Nina Eisenmenger Marina Fischer Kowalski and Helga Weisz

The limits to growth debate in the 1970s was concerned with exponential growth rates of gross domestic product (GDP) and population, which were seen as major drivers of resource use and waste production (Meadows et al. 1972; Hardin 1968; Ehrlich and Holdren 1971). The main environmental concern was resource scarcity of nonrenew-able raw materials and environmental and health damage through growing amounts of toxic wastes and emissions. In the 1980s, when earlier expectations about the exhaustion of natural resources did not materialize, environmental concerns focused on the output side of the social metabolism, particularly on pollution. Finally in the 1990s, the notion of sustainability became the leading environmental discourse supporting a conceptual shift (World Commission on Environment and Development 1987). The focus moved from the output side of the production system to an integrated understanding of the biophysical dimension of the economy (Munasinghe and McNeely 1995; Cleveland and Ruth 1997). One important idea emerging from the sustainability concept was that it is not the growth of the monetary economy (measured in GDP) but the growth of the physical economy that causes environmental burdens. With this, new policy targets aiming at a decoupling of the monetary and the physical economy became popular. Evidently, information on the state of the environment is not sufficient to support such policies. What is needed are environmental information systems that are conceptually linked to socioeconomic information systems, above all to the system of national accounts, and allow the compilation of pressure indictors (Eurostat 1999; UN et al. 2003). The emergence of material flow accounting (MFA) has to be seen in this context (Fischer-Kowalski and Huttler 1998).

MFA dates back to the 1960s (Ayres and Kneese 1969; Gofman et al. 1974; Wol-man 1965) and reappeared in the early 1990s (Steurer 1992; Bringezu 1993; Fischer-

Kowalski et al. 1994; Japan Environment Agency 1992), when the notion of sustainable development became the new leading paradigm of environmental policy. In the late 1990s the World Resources Institute coordinated the first comparative material flow studies (Adriaanse et al. 1997; Matthews et al. 2000). While several European countries started to include MFA reporting in their environmental statistics, the statistical office of the European Union undertook a concerted effort of harmonization, leading to a methodology guide (Eurostat 2001a). Eurostat and the European Environment Agency (EEA) also initiated the establishment of harmonized data compendia for the European countries (Eurostat 2002; ETC-WMF 2003; Weisz et al. 2005b).

Currently, processes are ongoing on the EU and Organization for Economic Cooperation and Development (OECD) levels that focus on the development of policies for sustainable resource use (Commission of the European Communities 2005; OECD 2004a). This in turn has enforced further methodological development and implementation of MFA.

One of the strengths of MFA is its systemic approach and the consistent application of the mass balance principle (i.e., material inputs equal material outputs minus stock increases). MFA provides a biophysical account of the level of national economies in analogy to economic accounting (GDP). (For an early conceptualization of the relation of MFAs and economic accounting, see Ayres and Kneese 1969.)

MFA keeps track of all materials that enter and leave the economy within 1 year. These flows comprise extracted or imported materials to be used within the national economy and all material released to the environment as wastes and emissions, exported to other economies, or added to societal stocks (Figure 12.1). The term used refers to acquiring value within the economic system (Eurostat 2001a).

In MFA the economy is usually treated as a black box (except for net additions to societal stocks, which are accounted for to close the mass balance equation). The boundary of the physical economy is defined in a fashion as compatible as possible with the system of national accounts (SNA) in order to facilitate integrated monetary and biophysical analysis (Eurostat 2001a). A detailed MFA database normally comprises flow data for several hundred different input materials. Material flow data are based on statistical data from either international or national statistics. For material categories where no statistical data are available, estimation methods were developed, such as for grazing and straw or for construction minerals (Eurostat 2002; Weisz et al. 2005b). MFA thus provides a comprehensive description of the physical economy in the form of a consistent database. From this, various highly aggregated national material flow indicators can be derived.

In MFA, the unit of measurement is metric tons. Arguably, the choice of one simple unit of measurement has disadvantages. In particular, mass units are insensitive to the quality of the materials (i.e., their specific environmental impact). We will return to this question later on. However, mass as an accounting unit has the clear advantage

Figure 12.1. General scheme of material flow accounting (Matthews et al. 2000, modified according to Eurostat 2001a).

of being a common measure across countries and over time. Tons are not subject to fluctuating exchange rates and relative prices, as is money value, nor to competing expert opinions, as is the assessment of specific environmental impacts. The use of tons as a unit of measurement in MFA (and also in other physical accounting tools) is thus a consequence of its feasibility, transparency, and stability. It also reflects Herman Daly's (1973) argument that it is the scale of material throughput that exerts pressures on the environment (Fischer-Kowalski 1998).

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