Industrial water pollution in Uruguay: Polluting and non-polluting sectors’ subsystems through input–output analysis

Industrial emissions getting into to water resources are one of the main environmental problems in Uruguay. Focusing attention only on polluting sectors may miss some very important interactions in the process of pollution generation if indirect pollution from non-polluting sectors is not considered. Input-Output analysis allows us to isolate the effect of a sector (or a group of sectors), and study its relationship with the environment without losing its linkages with the rest of the economy. The objective of the present paper is to appraise, by a decomposition analysis, the responsibility for water pollution on the part of polluting and non-polluting sector subsystems. Results show that polluting sector subsystem is responsible for 87.7% of total industrial water pollution, which is mainly produced for satisfying its own polluter sectors’ final demand through direct and indirect channels. The 12.3% remaining is spillover pollution indirectly produced by the non-polluting sector subsystem, mainly explained by direct input requirements to the polluting sectors. This opens a toolbox of complementary demand policies for pollution mitigation applied to indirect spillover polluters, mainly through input substitution, and labeling and process certification.