Chapter 8 Input-output models, national economic models, and the environment

Pervasive environmental spillovers are replacing the now outmoded bees and apple orchards as the economists' examples of external effects. The materials balance approach underlines the generality of residuals as the normal outcome of the throughput of materials in the course of production and consumption activities. Residuals measured in weight are defined by the difference between the weight of the total material inputs to an activity and the weight of the products that are the objective of the activity, plus the weight of net accumulation of tangible assets in the activity. The chapter reviews that the receiving bodies of Nature, the environmental receptors, play a decisive role in the economic analysis of pollution. It discusses that the receptors provide man with two types of services: residual disposal services and environmental services. The former type relates to the inherent generation of residuals by the materials-processing economy of an industrialized state; the latter type is an omnivorous category of recreation activities such as sport fishing, boating, amenity services, aesthetic values, including the intrinsic value of Nature, and the provision of extraction possibilities from mineral deposits, water, and air.