Isn't small beautiful?

Abstract

Main goal of this paper is to present a specific aspect of a recently designed ecological input-output model (ecolio) that on the one hand adopts the traditional monetary flows and that on the other hand transfers ecological relevant physical flows into the monetary scheme. Therefore the provision of natural resources and the absorption of emissions are evaluated in monetary terms. The model suggests, based on a detailed literature review, separate price corridors for each category of resources and emissions. ?ecolio? considers ?Nature? as intermediate sector that provides resources and absorption services as (monetarized) inputs for the conventional intermediate sectors. Since the usage of the considered natural services is currently ?gratis? for the industries, the companies have no incentive to replace resource intensive by nature friendly production. Within this paper it is assumed that the usage of natural services is not free of charge for the industries anymore, which in turn affects the input-output analysis at least twice. Since ?Nature? is considered as intermediate sector, first the Leontief output multipliers will change significantly. Generally the output multiplier become the higher the more natural services are absorbed, i.e. nature-intensive production is ?rewarded? by growing output multipliers. With regard to the concept of a sustainable development, the often positive assessment of high output multipliers is questioned in this paper. In contrast, if two sectors show similar income multipliers (based on the Leontief inverse matrix and the income coefficients) and different output multipliers, the sector with the smaller output multiplier will fulfill the idea of a sustainable development in a more efficient way. Secondly the pricing of natural services will, in the medium term, also lead to changing input coefficients, the paper closes with a brief outline of an exemplary substitution process that could be initiated by the evaluation of natural services.