Accounting for inflation

[dpatelisg]

Is there an established methodology or best practice on applying inflation factors to adjust the emissions factors to match with the year of spend data?

[MoLi7]

Hi @dpatelisg

The recommended practice to adjust EFs from year_A to year_B is:
kg CO2e per year_A $ = kg CO2e per year_B $ * (year_B $ / year_A $)
where year_B $ / year_A $ is calculated using the inflation factor between year_A and year_B.

[arby1005]

Hi @MoLi7
I wonder if I am applying the US EEIO emission factors to calculate emissions based on other currencies (i.e., other than USD), should I use the inflation rate of the USD or the currency that I am looking for?

[WesIngwersen]

You will have to convert to USD to use the factors. To do this, I would suggest using an international exchange rate to convert to USD where the exchange rate is an annual average for the year that matches the currency year of the factor that you are using, rather than using the spot exchange rate.

[WesIngwersen]

Hi @dpatelisg

The recommended practice to adjust EFs from year_A to year_B is: kg CO2e per year_A $ = kg CO2e per year_B $ * (year_B $ / year_A $) where year_B $ / year_A $ is calculated using the inflation factor between year_A and year_B.

Just to clarify, for the Supply Chain Factors we perform this adjustment using our useeior R package function adjustResultMatrixPrice and we use commodity-specific inflation factors. We call these ρ ("rho" for the Greek letter we use to represent them) factors. See our USEEIO v2 table of variables for definitions of variables including ρ

Thus, using an economy average 'inflation factor' will not result in the same price adjustment that we calculate. In the current release of this repository for building v.1.1.1 factors, we can only adjust to USD 2018 but hope to update this to more recent years soon.