Economic Effects of Individual Heating System and District Heating System in South Korea: An Input-Output Analysis

When South Korea develops a new city, the government has made a preliminary decision on one of two heating systems, an individual heating system (IHS) or a district heating system (DHS). However, it is still unclear which system is desirable in terms of maximizing the national economic effect. Thus, this article aims to derive quantitative information about the economic effects of the same amount of production or investment in the two systems through an input-output (IO) analysis using the recently published 2017 IO table. More specifically, the production-inducing effects, value-added creation effects, and wage-inducing effects are systematically analyzed focusing on the IHS and DHS sectors. The results show that one dollar of production or investment in IHS or DHS causes about 1.073 and 1.388 dollars of production, about 0.228 and 0.658 dollars of value-added, and about 0.051 and 0.108 dollars in wages, respectively, throughout the national economy. Overall, the economic effects of the DHS sector are greater than those of the IHS sector. That is, when the same amount of investment or production is made in the two sectors, DHS produces more economic effects than IHS.