A Multi-Region Input-Output Model for Optimizing Trade Under Footprint Constraints

Abstract

Multi-region input-output models have been used extensively for describing and analysing the production and trade of goods. However, there have been no prior publications on the use of such models to determine optimal trade benchmarks considering footprint limits. Such benchmarks can provide valuable insights for economic planning, in the same manner that pinch analysis targets provide insights in process integration. In this work, a mixed-integer linear programming input-output model is developed to minimize environmental footprint by adjusting production and trade levels in a cluster of regions or countries with specified final demand constraints. A case study based on a simplified, low-resolution model of the Philippines using land footprint as objective function is solved to illustrate this new approach.