The Territory vs. the Residence Principle

Carbon emission accounting in MRIO models

  • News 10.09.2015

Consumption-based CO2 emissions, which are commonly calculated by means of environmentally extended input-output analysis, are gaining wider recognition as a way to complement territorial emission inventories. However, insufficient attention has been paid to the methodological soundness of the underlying environmental extension, claim the authors.

In this article, Wuppertal Institute's Arkaitz Usubiaga and José Acosta-Fernández introduce the most relevant conceptual differences between two accounting frameworks: the residence principle which addresses the activities undertaken by the residents of a country, independent from where these take place, and the territory principle which accounts for all the activities within the territory. The magnitude of the gap between them is illustrated on the basis of the data generated for the EXIOBASE model. The article concludes that the differences are high for many countries and their magnitude is increasing over time.

The article "Carbon Emissions Accounting in MRIO Models: the Territory vs. the Residence Principle" was published in the journal "Economic Systems Research" and is available online.

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