Modeling reductions in the environmental footprints embodied in European Union’s imports through source shifting

The European Union (EU) is responsible for a disproportionately large global environmental footprint, in particular through its imports. Import embodied footprints (IEFs) vary significantly depending on the country of origin, which suggests that sourcing the same goods from different producer countries could change – and potentially reduce – Europe’s IEFs.

This paper explores how far Europe’s IEFs could be reduced by sourcing products that are currently imported to the EU from the countries with the lowest impact intensities per million euro. It looks at four environmental pressures: carbon emissions and use of materials, water and land). It does so using environmentally extended multiregional input-output (EE-MRIO) analysis using EXIOBASE, the same MRIO used for the international component of the PRINCE model.

The analysis suggests that just 13 of EXIOBASE’s 200 product groups are responsible for more than half of all impacts embedded in imports for each pressure. With only a few exceptions, optimizing sourcing of a product group in order to minimize one pressure reduces footprints in the other three pressures. The pressure with the highest scope for optimization is water. Optimizing carbon emissions and materials use yields the largest reductions in the other environmental pressures.

The paper also reflects on some significant limitations of EE-MRIO analysis for studying the impacts of source shifting. One is the assumption that product groups represent the same mix of products, whichever country they come from. In fact, product groups can be rather broad, and it was notable that four of the top 13 product groups were “n.e.c.” (not elsewhere classified) categories, which can be highly eclectic – for example, “chemicals n.e.c.” could include anything from fertilizer to pharmaceuticals. Thus, shifting sources could also entail a significant shift in the products imported. Another limitation is the assumption that imports of the same value represent the same quantity of product, whereas in fact imports from different producers (and different products within a product group) are differently priced. The authors  discuss how EE-MRIO could be made more credible and policy relevant for exploring the impacts of source shifting on IEFs by disaggregating n.e.c. product groups, and incorporating dynamic effects.