430
2281
1773
6236
162
11
67055950000
195000
2100
4930
79530
149350

11430
2281
1773
6236
162
11
67055950000
91200
1150
2399
38700
72675

1033000
1159000
531
4200
34481000
133000
5908000
90200
11820
1331000
57
57
3110
1900

862000
589000
498
3880
34481000
85700
5370000
90200
6660
1331000
57
57
3110
1900

Table B.2
Correction factors for differences in income, per country

AT
BE
BG
CY
CZ
DE
DK
EE
ES
FI
FR
GR
HU
IE
IT
LT
LU
LV
MT
NL
PL
PT
RO
SE

Austria
Belgium
Bulgaria
Cyprus
Czech Republic
Germany
Denmark
Estonia
Spain
Finland
France
Greece
Hungary
Ireland
Italy
Lithuania
Luxembourg
Latvia
Malta
Netherlands
Poland
Portugal
Romania
Sweden

1.00
1.00
0.43
0.68
0.72
1.00
1.00
0.63
0.74
0.87
1.00
0.58
0.59
1.32
0.78
0.63
1.87
0.56
0.73
1.00
0.59
0.65
0.50
0.97

SI
SK
GB
US
JP
CN
CA
KR
BR
IN
MX
RU
AU
CH
TR
TW
NO
ID
ZA
WA
WL
WE
WF
WM

Slovenia
Slovak Republic
United Kingdom
United States
Japan
China
Canada
South Korea
Brazil
India
Mexico
Russian Federation
Australia
Switzerland
Turkey
Taiwan
Norway
Indonesia
South Africa
RoW Asia and Pacific
RoW America
RoW Europe
RoW Africa
RoW Middle East

0.69
0.65
1.00
1.11
0.85
0.35
0.91
0.74
0.37
0.17
0.40
0.55
0.94
1.22
0.46
0.97
1.21
0.28
0.32
0.22
0.36
0.28
0.12
0.47

Table B.3
Deflators for calculating 2007/2008 GDP and production values in euros2015 (based
on Eurostat figures on GDP at market prices).

Austria
Belgium
Germany
Denmark
France
Netherlands
United Kingdom

2007
1.16
1.12
1.12
1.14
1.08
1.08
1.08

2008
1.13
1.10
1.11
1.09
1.06
1.05
1.22

PBL | 67

B.2 MRIO model
A multi-regional input-output (MRIO) model was used to calculate the environmental damage
of materials and products. The model is based on a model that was used for calculating the
supply-chain-related biodiversity losses for economic sectors (Wilting and Van Oorschot,
2017) and adjusted for environmental prices and damage. Our model for calculating the
production-chain environmental damage caused by materials or products j, Ej, was:

Ej = i (P ∘ D) (I – A)-1 xj

(1)

With (for an r-region economy with s sectors per region and t the number of environmental
pressures):

i

i is a (1 x t) vector of ones used for adding up the environmental
damage caused by individual environmental pressures;

𝒑𝒑1,1
𝑷𝑷 = � ⋮
𝒑𝒑t,1

⋯
⋱
⋯

𝒑𝒑1,r
⋮ �
𝒑𝒑t,r

P is the (t x r·s) matrix of environmental prices; pi,j is a (1 x s)
row vector of environmental prices of direct environmental
pressure i in region j (depicting the environmental price per unit
of environmental pressure);

𝒅𝒅1,1
𝑫𝑫 = � ⋮
𝒅𝒅t,1

⋯ 𝒅𝒅1,r
⋱
⋮ �
⋯ 𝒅𝒅t,r

D is the (t x r·s) matrix of direct environmental pressures; di,j is
a (1 x s) row vector of direct environmental pressure intensities
of pressure i in region j (depicting the direct environmental
pressures of one unit of production, for all sectors);
Matrix I is the identity matrix; (I – A)-1 is the Leontief inverse
matrix (named after Russian economist Wassilli Leontief who
received the Nobel Prize in 1973 for his pioneering work on inputoutput analysis). For a specific material or product, the
corresponding column in the Leontief inverse shows how much
of each product in the table must be produced to produce one
unit of the specific product. Each column describes the entire
chain of the corresponding product.

I

𝑨𝑨𝟏𝟏𝟏𝟏
𝑨𝑨 = � ⋮
𝑨𝑨𝒓𝒓𝒓𝒓

⋯ 𝑨𝑨𝟏𝟏𝟏𝟏
⋱
⋮ �
⋯ 𝑨𝑨𝒓𝒓𝒓𝒓

A is the (r·s x r·s) matrix of input coefficients; Aij, i=j is the (s x
s) matrix of domestic input coefficients of region i, Aij, i≠j is the
(s x s) matrix of import coefficients of region j importing from
region i.
The domestic and import coefficients depict the intermediate
input requirements per unit of production (output), for each
sector.

xj

xj is the (r·s x 1) adjusted vector of production with zeros for all
sectors except for sector j. Note that this is different from
consumption-based footprints that have a focus on final demand
(often characterised by y).

Operation ∘ is the element-wise multiplication of two matrices, named the Hadamard product.

PBL | 68

C Detailed sector data
C.1 Gross value added by industry
Million euros (2015 prices)

2008
Austria

Belgium

German
y

Denmar
k

France

Netherlands

United
Kingdom

2015
Austria

Belgium

Germany

Denmark

France

Netherlands

United
Kingdom

Forestry

1277

88

3501

185

3016

102

547

1220

92

3649

260

3349

130

926

Mining and quarrying

1299

336

5916

6215

2779

16644

39220

1148

222

4714

3141

1944

12569

27682

Manufacture of textiles

1193

2577

8685

469

6328

1207

10006

1080

1479

7369

400

5246

1099

8466

Manufacture of wood

2242

873

7088

826

3196

1082

4972

2292

740

7199

579

2919

792

3936

Manufacture of paper

1532

945

9617

488

3829

1441

5646

1903

1066

11190

410

4385

1607

5369

Refineries

1498

892

7474

7829

2494

784

4913

447

2124

5637

474

2621

1504

3807

Manufacture of chemicals

1910

7120

45767

1570

15481

10419

17111

2751

9176

46771

2416

19595

9497

16567

Manufacture of other minerals

2775

2595

17437

1345

7625

2485

7865

2554

2365

16762

1090

7803

1631

6935

Manufacture of basic metals

6664

1181

22493

394

4827

1837

6866

4183

2613

21648

403

6261

1867

5873

Printing

1104

1567

8298

769

3581

1848

8144

927

999

7524

401

3787

1450

6814

Manufacture of basic pharmaceuticals

1352

4997

24625

4217

11469

1639

22225

2191

5709

23207

8076

12412

2423

16734

Rubber and plastic production

2358

2216

26772

1555

13967

2797

14164

2398

2059

28685

1252

11127

2746

12478

Metal products

5402

4048

52827

2890

20674

6912

25352

5747

3692

54067

2373

19602

6637

23476

Manufacture of computers

2491

2263

28616

1906

8194

4949

11696

2858

1250

38946

2125

11497

4743

10603

Manufacture of electrical equipment

4780

2284

43741

1181

8831

3120

8602

4815

1374

42163

1018

6792

2611

7356

Manufacture of machinery

7588

4582

106256

5845

15014

8076

18332

8118

3500

95779

4925

12175

9635

15348

Manufacture of motor vehicles

4050

3755

87124

424

19204

2859

15003

3753

2290

123292

349

13235

2082

18711

Manufacture of other transport equipment

1172

652

12236

220

15288

1753

9468

828

931

15447

198

16682

1434

15222

Other manufacturing

3071

1490

23723

2229

8648

6411

12836

2609

1386

24222

2488

7219

5098

12982

Construction

23669

18302

116089

12032

129671

32454

136372

19173

19682

125771

11750

107884

26394

140897

Sewerage and waste management

2235

2467

16271

1807

12007

2338

15028

2646

2512

23892

1615

10790

3108

16121

Source: Eurostat, National accounts aggregates by industry (up to NACE A*64)

PBL | 69

C.2 Output value by industry
Million euros (2015 prices)

2008
Austria

Belgium

German
y

Denmar
k

France

Netherlands

United
Kingdom

2015
Austria

Belgium

Germany

Denmark

France

Netherlands

United
Kingdom

Forestry

2580

288

5034

520

5174

235

1689

2467

413

6338

657

6534

265

2107

Mining and quarrying

2768

1104

15261

10920

6378

27272

76878

2134

646

11681

4065

4618

18874

49289

Manufacture of textiles

3717

7257

26290

1510

21207

3546

14950

3283

5122

22428

Manufacture of wood

8764

3666

23761

2222

12496

3226

10370

8291

3138

25513

1228

16318

3386

17592

1524

10067

2595

10746

Manufacture of paper

6785

4590

41693

1430

19604

7211

16446

6219

4295

37895

1290

16305

6546

16158

Refineries

6927

38363

85240

5325

62146

30916

40456

4333

26101

54928

3705

35430

25285

25829

Manufacture of chemicals

8411

34478

137769

4437

69250

43481

59157

13142

32137

137730

5545

64869

41782

53998

Manufacture of other minerals

8017

8789

46558

3449

27775

6957

22220

6468

6908

44272

2712

22100

5013

21750

Manufacture of basic metals

17536

24859

124699

1827

42893

9278

30217

15834

18345

98316

1322

30588

7051

26298

Printing

3520

4050

25466

2034

12861

5781

19599

2472

2963

18437

1040

8856

3751

17319

Manufacture of basic pharmaceuticals

3457

10332

47073

7132

26876

6140

30049

4269

15736

46439

12350

26029

5784

30343

Rubber and plastic production

6285

6457

74992

3566

36114

7717

28914

6275

7007

78500

2868

29076

8322

29454

Metal products

15523

15932

135608

7627

55901

19132

47912

14470

11404

125553

5952

49636

19060

47154

Manufacture of computers

6487

4567

90786

4474

29388

28109

29871

6549

3464

82722

4361

24431

40332

26584

Manufacture of electrical equipment

12319

4411

110972

3025

24920

6492

19109

10473

3592

102011

2499

19920

6587

19018

Manufacture of machinery

21943

11510

260103

19570

46331

21526

42607

22273

9413

245082

18238

36714

25379

45737

Manufacture of motor vehicles

15710

18375

340236

1163

70393

8875

60051

14885

14603

383326

879

56461

10078

73234

Manufacture of other transport equipment

3543

1747

36668

1313

46845

7467

32068

2411

2264

45167

623

69137

7625

43986

Other manufacturing

8132

4165

53735

4815

18866

12682

23708

7274

4369

52752

5773

16313

10687

24658

Construction

51146

63820

246186

35525

300404

104353

343875

50171

67885

279630

32097

271069

84840

362113

Sewerage and waste management

6004

6680

43229

3839

26456

7528

38712

6509

8009

53120

4281

27213

8577

38692

Source: Eurostat, National accounts aggregates by industry (up to NACE A*64)

PBL | 70