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The Case for Material Blows AnaBysi Committee on Material Flows Accounting of Natural Resources, Products, and Residuals Board on Earth Sciences and Resources Committee on Earth Resources Division on Earth and Life Studies NATIONAL RESEARCH COUNCIL OF THE NATIONAL ACADEMIES THE NATIONAL ACADEMIES PRESS Washington, D.C. www.nap.edu

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THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W., Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Gov- erning Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engi- neering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for ap- propriate balance. This study was supported by Department of Energy, Office of Energy Efficiency, Award No. DE-AM01-99PO80016 (Task Order No. DE-AT01-OlEE41422~; National Science Foundation, Award No. EAR-0122257; Environmental Protection Agency through National Science Foundation; U.S. Geological Survey Award No. 01- HQGR0068. Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the authoress and do not necessarily reflect the views of the organizations or agencies that provided support for the project. International Standard Book Number 0-309-08944-1 (Book) International Standard Book Number 0-309-51714-1 (PDF) Library of Congress Catalog Card Number 2003114554 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap.edu Cover: Design by Michael Dudzik. Photo courtesy of PhotoDisc, Inc. (upper left and right); Digital Stock Corp. (center and lower left); and Corbis Corp. (lower right). Copyright 2004 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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THE NATIONAL ACADEMIES Advisers to the Nation on Science, Engineering, and Medicine The National Academy of Sciences is a private, nonprofit, self-perpetuating soci- ety of distinguished scholars engaged in scientific and engineering research, dedi- cated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its mem- bers, sharing with the National Academy of Sciences the responsibility for advis- ing the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Wm. A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Insti- tute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sci- ences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal gov- ernment. Functioning in accordance with general policies determined by the Acad- emy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing ser- vices to the government, the public, and the scientific and engineering communi- ties. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Wm. A. Wulf are chair and vice chair, respectively, of the National Research Council. www. nationa l-academies.org

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COMMITTEE ON MATERIAL FLOWS ACCOUNTING OF NATURAL RESOURCES, PRODUCTS, AND RESIDUALS R. LARRY GRAYSON, Chair, University of Missouri-Rolla DAVID T. ALLEN, University of Texas, Austin BRADEN ALLENBY, AT&T Corporation, Bedminister, New Jersey CORBY G. ANDERSON, Montana Tech, Butte SCOTT R. BAKER, International Copper Association, New York, New York DAVID BERRY, Department of Interior (retired), Annandale, Virginia ROBERT COSTANZA, University of Vermont, Burlington THOMAS E. GRAEDEL, Yale University, New Haven, Connecticut rOYCE LEE, City of New York Office of Management and Budget, New York WAYNE B. TRUSTY, ATHENA Sustainable Material Institute, Merrickville, Ontario, Canada DIRK PA. VAN ZYL, University of Nevada, Reno Staff TAMARA L. DICKINSON, Study Director MONICA R. LIPSCOMB, Research Assistant (from February 2003) EILEEN McTAGUE, Research Assistant June 2002 to February 2003) KAREN L. IMHOF, Senior Project Assistant v

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COMMITTEE ON EARTH RESOURCES SUSAN M. LANDON, Chair, Thomasson Partner Associates, Denver, Colorado TAMES C. COBB, University of Kentucky, Lexington VICKI COWART, Consulting Geologist, Denver, Colorado PATRICK CUMMINS, Western Governors' Association, Denver, Colorado THOMAS V. FALKIE, Berwind Natural Resources Corporation, Philadelphia, Pennsylvania MURRAY W. HITZMAN, Colorado School of Mines, Golden, Colorado MICHAEL L. MENGE, U.S. Senate Committee for Energy and Natural Resources, (retired), Dover, Arkansas rOHN N. MURPHY, University of Pittsburgh, Pennsylvania DONALD L. PAUL, ChevronTexaco Corporation, San Ramon, California MARK C. ROBERTS, Michigan Technological University, Houghton rOAQUIN RUIZ, University of Arizona, Tucson RUSSELL E. STANDS-OVER-BULL, Arrow Creek Resources, Inc., Pryor, Montana R. BRUCE TIPPIN, North Carolina State University, Asheville LAWRENCE P. WILDING, Texas A&M University, College Station P. MICHAEL WRIGHT, Idaho National Engineering and Environmental Laboratory, Idaho Falls Staff TAMARA L. DICKINSON, Senior Program Officer MONICA R. LIPSCOMB, Research Assistant KAREN L. IMHOF, Senior Project Assistant

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BOARD ON EARTH SCIENCES AND RESOURCES GEORGE M. HORNBERGER, Chair, University of Virginia, Charlottesville TILL BANFIELD, University of California, Berkeley STEVEN R. BOHLEN, Joint Oceanographic Institutions, Washington, D.C. VICKI COWART, Consulting Geologist, Denver, Colorado DAVID L. DILCHER, University of Florida, Gainesville ADAM M. DZIEWONSKI, Harvard University, Cambridge, Massachusetts WILLIAM L. GRAF, University of South Carolina, Columbia RHEA GRAHAM, New Mexico Interstate Stream Commission, Albuquerque V. RAMA MURTHY, University of Minnesota, Minneapolis DIANNE R. NIELSON, Utah Department of Environmental Quality, Salt Lake City RAYMOND A. PRICE, Queen's University, Kingston, Ontario MARK SCHAEFER, NatureServe, Arlington, Virginia BILLIE L. TURNER II, Clark University, Worcester, Massachusetts THOMAS I. WILBANKS, Oak Ridge National Laboratory, Oak Ridge, . . ennessee Staff ANTHONY R. DE SOUZA, Director PAUL M. CUTLER, Senior Program Officer TAMARA L. DICKINSON, Senior Program Officer DAVID A. FEARY, Senior Program Officer ANNE M. LINN, Senior Program Officer RONALD F. ABLER, Senior Scholar KRISTEN L. KRAPF, Program Officer LISA M. VANDEMARK, Program Officer YVONNE P. FORSBERGH, Research Assistant MONICA R. LIPSCOMB, Research Assistant VERNA J. BOWEN, Administrative Associate rENNIFER T. ESTEP, Administrative Associate RADHIKA S. CHARI, Senior Project Assistant KAREN L. IMHOF, Senior Project Assistant TERESIA K. WILMORE, Project Assistant WINFIELD SWANSON, Editor . . v''

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JENNIFER T. ESTEP, Administrative Associate RADHIKA S. CHARI, Senior Project Assistant KAREN L. IMHOF, Senior Project Assistant TERESIA K. ANYMORE, Project Assistant W1NFIELD SWANSON, Editor . . . V111 PREPUBLICATION VERSION, SUBJECT TO EDITORIAL CHANGES

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Acknowledgments his report has been reviewed by individuals chosen for their di- verse perspectives and technical expertise, in accordance with pro- cedures approved by the National Research Council's Report Re- view Committee. The purpose of this independent review is to provide candid and critical comments that will assist the authors and the NRC in making their published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and respon- siveness to the study charge. The content of the review comments and draft manuscript remain confidential to protect the integrity of the delib- erative process. We wish to thank the following individuals for their par- ticipation in the review of this report: Patrick Atkins, Alcoa Inc. Robert U. Ayres, INSEAD, Center for the Management of Environmental and Social Responsibility Robert W. Bartlett, University of Idaho, (emeritus) Graham A. Davis, Colorado School of Mines Robert A. Frosch, Harvard University I. Brent Hiskey, University of Arizona Richard T. laffre, Texas Industries, Inc. Brad Mertz, Utah Valley State College Mark Schaefer, NatureServe Valerie Thomas, Princeton University 1 ~

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x ACKNOWLEDGMENTS Although the individuals listed above have provided many construc- tive comments and suggestions, they were not asked to endorse the con- clusions or recommendations, nor did they see the final report before its release. The review of this report was overseen by Gordon E. Forward, U.S. Business Council for Sustainable Development, Chairman Emeritus. Appointed by the National Research Council, he was responsible for mak- ing certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this re- port rests entirely with the authoring committee and the NRC.

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Preface I ther the past century, increasing consumption of materials and energy to meet growing industrial and population demands has Be_ strained both society and the ecosystem. For about a decade the world community has been working toward better tracking of material and energy flows through the economy and into the environment. Some nations have begun developing indicators of total material requirements, efficiency of materials use, and the impacts on the environment, while realizing that social and economic impacts must be assessed and inte- grated in making related public policy. Formal economy-wide material flows accounts and analyses began in Austria in the l990s and then in other European countries, and the efforts have been coalescing now into a framework with guidelines at the Euro- pean Union level. lapan has been pursuing similar developments. A1- though not yet establishing formal material flows accounts, the United States has a long history of tracking mineral and energy flows through the U.S. Geological Survey, the Bureau of Mines, and the Energy Information Administration. The U.S. Environmental Protection Agency, the U.S. Geo- logical Survey, the Department of Energy, and the National Science Foun- dation, in sponsoring this study, realized the need to examine the poten- tial benefits of material flows accounting and analyses, directed toward making better public policy related to the interactions among industrial processes, the economy, and the environment. This report examines the current state of material flows accounting, the uses and usefulness of the accounts and analyses, and related issues. Conclusions on these topics are given, along with recommendations X1

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X11 PERFACE aimed at implementing an effective material flows accounting system that could be used to enhance public policy making on the environment, ma- terials, and energy. The report was prepared based on deliberations and discussions among members of the committee, who shared their expertise freely and dedicated themselves to many hours of report writing and re- vision as well as careful review of a number of report drafts. The commit- tee was completely engaged during the study, and a pleasure to work with throughout. The committee is grateful to a number of experts on material flows and industrial ecology at the U.S. Environmental Protection Agency, the U.S. Geological Survey, the Department of Energy, and the National Sci- ence Foundation, who participated in open information-gathering ses- sions. Gratitude is also expressed to many other professionals from in- dustry, associations, nongovernmental organizations, and other state and federal agencies that participated in the process. For the study, we are indebted to Anthony de Souza, Director, Board on Earth Sciences and Resources, and the outstanding assistance of Tammy L. Dickinson, study director, who guided the committee through the entire process and kept us focused and organized. Finally, a great debt of gratitude is owed to the expert reviewers who helped us achieve a cogent and accurate report. Larry Grayson, Chair

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Contents EXECUTIVE SUMMARY 1 INTRODUCTION Study and Report, 14 2 MATERIAL FLOWS ACCOUNTING DEFINITIONS AND SYSTEM STRUCTURE Accounting Versus Analysis, 18 Existing Definitions, 19 INFORM Report, 19 International Collaborative Study on Resource Flows, 22 European Union Guidelines, 22 Proposed Definitions, 24 Conceptual Framework, 25 Details of Accounting System Structure, 29 European Union System Structure, 29 New Jersey System Structure, 30 Summary, 31 3 BROAD CONTEXT FOR MATERIAL AND ENERGY FLOWS INFORMATION Globalization of the Economy, 33 Sustainable Development, 36 Technology Evolution, 37 Biogeochemical Cycles, 37 Summary, 38 . . . x''' 1 9 17 33

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XIV 4 MATERIAL FLOWS ACCOUNTING: USES AND USEFULNESS Material Flows Information in the Private Sector, 40 DuPont, 40 Alcoa, 41 Vulcan Materials Company, 41 Recycling Industries, 44 U.S. Construction Industry, 47 Material Flows Accounting in the Public Sector and Nongovernmental Organizations, 48 Multinational Material Flows Accounting and Derived Indicators, 48 U.S. National Accounting, 49 State Material Flows Accounting, 51 Municipal Accounting Applications, 54 Summary and Findings, 55 5 MATERIAL FLOWS INFORMATION IN THE UNITED STATES Evolution of Materials Data, 59 Current Data Sources, 62 Definitional Gaps in the Data, 64 Summary and Findings, 67 6 THE IMPORTANCE OF PARTNERSHIP IN THE CONDUCT OF MATERIAL FLOWS ACCOUNTING Examples of Partnerships, 70 The U.S. Industrial Outlook, 70 The Copper Recycling Initiative, 70 A Life-Cycle Assessment Policy Statement, 71 Life-Cycle Inventory Database, 71 Objectives of Partnership in Material Flows Accounting, 72 Characteristics of Effective Partnership and Partners in Material Flows Accounting, 72 Effective Partnerships, 72 Effective Partners, 78 Impediments to Effective Partnerships, 78 Summary and Findings, 81 7 RESEARCH CHALLENGES FOR MATERIAL FLOWS ACCOUNTING Spatially Discrete Material Flows Accounts, 84 Material Flows Accounts of Linked Systems, 85 CONTENTS 39 59 69 83

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CONTENTS Dynamic Material Flows Accounting, 86 Multilevel Material Flows Accounts, 88 Material Flows Accounts of Natural Systems, 89 Summary and Findings, 91 8 IMPLEMENTATION STRATEGY Mission and Goals of the Organization, 94 Partnership a Key to Success, 95 Identifying and Selecting an Advisory Committee, 95 Collaborative Protocol Necessary, 96 Prioritizing Material Flows Accounts, 96 Globalization of Accounts, 96 Outlining an Initial Research Agenda, 97 Supporting Ongoing Activities, 97 Organizational Options and Recommendation, 98 Implementation in a Government Agency, 98 Government Task Force, 99 Independent Organization Affiliated with a Government Agency, 100 A New Center, 100 Recommendation, 101 Summary, 101 REFERENCES APPENDIXES xv 93 103 A BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS 109 B INFORMATION PROVIDED TO THE COMMITTEEE 115 C DETAILED CLASSIFICATION OF MATERIAL INPUTS 117 D DETAILED CLASSIFICATION OF MATERIAL OUTPUTS E CLASSIFICATION OF MATERIAL STOCK CHANGES 121 123

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MATERIALS COUNT 7 RESEARCH CHALLENGES FOR MATERIAL FLOWS ACCOUNTING Spatially Discrete Material Flows Accounts, 94 Matenal Flows Accounts of Linked Systems, 95 Dynamic Material Flows Accounting, 96 Multilevel Matenal Flows Accounts, 99 Material Flows Accounts of Natural Systems, 100 Summary and Findings, 103 8. IMPLEMENTATION STRATEGY Mission ant} Goals of the Organization, 106 Par~ershi~a Key to Success, 107 Identifying and Selecting an Advisory Committee, 108 Collaborative Protocol Necessary, 108 Prioritizing Material Flows Accounts, 108 Globalization of Accounts, 109 Outlining an Titian Research Agenda, 109 Supporting Ongoing Activities, ~ 10 Organizational Options and Recommendation, 111 Implementation in a Govemment Agency, 1 12 Government Task Force, 112 depenclent Organization Affiliatecl with a Government Agency, 1 13 A New Center, 114 Recommendation, 115 Summary, ~ 15 REFERENCES APPENDIXES A. BIOGRAPHICAL SKETCHES OF COMMITTEE MEMBERS B. INFORMATION PROVIDED TO THE COMMITTEEE C. DETAILED CLASSIFICATION OF MATERIAL INPUTS D. DETAILED CLASSIFICATION OF MATERIAL OUTPUTS E. CLASSIFICATION OF MATERIAL STOCK CHANGES XVI PRE PUBLICATION VERSION, SUBJECT TO EDITORIAL CHANGES 93 105 117 127 135 137 141 145