“Physical input-output tables (PIOT) allow national-level analysis that extends upon conventional input-output methodology and classifications to incorporate environmental resource and waste output “sectors” to provide measures of the physical flow of materials and goods within the economic system and between the economic system and the natural environment. This approach involves the exhaustive physical coverage of the movement (origins and uses) of most environmentally relevant materials induced by an economic region (sometimes disaggregated to the level of elements or simple chemical compounds). The PIOT method traces how natural resources enter, are processed, and subsequently as commodities, are moved around the economy, used, and finally returned to the natural environment in the form of residuals. It undertakes the detailed investigation of intersectoral physical flows of environmental resources inputs and commodity weights and residuals, and given this intersectoral specification and transactions matrix structure, has the ability to evaluate the cumulative environmental burden (total direct and indirect effect material requirements and pressures) of private consumption and other final demand for the products of different industries” (Daniels and Moore 2001).

This physical quantification is of course a contrast to the economic or monetary input-output tables that reflect the flows only in monetary values. As Giljum and Hubacek (2004) pointed out, it needs to be noted “that a PIOT is not simply a unit conversion of a MIOT and cannot be derived by multiplying the MIOT with a vector of prices per tons for each sector. This is mainly due to aggregation of non-homogeneous sectors into one category, differences in prices for different consumers of the products and different methods of establishing material versus money flows. However, increases in resource productivity of production processes as well as changes in pollution abatement technologies can also rapidly alter the physical technological coefficients of particular sectors in a PIOT and the production of waste per unit of physical input. These aspects have to be taken into account, in particular when working with sequential PIOTs over time.”