Attribution of Pollution Generation to Local Private and Public Demands in a Small Open Economy: Results from a SAM-Based Neo-Classical Linear Attribution System for Scotland

For the construction of environmental accounts, Input Output (IO) systems have a number of clear advantages. First IO is an internally consistency, rigorous accounting framework. Second, the characteristics of IO systems are well known. Third, IO systems focus on the link between intermediate and final demands, and can attribute the indirect, intermediate use of commodities to elements of final demand. However, there are concerns over the degree of appropriateness of the standard IO attribution approaches (McGregor et al, 2001a). If standard Type I output-pollution multiplier, especially in the case of a very open economy such as Scotland, responsibility for much pollution can be attributed to external sources of demand. Furthermore, when Type II output-pollution multipliers are utilised, local private consumption virtually disappears as a pollution source. This seems to be at variance with the common environmental approach, which would wish to place domestic consumption at the centre of pollution attribution.