Aggregation bias in 'consumption vs production perspective' comparisons: evidence using the Italian and Spanish NAMEAs

The integration of the National Accounting Matrix including Environmental Accounts (NAMEA) and input output (I–O) tables (often referred to as Environmentally extended Input–Output Analysis – EE-IOA – based on NAMEA data) represents a new way to analyse the determinants of the income–environment relationships in international settings. Moreover, EE-IOA provides analyses of the emissions embodied in domestic consumption and domestic production by considering the structure of intermediate inputs and environmental efficiency in each production sector. A comparison of a production and consumption perspective may have relevant policy implications. A consumption and production emission ratio greater than 1 denotes a country that is a net exporter of emissions in the sense that it requires an amount of emissions embodied in imports, and thus produced abroad, that is greater than the amount of emissions embodied in export. Usually, the environmental policy points mainly to production activities as responsible actors of impacts to be targeted by legislation and regulation. Looking at the final consumption demand for vertically integrated domestic and international environmental impacts can push policy attention towards the possible role of consumers as actors to be targeted with particular environmental policies, together with the international responsibility for environmental externalities of pollutants’ emissions produced abroad but domestically demanded. Our results suggest that special attention must be paid when interpreting the EE-IOA of country estimated amounts of embodied emissions, both in domestic final demand and those directly associated with the production sectors when the sectoral aggregation level has a low definition as considered in some recent similar studies.