An input–output approach to study environmental impact

There are interdependencies between different sectors and economic units where different consuming and producing units are interlinked. These interlinkages generate direct and indirect effects for the sectors. From time to time, there have been multiple studies on the impact of rising water pollution on the environment. A close examination of the literature suggests that the majority of these studies have taken into account only the direct pollution effect that is generated in the process of production. The indirect effect generated during the process of production has been utterly ignored in the literature of the environmental policy. This chapter explains how total pollution effects are decomposed into direct pollution and indirect pollution effects using input–output tables In an input-output table, the level of pollution depends upon the technological structure that is expressed in the form of a structural coefficients of the production function. The study also demonstrates the role of technology on the direct and indirect pollution generation.