5/7/2023 0 Comments Consumption definition![]() ![]() Similarly, when waste disposal “services” are consumed, these emissions are included as well. What does this mean for the treatment of materials in a consumption-based emissions inventory? For materials “consumed” in the community, the upstream (supply chain) life-cycle emissions are included. For example, if consumer demand for $1,000 of washing machines results in $100 of economic activity by steel manufacturers, and it is estimated that for every $100 in economic output, steel manufacturers (on average) emit X pounds of GHGs, then the emissions associated with the steel used to make $1,000 of washing machines will result in X pounds of GHG emissions by the steel industry. This economic information is then combined with estimates of the greenhouse gas emissions associated with each economic sector. The result is an estimate of the economic activity in each of many different economic sectors associated with each act of final consumption (a household purchasing a washing machine, for example). Economic input/output analysis is used to trace this flow of money from one economic sector to another, and an analytical method in linear algebra called the “Leontief inverse” captures the seemingly infinite nature of the supply chains (the industry that makes the steel used to make the equipment used to mine the coal used to make the steel used to make the equipment used to mine coal, etc.). Some of that money then flows to the manufacturer of the washing machine, and from there, some passes up through a series of inter-linked supply chains (manufacturers of labels, buttons, casings, gaskets, drums, lights, electrical cords, cardboard boxes, paper for instruction manuals, etc.). For example, when an individual purchases a washing machine, money flows from the consumer to the retailer. When a consumer engages in “consumption”, it triggers a series of events. This definition of “consumption”, or “final demand”, is consistent with the system of national economic accounting used by the US and throughout the world. In all approaches, non-capital/inventory business expenditures are not part of “consumption”, in order to avoid double-counting, as will be shown below. In other models (notably the UC Berkeley Cool Climate approach) consumption includes household purchases, but not government business investment purchases are treated like other business purchases (non durable goods) and embedded in emissions intensities. In some models (such as those used by Oregon and King County) it also includes purchases by governments as well as business purchases that are classified as investment or capital – typically, goods that are kept in inventory for more than one year, and not quickly passed on to another business. It represents purchases of goods and services (including energy) by households. ![]() The term “consumption” is typically defined to be consistent with what economists call “final demand”. It is important to understand what is meant by the term “consumption” and how this relates to materials use.
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