Pilot Project on Material Flow Accounts

Pilot project on Material Flow accounts

Grant Agreement No 71401.2007.014-2007.485

Final report December 2008, Vilnius

Project Manager Danguole Krepštulienė Chief specialist, Agriculture and Environment Statistics Division Statistics Lithuania Tel. + 370 5 2364 951 E-mail: [email protected]

Introduction The increasing rate of material consumption and the resulting environmental impact threats sustainability and additional measures to make use of natural resources more sustainable are necessary. It was already stressed in the Brundtland Commission Report Our common future (1987) that development can be made far less materially intensive and more economically and environmentally efficient. The Goteborg Council adopted the EU Strategy for sustainable development in the year 2001 and one of the six main priorities was formulated – to manage natural resources more responsibly. Decoupling environmental degradation and resource consumption from economic and social development was considered as a key issue in the strategy.

A Thematic strategy on the sustainable use of natural resources was published by the European Commission in 2005. Despite the fact that no target figures have been set at this stage, the strategy aims to reduce the negative environmental impact of resource use at each stage of their life cycle and to replace polluting resources with alternatives. Conservation and management of natural resources is recognized as one of the main priorities in the renewed EU strategy for sustainable development (2007) as well. To improve management and to avoid the overexploitation of natural resources is considered as an overall objective. Enhancing of resource efficiency and the reduction of the use of non-renewable natural resources and related environmental impacts, thereby using renewable resources at the rate that does not exceed their regeneration capacity are formulated as operational targets in the resource consumption chapter of the renewed EU strategy for sustainable development.

The implementation of the mentioned strategic documents and political decisions increased the need for reliable and comparable information on material use. Despite the fact that the level of current knowledge in cause-effect relations is not sufficient and complex linkages between material flows and their environmental impact are not fully understood, information on material flows use could be considered as an appropriate tool for political decisions in order to make material use more sustainable.

In general, for more sustainable material consumption and decoupling of resource use and environmental impact from the economic growth, two main principles – dematerialization and transmaterialization – should be implemented. The implementation of the dematerialization principle (to get more from less) is oriented to increased eco-efficiency (resource productivity), while the implementation of transmaterialization principle – to the substitution of hazardous materials with non-hazardous and non-renewable materials – with renewable ones.

Consequently, even if we are not able to formulate exact final goals of sustainability in the field of material use, the current level of our knowledge allows us to identify trends in material consumptions which can be considered as acceptable from the point of sustainability: - increase in material productivity (GDP ratio to DMC); - decrease in the volume of material consumption; - increase in the share of renewable materials (biomass); - increase in self-sufficiency (decrease in the imports share in DMI). Material Flow Accounts (MFA) are considered good indicators of various types of environmental deterioration. The general purpose of Material Flow Accounting is to quantify material inputs and outputs of socio-economic systems. Material Flow Accounting is physical environmental accounting approach which tracks the use of materials by socio-economic systems from their extraction to manufacturing; final use and disposal of emissions and wastes.

Implementation of the project

This pilot project on material flow accounts for Lithuania has been processed in the frame of the environmental accounting project “Grant Agreement No 71401.2007.014-2007.485 – Environment Statistics and Accounts – Material flow accounts”, financially supported by Eurostat. The main objective of the project (pilot study) was to introduce the implementation of Economy- Wide Material Flow Accounts (hereinafter referred to as the MFA) at Statistics Lithuania, to fill in the Standard Tables of MFA (hereinafter referred to as “the standard tables”).

The project was carried out by the specialists from the Agriculture and Environment Statistics, Energy Statistics and Foreign Trade Statistics divisions of Statistics Lithuania. The available data for compiling Domestic Extraction (DE), Imports and Exports, Domestic processed output tables were mapped and Standard Tables of MFA were filled in using the existing data. Besides, the derived indicators – Direct Material Input (DMI), Domestic Material Consumption (DMC), Physical Trade Balance (PTB), Domestic processed output – were calculated.

Changes in material flows (description of derived indicators) during 2000-2006 in Lithuania were analysed by an external expert – professor of Vytautas Magnus University R. Juknys. An analysis of material flows was performed on the basis of a black box approach and transformations of materials inside an economic sector were neither accounted nor analyzed. Data from the Eurostat’s report “Economy-wide materials flow account, Resource productivity EU- 15 1990-2004” were used for the comparison and analysis of convergence processes.

Identification of the existing data sources for the MFA and producing of the accounts In order to achieve the objectives defined for the project and for better coordination, a Working Group was established. In the preliminary stage of the project the methodological recommendations of Eurostat were studied.

Compiling the MFA Statistics Lithuania followed the international methodology standardized by Eurostat Economy-wide Material Flow accounting A compilation guide (Eurostat, 2007) (hereinafter referred to as “the Guide”) and pilot studies carried out in the Member States.

The general requirements for the compilation of the MFA were as follows: - only those data must be included which comply with the system boundary definition of the MFA; - all data were measured in the same unit of tonnes; - the compilation must be free of double counts. Each relevant flow has to be accounted for only once.

First, the assessment of the statistical data sources of Statistics Lithuania was made in the field of biomass products. Other administrative data sources were also used in the project.

Table A: Domestic Extraction (DE)

A.1 Biomass

Primary crops For the compilation of biomass the data on primary crops were taken from agricultural statistics, based on the harvest survey. Data on harvest were obtained from the reports submitted by agricultural companies and enterprises and surveys of farmers’ and family farms.

The data on cereals harvest are available in weight before cleaning and drying and after cleaning and drying. Taking into account recommendations of the Guide i.e. biomass is accounted for at its “as is weight” at the time of harvest data in weight before drying and cleaning were used for filling in standard tables.

Data on vegetable harvest are available for vegetables grown in hothouses and in the open. Vegetables include all sorts of cabbage, beet root, carrots, cucumbers, tomatoes, onions, garlic, melons, peas for preservation, greenery and spice vegetables. Fodder root crop harvest includes beet root for fodder and carrots, turnips, swedes, sugar beet.

Crop residues An amount of used crop residues was estimated using harvest factors and the recovery rate presented in the Guide.

Fodder crops Fodder crops comprised fodder crops from cropland, including maize for silage, clover, alfa alfa for forage, annual and perennial grasses, beets for fodder. The weight of fodder crops was reduced to a moisture content of 15 percent following the requirements of the Guide.

Grazed biomass Biomass uptake from grazing can be estimated (see the Guide) applying two different approaches: the ”supply approach” multiplies areas of permanent pastures with annual yield coefficients and the “demand approach“ multiplies annual livestock data with annual feed intake (t per head and year) by different grazing animals. Taking into account that the data on yield of permanent pastures are not available for a number of years in Lithuania, the “demand approach” was used for the estimation of grazed biomass.

Wood Data on biomass from forestry, i.e. timber (industrial round wood), wood fuel and other extraction, were obtained from the Directorate General of State Forests, State Forest Survey Service. The quantity of timber was converted into tonnes using density factor 0.659 at 15% moisture content.

Fish capture Data on fish catch, in terms of non-cultivated fish, were taken from national fishery statistics, under responsibility of the Ministry of Agriculture. Fish production from aquaculture was not considered as domestic extraction.

Hunting and gathering Data on hunting are not available in tonnes. The number of animals hunted over a hunting season were obtained from the Ministry of Environment. The quantity of biomass from hunting was calculated on the basis of the number of animals and average weights obtained from literature (Encyclopedia). 5

Statistics on forest berries, mushrooms, medical herbs and reeds is based on information about bulk purchases of mushrooms, wild berries, medical herbs collected and processed by the Ministry of Environment. According to scientific researches, average biological harvest of edible mushrooms made 54 thous. tonnes per year, while 1666.9 tons of mushrooms and 1098.1 tonnes of forest berries were purchased in 2006.

A.2 and A.3: Metal ores Non-metallic Minerals

Metal ores (gross ores) – there are no metal ores in Lithuania.

Non-metallic Minerals Data on non-metallic minerals were obtained from the Geological Survey of Lithuania. Lithuania abounds in mineral resources. There are mainly construction mineral materials or row materials intended for their production. In Lithuania, there are sufficient quantities of the most important resources – gravel and sand, dolomite, as well as limestone, clay, peat, anhydride.

Concerning the limestone, gypsum, chalk, and dolomite, the different rocks have a different conversion coefficient from volume units into weight units, while in the MFA standard table these rocks are in one line A.3.2., i.e. one (generalized) conversion coefficient cannot be applied to them; therefore, data on extraction provided in the questionnaire were calculated for each deposit (field) separately with its certain coefficient (ranging from 2.03 to 2.5) when summing up total extraction. When converting from volume units into weight units (from m3 into tonnes), a generalized coefficient (for limestone and dolomite) could be approximately 2.2-2.3; however, in the opinion of experts of the Geological Survey, it is not recommended to apply this coefficient as it will not correspond to the real situation.

A.4. Fossil Energy Carriers

Data available in the database of the Geological Survey of Lithuania were used for filling in standard table A. These data were cross-checked with the Energy Statistics Division processed data. Concerning peat extraction, the data on peat extracted for combustion and agriculture purposes are reported.

Tables B, C, D and E: Import and Export

For filling in tables B, C, D and E information on imports and exports was taken from foreign trade statistics collected by Statistics Lithuania. Foreign trade statistics are produced based on the data of two statistical surveys – Intrastat and Extrastat.

Intrastat is a system of data collection on Lithuanian trade with the Member States of the European Union (EU). Information on such trade is supplied to the customs in Intrastat reports UPS-01 (Dispatches) and UPS-02 (Arrivals). There are thresholds set by the Order of the Director General of Statistics Lithuania, i.e. the value of goods arrived/dispatched from/to the EU during the previous or current calendar year. VAT payers below the threshold are exempted from the obligation to submit Intrastat declarations. The data that were not collected are estimated on the basis of VAT data. The Extrastat survey covers the data on Lithuanian trade with non-member countries; data source for this survey is customs declarations (Single Administrative Document). The Customs 6

Department monthly submits to Statistics Lithuania primary data of the Single Administrative Document, received from importers and exporters.

Foreign trade of Lithuania is defined by four indicators: exports and imports define trade volumes of Lithuania with non-member countries, while dispatches and arrivals define trade with the EU Member States. In the statistical publications on Foreign Trade, for both commodity flows, the terms “imports” and “exports” are used.

Commodities in foreign trade statistics are classified and encoded according to the Combined Nomenclature (CN). The first six digits of the CN coincide with the Harmonized System commodity codes. For the purposes of economic analysis, there are tables where commodities are grouped according to the Standard International Trade Classification (SITC Rev. 3), Classification by Broad Economic Categories (BEC), Classification of Products by Activity (CPA).

Table F: Domestic Processed Output (DPO)

F.1. Emissions to Air

For compiling an economy-wide MFA and balances the Guide suggested to use the data readily available nationally. For filling in the table F of the MFA the main data source was the data base of the Ministry of Environment which has overall responsibility for the preparation of a yearly Greenhouse gas and Pollutants emissions inventory in Lithuania and of the Environmental Protection Agency (EPA)

The GHG inventories were compiled in accordance with the methodology recommended by the Intergovernmental Panel on Climate Change (IPCC) in its Good Practice Guidance. Emission factors used were either country specific (used for the Energy sector, except fugitive emissions) or internationally recommended default factors, mainly those provided in the IPCC Good Practice Guidance and in EMEP/CORINAIR Emission Inventory Guidebook.

In the process of the preparation of the Pollutants emissions inventory, activity data, emission factors and all relevant information needed for the estimation of emission were collected. The main sources for pollutants inventory are the activity data provided by Statistics Lithuania, Institute of Road Transport, Register of Transport (state enterprise Regitra) and the data collected by the Environmental Protection Agency and the Ministry of Environment using the annual questionnaires from the large point sources. Emission factors used were either country specific (used for the Energy sector, except Road transport) or internationally recommended default factors, mainly those provided in the EMEP/CORINAIR Emission Inventory Guidebook.

F.2. Waste

Information on waste generation and treatment was obtained mainly from the EPA which is responsible for the preparation of the report in accordance with the requirements of Regulation 2150/2002/EC (WStatR) on waste statistics.

Waste generation by waste categories (EWC-Stat) and economic activities (NACE) is evaluated by the EPA on the basis of the administrative data source which covers annual reports from waste treatment and waste generation companies in all NACE sections and households, except sections A and B. The main criteria defining the obligation to submit reports are as follows: - for waste treatment companies – economic activities related to waste treatment irrespective of the quantities of treated waste; - for waste generators – the quantity of waste generated: 12 t/year of non-hazardous waste and/or 600 kg of hazardous waste. Starting from the year 2006, Statistics Lithuania is responsible for performing every other year the sample survey of waste generation in NACE sections A (agriculture, hunting and forestry) and B (fisheries).

F.3. Emissions to water

Data available in the Environmental Protection Agency database were used for filling in a standard table.

Description of derived indicators After filling in the standards tables of MFA the key material use indicators for inputs, outputs as well as aggregated material consumption indicators were calculated. Changes in material flows during 2000-2006 in Lithuania, comparison and convergence processes were analyzed and the derived indicators were described by an external expert – professor of Vytautas Magnus University R. Juknys.

Analyzing material flows in the new eastern EU member states it is necessary to take into account, that these countries inherited extremely ineffective and resources consuming economy, however, they inherited sufficiently high level of people education, rather well developed, thought not very modern, energy supply and communication infrastructure as well. This social and economic potential creates good preconditions for fast progress.

Over the last almost twenty years Lithuania and other newly accepted countries have undergone dramatic reforms. Changes in political system and transition from the centralized to a market economy caused an inevitable economical and social decline. As a consequence of an essentially reduced production, consumption of natural resources and environmental pollution decreased respectively. Taking into account, that Lithuania, as well as Latvia and Estonia were mostly integrated into general soviet economy, most remarkable changes took place namely in these Baltic States.

Since the middle of the 1990’s the Lithuanian economy, as well as economy of other countries of transition economy, has started to recover. More rapid positive economic changes took place in the countries which have chosen the way of advanced reforms, the so-called “shock therapy” instead of slow institutional changes, and most of these countries joined EU in 2004. However, the level and patterns of production and consumption in newly accepted East-European EU countries is still rather different from the old EU member states. The society of newly accepted countries tends to consider western lifestyle with high material consumption as the main indicator of better quality of life and big efforts will be needed to balance the necessity of an improved quality of life with sustainable use of natural resources. One of the most important questions in this case – are the new EU member states able to reach the level of welfare that would be similar to that of the old EU member states with less intensive consumption of natural resources? An essential attention to the process of convergence of Lithuanian material flow indicators to the level of these indicators in EU- 15 countries is dedicated in this report.

The Lithuanian strategy for sustainable development was adopted in 2003. The main strategic goal was formulated as follows: to balance environmental, economic and social development concerns, to ensure a clean and healthy environment, effective use of natural resources, overall economic welfare of the society and, according to economic, social and eco-efficiency indicators until 2020, to achieve the current average level of old EU countries without exceeding allowable limits of environmental impact.

An analysis of material flows was performed according to a simplified scheme, presented in Fig.1. The analysis is based on a black box approach and no transformations of materials inside the economic sector were neither accounted nor analyzed.

Domestic Domestic processed material output Economy Import Export

Fig.1. Simplified scheme of material flow analysis

The following material flow indicators were estimated according to the MFA compilation guide mentioned above, on the basis of material flow accounting data.

Direct material input (DMI) as one of the basic indicators in material flow analysis, which reflects input of materials for use in the economy. DMI includes all materials that are used in domestic production and consumption, including materials used for producing export goods. Direct material input is calculated as a sum of domestic material extraction and imports.

Physical trade balance (PTB), which reflects the difference between the volume of imported and exported materials (metric tons). 9

Domestic material consumption (DMC) equals domestic extraction plus imports minus exports, or can be expressed as a direct material input minus exports, or as domestic extraction plus physical trade balance. As it is noticed by some authors, DMC denotes apparent consumption but not final consumption. On the other hand, DMC represents that part of materials which earlier or later will turn into emissions or wastes and it is a reason why DMC rather often is considered as a domestic waste potential (Weisz et al., 2006).

Domestic processed output (DPO) is considered as the total weight of no longer used materials which are released to the environment after having been used in the domestic economy. Material productivity is considered as an amount of produced goods and services per unit of domestic material consumption and is evaluated as a ratio of GDP to DMC. For the comparison with EU-15 material productivity, GDP is expressed in PPS, i.e. common currency that eliminates the differences in price level between countries and allows meaningful comparison of GDP and derived indicators between countries.

The main attention in this report is paid to changes in volume and structure (composition by main material groups) of material flows, changes in material productivity and to the course of convergence of Lithuanian and EU-15 material flow indicators. 10

1. Direct material input

Direct material input (DMI) is one of the basic indicators in material flow analysis and reflects input of materials for use into the economy. DMI includes all materials are used in domestic production and consumption, including materials used for producing export goods. Direct material input is calculated as a sum of domestic extraction and imports (Weisz et al., 2007; Moll, Bringezu and Shutz, 2005). Changes in the volume and structure of these both components of DMI and DMI itself are analyzed in this chapter.

1.1. Domestic extraction

Extracted materials usually includes a part which is used to produce goods and services and unused part of extracted materials, which is often considered as environmental rucksack (Schmidt-Bleek, 1994). Only the used part of extracted materials is included in the material flow analysis and is considered as domestic extraction.

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Fig. 1.1. Domestic extraction in metric tons, Lithuania. 2000-2006

Despite the fact that the period under analysis is quite short (2001–2006), essential changes in DE volume can be noted (Fig. 1.1). Alongside a very fast growth of the Lithuanian economy (Fig. 5.1), a fast growth in DE volumes has started as well from the year 2002, and an increase in DE volume by 30% during the investigated 7 years was registered. Changes in extraction of different material categories were very different and the structure of DE has changed essentially during this period (Fig.1.2.). The share of non-metallic minerals has increased by 22% (from 35 up to 57%), while the share of biomass has decreased consequently (from 63 to 41%). Looking to absolute volumes it could be seen that extraction of non-metallic minerals increased 2.1 times and biomass extraction remained approximately on the same level during the investigated period. Very fast development of the construction sector can be recognized as a main reason of sharply increasing demand for non-metallic minerals.

2000 2006

2% 2%

35% 41%

63% 57%

Biomass Non metalic miner als Fossil energy carriers Biomass Non metalic minerals Fossil energy carriers

Fig.1.2. Structure of domestic extraction by main material categories, Lithuania. 2000 and 2006 11

Metals are not extracted domestically in Lithuania and after collapse of USSR sector of heavy industry is minor in Lithuania. The needs of metals are satisfied with processed stock and imports. Looking more deeply inside main material categories, it could be seen that in the year 2006 almost 70% of biomass extraction were related to the agricultural production (primary crops, crop residues, fodder crops and grazed biomass), almost 30% to wood production, and other sources of biomass extraction (fishing, hunting, etc.) were relatively minor.

Extraction of non-metallic minerals is also predominantly split between two material groups. Gravel and sand consist 67%, limestone, gypsum, chalk and dolomite – 29%.

1.2. Imports

Taking into account the fact that separate data on intra and extra EU trade for Lithuania are available only from 2005 joint import values are presented for the entire analyzed period.

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Fig. 1.3. Imports in metric tons, Lithuania, 2000-2006

A much faster growth in material import as compared to domestic extraction (Fig. 1.1) can be seen from the data presented in Figure 1.3. An almost double (1.89 times) increase in the volume of imported materials was registered during the investigated 7year period and only in the last year under investigation (2006) this fast growth almost stopped.

An especially fast growth in imports of biomass (2.67 times) and metals (3.13 times) was characteristic for the investigated period. As a consequence of different trends in the imports of different material groups, the structure of imported materials was changed rather essentially. 12

2000 2006

2% 10% 6% 2% 15%

11%

58% 24% 49%

23%

Biomass Metal Biomass Non metalic Other products Non metalic minerals Fossil energy carriers Metal Fossil energy carriers Other products

Fig. 1.4. Structure of imports by main material categories, Lithuania, 2000 and 2006

The share of metals and biomass has increased almost two times (from 6 up to 11% for metals and from 10 up to 19% for biomass), while the share of fossils decreased from 58 to 49%.

1.3. Trends in direct material input

The volume of DMI has increased almost 1.5 times in Lithuania and the share of DE, which is usually named as self-sufficiency, came down from 67.5 to 58.9% of DMI during the investigated 7-year period (Fig. 1.5). Both these trends should be considered as unsustainable and result in increased Lithuanian ecological footprint.

The structure of DMI during the investigated period was changed as follows: 2000 2006 - Non-metallic minerals 32% 44%; - Biomass 45% 30%; - Fossil energy carriers 20% 21%; - Metals 1.4 % 4.2%.

The main feature of structural changes in the Lithuanian DMI – an essential reduction in the share of renewables from 45% in the year 2000 to 30% in 2006 and fast approaching to the EU-15 average – 25%. This trend should be considered as unsustainable as well.

Rather similar figures are characteristic for EU-15 countries, on average: however, the share of biomass is lower by 5% and makes up 25% (Moll, Bringezu and Shutz, 2005).

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Import DE

Fig. 1.5. Direct material input in metric tons, Lithuania, 2000-2006

For international comparison, indicators of DMI were recalculated to DMI per capita, and the Lithuanian trend was check against the EU-15 trend (Fig 1.6).

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Fig. 1.6. Direct material input in metric tons per capita in Lithuania and EU-15 countries

Fast convergence of Lithuanian and EU-15 DMI indicators is characteristic for the investigated period. DMI per capita has increased from 11.2 t. up to the EU-15 level (15 t.) already in 2004 and reached 17.2 t. in 2005-2006. These figures correspond to the EU-15 DMI level in the very beginning of the 1990s.

These figures, reflecting fast convergence and even excess of current EU-15 DMI volumes (Fig. 1.6), show that warnings of some specialists (Moll et al., 2005) that accession countries, while striving to reach the EU-15 level of welfare, will face difficulties in curbing the growth in the use of resources, unfortunately were right, and essential efforts will be needed to change these unsustainable trends.

2. Physical trade balance

Physical trade balance (PTB) reflects the difference between volumes of imported and exported materials (metric tons). The European Union is a net importer of materials in physical terms, and Lithuania is not an exception (Fig. 2.1).

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Fig. 2.1. Physical imports and exports, in metric tons, Lithuania, 2000-2006

A synchronic growth of physical imports and exports was characteristic for the Lithuanian economy, and PTB increased almost 1.8 times.

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Biomass Metal Non metalic minerals Fossil energy carriers

Fig. 2.2. Physical trade balance by main material categories, in metric tons, Lithuania, 2000-2006

Biomass is only a material category with negative PTB in Lithuania, and annual exports of biomass exceeded imports by almost 1.5 mill. t on average during investigated period. Taking into account the fact that an essential part of biomass consist of agricultural production, significant fluctuations are characteristic for biomass PTB depending on the yield of agricultural crops (Fig.2.2).

PTB of other material categories was on the gradual increase during the investigated 7-year period. PTB of fossil energy carriers increased by 31%, and PTB of non-metallic minerals almost doubled. An essential growth in PTB for metals can be noticed as well (Fig. 2.2).

According to the opinion of material flow analysis experts, increasing trade volumes reflect the growing relevance of international trade to the globalization process. The main reason of the increase in PTB should be related with the fact that import to more developed countries are mainly related to the supply of relatively heavy raw and base materials, whereas exports are dominated by manufactured goods of lower volume (Moll, Bringezu and Shutz, 2005).

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Fig. 2.3. Physical trade balance in metric tons per capita in Lithuania and EU-15 countries

Lithuanian and EU-15 PTB trends were compared on the basis of PTB per capita data (Fig.2.3). In EU-15 countries PTB per capita during the last five years is kept on almost the same level (2.7 tonnes), however, a very fast growth in PTB is characteristic for Lithuania and this indicator has increased from 0.91 t up to 1.66 t during the investigated period. In the case of same trends, full convergence of EU-15 and Lithuanian PTB indicators could be achieved already in the nearest 3- 5 years.

3. Domestic material consumption

Domestic material consumption (DMC) equals domestic extraction plus imports minus exports or can be expressed as a direct material input minus exports, or as domestic extraction plus physical trade balance. As it is noticed by some authors, DMC denotes apparent consumption but not final consumption. On the other hand, DMC represents that part of materials which earlier or later will turn into emissions or wastes, and it is a reason why DMC rather often is considered as a domestic waste potential (Weisz et al., 2006).

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Fig. 3.1. Domestic material consumption in metric tons, Lithuania, 2000-2006

The volume of DMC has increased by one-third during the investigated 7-year period. A very fast growth in DMC has started from the year 2002, and this time coincided with the beginning of a very fast recovery of the Lithuanian economy. However, despite of the further fast economic growth, a much slower increase in DMC took place from the year 2005, and the first signs of relative decoupling of material consumption from the economic growth became rather obvious (Chapt. 5.).

2000 2006

14% 14% 33%

52% 34% 1% 52% 0%

Biomass Metals Biomass Metals Non metalic minerals Fossil energy carriers Non metalic miner als Fossil energy carriers

Fig. 3.2. Structure of domestic material consumption by main material categories, Lithuania, 2000 and 2006

Changes in DMC for the main material categories were very different. Taking in absolute volumes, DMC of non-metallic minerals increased 2.1 times, fossil energy carriers – by one-third. At the same time, DMC of biomass was reduced by 15%. These changes resulted in essential changes in 17 the structure of DMC (Fig.3.2.). The share of biomass in general DMC was reduced from more than half in 2000 to one-third in 2006, and vice versa, while the share of non-metallic minerals increased from one-third to more than half (52%).

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Fig. 3.3. Domestic material consumption in metric tons per capita in Lithuania and EU-15 countries

Lithuanian and EU-15 DMC trends for the last period on a per capita basis are compared in Fig. 3.3. Fast convergence of Lithuanian DMC to the average level of EU-15 countries is very obvious in this case as well – however, the pattern of this process is quite different from that for direct material input (Fig. 1.6.). As it seen from Fig. 3.3, DMC in EU-15 countries has been on a slow decrease during the last several years, and an increase in the Lithuanian DMC has almost stopped. Despite the fact that the presented time series are too short for serious conclusions, but the current trends look quite promising from the point of sustainability.

4. Domestic processed output

Domestic processed output (DPO) is considered as the total weight of no longer used materials which are released to the environment after having been used in the domestic economy (Weiz et al., 2007). The main part of DPO, which consists of more than 90% of general DPO, usually is named as emissions (emissions to air, water and land). The second part of DPO is named as dissipative use of products and mainly consist from materials used in agriculture (organic and mineral fertilizers, pesticides, compost, seeds). The third part of DPO – dissipative losses, consist from abrasion from tires, friction products etc.

Because of the lack of completed data, only the first and the main part of DPO – emissions to air, water and land – are accounted in this report.

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Fig. 4.1. Domestic processed output in metric tons, Lithuania, 2000-2006

The general amount of emissions to air, water and land increased by 28.7% during 2000-2006, and some reduction in DPO as compared with previous year was registered in the year 2006. As evaluated on a per capita basis, DPO made 5.5 tonnes per capita in 2006 and was approximately two times less than in EU-15 countries, on average.

The highest rate of growth was characteristic to solid wastes which are considered as emissions to land, and the amount of this group of emissions increased by 73.9% during the investigated period. An increase in emissions to air and water was not so pronounced and made up 21.5 and 26.3% consequently.

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19% 0% 14% 0%

81% 86%

Emissions to air Waste land filled Emissions to air Waste land filled Emissions to water Emissions to w ater

Fig. 4.2. Structure of domestic processed output by main groups of emissions, Lithuania, 2000 and 2006

Changes in the structure of emissions during the last seven years are presented in Fig. 4.2. As it seen from the presented data, the share of emissions to air decreased by 5% (from 86 to 81%), while the share of solid wastes increased by 5% during the investigated period.

As it was noticed earlier, domestic material consumption is usually considered as DPO potential, and the ratio of DPO to DMS was further evaluated. A slow decrease in the DPO/ DMC ratio from 49.1% at the beginning of the period to 46.7% in 2006 can be seen from Fig. 4.3.

0 2000 2001 2002 2003 2004 2005 2006

Fig. 4.3. Ratio of domestic processed output to domestic material consumption in per cents, Lithuania, 2000-2006

Considering possible ways to reduce DPO and environmental pressure more essentially, it is necessary to remember that a lion’s share (approximately three quarters) of DPO can be addressed to the combustion of fossil fuels. Cardinal changes in energy carriers and defossilization of economy can be considered as the most promising option to drive global economy towards a more sustainable way.

5. Material productivity

As it was already stressed in the Brundtland Commision raport Our common future (1987), development can be made far less materially intensive and more economically and environmentally efficient. The concept of ecological efficiency is very important for the evaluation of sustainability progress in quantitative manner. To get more from less is the main idea of the eco- efficiency concept.

Indicators of eco-efficiency measures the efficiency with which ecological resources (energy, materials) are used to generate goods and services and are of particular importance to evaluate the level of dematerialization and course of decoupling of the environmental impact from the economic growth (Sun, 2000; WBCSD, 2000). Eco-efficiency is expressed as a ratio of monetary value of goods and services, most often GDP, to the amount of consumed ecological resources. In the case of energy, it’s amount is usually expressed in tonnes of oil equivalent, and in the case of materials – in metric tons. Eco-efficiency is usually named as resource (material) productivity in the context of material flow analysis (Weisz et al., 2007). Rather often the inverse of eco-efficiency or resource productivity – eco-intensity (energy intensity, materials intensity) is used as an indicator of sustainability (Gee and Moll, 1998; Miskinis, 2002).

Quantitative indicators of eco-efficiency (eco-intensity) appear to be a very useful tool formulating developmental goals at different – national, regional or global – levels (Hinterberger et al., 1997; Honkasalo, 2001). Despite some criticism of the eco-efficiency concept (Hukkinen, 2003), an increase in eco-efficiency should be considered as an absolutely necessary though insufficient condition for sustainable development. Very often the overall growth in production offsets eco- efficiency gains and results in increased demand of materials and energy – rebound effect (Binswanger, 2001, Hukkinen, 2003); therefore, only relative decoupling of material use from the economic growth is achieved in the most cases.

Relative changes in production of goods and services (GDP), domestic material consumption (DMC), and domestic processed output (DMO) are presented in Fig. 5.1.

180 160 140 120 100 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006

GDP DMC DPO

Fig. 5.1. Relative changes in gross domestic product, domestic material consumption, and domestic processed output, Lithuania, 2000-2006. Values of 2000 yr. equaled to 100% 21

The concept of double decoupling was elaborated for better interpretation of ongoing changes in eco-efficiency (Juknys, Miškinis and Dagiliūtė, 2005). Decoupling of resource consumption from the economic growth is considered as primary decoupling, and decoupling of environmental pollution from resource consumption is considered as secondary decoupling. Taking into account the fact that measures to achieve primary and secondary decoupling are rather different, such an approach makes available information more operational (Juknys, Miškinis and Dagiliūtė, 2008).

As seen from Fig. 5.1., rather weak relative decoupling of material consumption from the economic growth (GDP) is characteristic for the analyzed period. It is necessary to note, that at the beginning of the transition period (1991-1997) even negative decoupling, when GDP drop down fasted or grew later than DMC and material productivity was reduced consequently, was registered in Lithuania and other accession countries. It was only from the end of the 1990s that positive decoupling of material consumption from the economic growth and an increase in material productivity has started (Ščasny, Kovanda and Hak, 2003, Dagiliūtė, 2008).

Changes in material productivity (ratio of GDP to DMC) during the investigated 2000-2006 yr. period are presented in Fig. 5.2. During the entire 7-years period, material productivity increased by 12.2% (from 475 to 533 Euros per tonne); however, a more essential growth in material productivity was registered only during very end of the investigated period when this indicator increased by 9% during the last two years.

580

560

540

520

500

480

460

440

420 2000 2001 2002 2003 2004 2005 2006

Fig. 5.2. Material productivity in Euros per tonne DMC, Lithuania, 2000-2006

Considering secondary decoupling, later growth of environmental pollution (DPO) than material consumption (DMC) can be seen only from the year 2004. A decrease in the DPO/DMC ratio, which can be considered as the pollution intensity, from 49.1% at the beginning of the period (2000) to 46.7% in 2006 can be seen from Fig. 3.3.

Taking into account the objective foreseen in the Lithuanian strategy for sustainable development – to reach the level of indicators in eco-efficiency of EU-15 countries up to 2020 correct international comparison of eco-efficiency indicators (material productivity, material intensity, etc.) is very important. In this context, it is necessary to drive attention to the remark of Eurostat, which is 22 usually presented in the headings of information on integrated indicators with GDP as a denominator. This remark sounds as follows: basic figures are expressed in PPS (Purchasing Power Standards), i.e. common currency that eliminates the effects of the differences in price levels between countries allowing meaningful volume comparisons of GDP between countries.

In the cases when this rule is neglected, a serious methodological mistake is made and wrong conclusions on extremely low resources productivity in the new Eastern EU member states, as compared to EU-15 countries (factor 5 or even more) are made.

An analysis of Lithuanian and EU-15 data on material productivity has showed, that when correct comparison is made and GDP is expressed in PPS (Purchasing Power Standards, Eurostat data), material productivity (GDP/DMC) for the year 2004 was 1.68 times lower in Lithuania than in EU-15 countries (1644 PPS/t. in EU-15, 977 PPS/t. in Lithuania). The difference is still very big; however, taking into account the current trends of Lithuania’s development presented in this report, the strategic objective to reach the EU-15 level according to this indicator up to the year 2020 seems manageable. 23

Concluding remarks

Alongside fast growth of the Lithuanian economy, a fast growth in the main indicators of material flows (DMI, DMC, PTB, DPO), and convergence to the EU-15 level of material flows per capita is characteristic for the investigated 2000-2006 year period. In case of the same trends, full convergence of the most EU-15 and Lithuanian material flow indicators could be achieved already in nearest 3–5 years.

The main feature of structural changes of direct material input and domestic material consumption – an essential reduction in the share of renewables (biomass) and fast convergence to EU-15 average according to this indicator. Both these trends do not correspond to the basic principles for sustainable use of natural resources (dematerialization and transmaterialization) and should be considered as unsustainable.

Concerning the question that was formulated – “are the new Eastern EU member states able to reach the level of welfare similar to old EU member states with less intensive consumption of natural resources“, the answer for current situation is negative.

Some positive changes can be noted at the very end of the investigated period, when the increase in domestic material consumption was stopped or direct material input even started to decrease. Despite the fact that presented time series are too short for serious conclusions, but these changes look quite promising from the point of sustainability.

Relative decoupling of material consumption from the economic growth (GDP) is characteristic for the analyzed period. Despite the fact that during the entire 7-year period material productivity increased only by 12.2%, the most essential and most growth in material productivity from the point of view of sustainability was registered at the very end of investigated period, when this indicator has increased by 9% during last two years.

Another positive trend in Lithuanian material flows – a decrease in emission amount per unit of consumed materials. The DPO/ DMC ratio decreased from 49.1% at the beginning of the period to 46.7% in 2006.

A comparison of Lithuanian and EU-15 data on material productivity has showed that when a correct comparison is made and GDP is expressed in PPS (Purchasing Power Standards), material productivity (GDP/DMC) for the year 2004 was 1.68 times lower in Lithuania than in EU-15 countries. Taking into account the current trends of Lithuania’s development, the strategic objective to increase this indicator up to the EU-15 level until the year 2020, despite of the current global economic problems, seems manageable. 24

References

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