Environmentally Extended Input-Output Analysis
Also known as: EEIO, Environmental Input-Output Analysis, Pollution Input-Output Model, Footprint Input-Output Analysis
Environmentally extended input-output (EEIO) analysis appends satellite accounts of physical environmental flows — greenhouse-gas emissions, energy, water, land, and materials — to a monetary input-output table so that environmental burdens can be allocated through supply chains to the final demand that ultimately drives them. By multiplying direct environmental-intensity coefficients by the Leontief inverse, EEIO computes the total burden embodied in each unit of final demand, providing the standard framework for consumption-based carbon footprints and emissions embodied in trade.
Key highlights
- Provides complete, boundary-consistent supply-chain coverage with no truncation, unlike bottom-up process methods.
- Allocates burdens to final consumers, enabling consumption-based footprints and emissions-embodied-in-trade accounting.
- Reuses the existing Leontief inverse, so any satellite account (carbon, water, land, materials) plugs in with one multiplication.
- Built on official national accounts and environmental satellite accounts, giving an auditable, reproducible basis.
Intuition
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How it works
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When to use it
Use EEIO when you need to attribute environmental burdens — carbon, energy, water, land, or materials — to the final demand or consumption that drives them across complete supply chains, especially when comprehensive, economy-wide coverage matters more than process-level detail. It is the standard method for consumption-based (footprint) carbon accounting, emissions embodied in international trade, and national or regional environmental footprints. Because it inherits the input-output assumptions of fixed coefficients, linearity, and sectoral aggregation, it is best where boundary completeness and consistency are paramount and acceptable where within-sector product heterogeneity is not the central concern.
Strengths & limitations
- Provides complete, boundary-consistent supply-chain coverage with no truncation, unlike bottom-up process methods.
- Allocates burdens to final consumers, enabling consumption-based footprints and emissions-embodied-in-trade accounting.
- Reuses the existing Leontief inverse, so any satellite account (carbon, water, land, materials) plugs in with one multiplication.
- Built on official national accounts and environmental satellite accounts, giving an auditable, reproducible basis.
- Sectoral aggregation masks product heterogeneity, so all output of a sector is assumed equally polluting per dollar.
- Monetary flows are imperfect proxies for physical flows, introducing price-driven distortions in intensity estimates.
- Fixed coefficients and base-year tables lag behind technological change in emissions intensity.
- Allocating imports requires multi-regional tables or restrictive domestic-technology assumptions that bias trade footprints.
Common pitfalls
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Applications
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Frequently asked
What is the difference between production-based and consumption-based emissions in EEIO?
Production-based emissions are those physically released within a sector or territory. Consumption-based emissions reallocate burdens to the final demand that drives them: EEIO multiplies direct intensities by the Leontief inverse to trace emissions through supply chains and assign them to the consumers of the final products. The two differ most for trade-exposed economies, since consumption-based accounting includes emissions embodied in imports and excludes those embodied in exports.
How does EEIO handle imported goods?
Single-region EEIO often applies the domestic-technology assumption, treating imports as if produced with home-country intensities, which can badly misstate footprints when trading partners use cleaner or dirtier technologies. Multi-regional environmentally extended tables such as EXIOBASE and WIOD avoid this by representing each region's actual production technology and intensities, allowing accurate emissions-embodied-in-trade calculations.
Why combine satellite accounts with the Leontief inverse?
Direct intensities capture only the pollution a sector emits itself, not the pollution embodied in the inputs it buys. Multiplying intensities by the Leontief inverse (I − A)^{-1} accumulates every upstream supply-chain round, converting smokestack intensities into total embodied intensities so that the full life-cycle burden of final demand is captured without arbitrary supply-chain truncation.
Sources
- 1.Leontief, W. (1970). Environmental repercussions and the economic structure: an input-output approach. The Review of Economics and Statistics, 52(3), 262–271.
- 2.Leontief, W., & Ford, D. (1972). Air pollution and the economic structure: empirical results of input-output computations. In A. Brody & A. P. Carter (Eds.), Input-Output Techniques. North-Holland.ISBN 9780720431605
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Cite this page
ScholarGate. (2026, June 22). Environmentally Extended Input-Output Analysis. ScholarGate. https://scholargate.app/economics/environmentally-extended-io