The author presents a methodology which is used first to model a product-manufacturing-and-distribution system, and then to predict the resulting changes in environmental impact from changes either in taxation or in costs of inputs. A case study of the paper sector in the eastern and central United States is developed, derived from the 1993 US Commodity Flow Survey. From an analysis of five scenarios, two central findings arise: (1) the model is found to be unresponsive to even large changes in transport taxation, so an environmental policy which considers both transportation and production aspects at the same time is favored, and (2) fluctuations in raw-material costs can have an influence on environmental impact as great as or greater than that of changes in taxation levels.
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