The main purpose of economy-wide material flow accounting is to provide background information on composition and changes of the physical structure of socio-economic systems. MFA represents a useful framework for analysing the relationship between the economic system and the environment and deriving aggregated indicators of material use and material productivity.
Main areas of application of MFA include the following issues:
Based on the increasing availability of time series data on the national and international level it is possible to perform historical analyses of the development of a country's (or the world-wide) material use related to production and consumption activities. The analysis of historical developments of national or worldwide resource consumption can deliver insights into the relation between the growth of the biophysical metabolism of societies and of population or economic growth. By that means, metabolic transitions - changes in the scale and composition of material use over time - can be identified and related to socio-economic developments.
Economic models can be extended by environmental data in physical units (such as material flow data) to consider environmental aspects in the evaluation of future development scenarios. The use of integrated environmental-economic models allows for a quantification of the implications of economic growth, of structural changes of the economy, of technological changes in specific economic sectors, and of changes in consumption behaviour (life-styles) on the extraction and consumption of natural resources and the related production of emissions and waste.
Material flow-based indicators are important tools to illustrate environmental consequences of economic specialisation in the division of labour between different world regions. Since production and consumption activities in industrialised countries have environmental impacts far beyond their borders, links between international trade and the environment and problems related to material use and emissions with global environmental implications (such as CO2) have to be taken into account in the evaluation of national sustainability strategies. In the age of increasing globalisation of international supply-chains, assessments of the international re-location of environmental pressures become increasingly important and can be carried out with MFA-based indicators, which include indirect material flows (see indicator section for more details).
Due to the consistent accounting framework, material flow-based indicators can be aggregated from the micro level via the level of economic sectors to the macro level and thus allow analysis of the macro effects due to changes at the micro level. Resource efficient products are a crucial step towards the realisation of environmentally sustainable development. However, if higher material and energy efficiency results in lower production costs and real savings to customers, overall demand for these products will increase - a phenomenon known as the ‘rebound effect'. Typical examples of this development are personal computers, digital assistants, and cellular phones. Therefore, efficiency gains at the micro level typically go hand in hand with an increase in the overall material and energy consumption at the economy-wide level. This highlights the need to implement policy instruments which limit the absolute level of resource extraction and use (such as certificate trading systems or material input taxes). MFA-based indicators are important tools to assess these feedbacks between increased material efficiency of products and technologies and their impacts on overall material consumption on the macro level.
Deposits of fossil fuels and metals are not evenly distributed among the different world regions. Not only many developed economies, also emerging economies such as China increasingly depend on the imports of resources from other world regions. Consequently, European enterprises and industrial policies seek to ensure access to and a constant supply of these raw materials, whether through (conflictual) competition with other countries or through a cooperative approach.
Research on reserves and resources of metals and minerals across the world is complex and available data has to be treated with care as new exploration and extraction activities are triggered by high commodity prices, including in areas, which have not been economical in the past (e.g. deep sea oil drilling; metal extraction in polar regions).
In the context of the development of resource efficiency policies on the European and international levels, the issue of defining targets for sustainable resource use is rapidly rising on the policy agenda. In order to set targets for material use and material productivity, robust measurements need to be in place, which are accepted by key stakeholders and countries engaging in these policies. With the increasing international availability, standardisation and harmonisation of MFA data, the empirical foundation for deriving targets and monitoring is constantly improving.
Materials are only one type of natural resource relevant for maintaining the physical metabolism of societies. An important application of material flow data is its combination with data on the use of other natural resources such as water, land or energy, or the production of negative outputs such as emissions to air, water and waste. All of these categories are closely interrelated with the use of materials, and a joint analysis of existing data can reveal their interlinkages. For instance, for extraction activities of metals or construction minerals not only a certain amount of water is needed, but they also occupy a specific area, often including land use changes, and during these extraction processes, waste and emissions are produced.
Material flows are accounted in mass units, i.e. kilogrammes or tonnes. Using MFA-based indicators on a high level of aggregation hence results in the fact that materials of large mass (e.g. some metal ores or construction minerals) dominate these indicators, which could bias their interpretation. Consequently, it is crucial that analyses of MFA data is done for disaggregated material groups and economic sectors, which is increasingly performed on the national and global levels.
Furthermore, as a consequence of being mass-based, MFA-based indicators provide no direct information about actual environmental impacts, as quantitative numbers say little about the qualitative characteristics of the used materials. During the past years increasing research has been focussed on the question how to combine quantitative information stemming from MFA and data on the environmental impact of specific materials originating from Life Cycle Assessment (LCA) accounts. Also, the European Commission has acknowledged the importance of this aspect supporting the creation of an internationally standardised procedure for considering qualitative differences in the quantitative concept of MFA.