Physical and Monetary Methods for Estimating the Hidden Trade of Materials

Abstract

The hidden trade of a material (e.g., aluminum) refers to the trade of that material embedded in final products (e.g., automobiles). There are two methods for estimating the hidden trade amount of materials: (1) the physical method relies on the physical trade data (measured by physical units) in which products are categorized according to the standard international trade classification codes or the harmonized system codes; and (2) the monetary method relies on the monetary trade data (measured by monetary units) in which products are categorized in accordance to the sectors of an input–output (IO) table. Information on material concentrations in products can be relatively quickly estimated by an IO-based model in the monetary method, but will have to be collected from various sources with intensive time cost in the physical method. Exemplified by the U.S. hidden trade of aluminum, iron, and copper in 2007, this study attempts to compare the two methods. We find that, despite the unavoidable but reasonable differences in the amounts of three metals trade, the results generated by the two methods are consistent with each other pretty well for final products at the level of end-use product groups (e.g., total transportation facilities). However, the comparison for specific products (e.g., automobiles) is challenging or does not generate consistent enough results. We suggest that similar estimations be done for more materials, more countries/territories, and different years, to gain experience, reduce estimation time and costs, and increase the knowledge base on metal flows in society.

LAYERS: A Decision-Support Tool to Illustrate and Assess the Supply and Value Chain for the Energy Transition

“…Other studies have estimated the impact of the expansion of low-carbon energy technologies on future metal demands to highlight the energy metal nexus [67,68] to policy makers. Determining the potential impacts metal shortage can have on delivering Chinas EV strategies have recently been reported [69], and others have presented physical and monetary methods for estimating the hidden trade of materials [70]. However, the geographical relationships and potential bottlenecks are not that well-illustrated or indeed explored.…”

Direct, Embedded, and Embodied Trade of Arsenic: 1990–2019

“…Different trade-related flows have been discussed in an attempt to reveal the effects of trade. The trade of materials in various forms within products can be described as “hidden” trade, referring to materials physically embedded within manufactured goods. , The primary term used to assess the environmental impacts of trade is “embodied flow”, , which quantifies the natural resources or environmental burdens that are directly or indirectly needed to produce a product. Embodied flows refer to virtual trade, in contrast to physical trade.…”