Gross (economic) output is the value of the Product outputs of an Activity or group of activities, related to a specified time period or product, including subsidies. This metric provides a comprehensive measure of the total economic value generated by production activities before accounting for the costs of intermediate inputs.
In economic accounting and Life Cycle Assessment contexts, gross output represents the full value of all products produced by an activity, regardless of whether those products are final goods or intermediate products that will be used as inputs by other activities. The inclusion of subsidies in this measure is particularly important, as subsidies represent government support that adds to the market value of products and affects the economic viability of production activities.
It is important to distinguish gross output from related concepts in economic analysis. Gross output should not be confused with activity output in the LCA sense, which refers to the physical or functional flow of products from an activity rather than their monetary value. Whilst gross output measures the total value including all product outputs, net economic output (also known as value added) represents gross output minus the costs of intermediate product inputs. Value added thus captures the new economic value created by an activity, excluding the value that was simply passed through from inputs to outputs.
The relationship between gross output and Revenue is close but not identical. Revenue specifically refers to the income from the sale of product outputs, whilst gross output is a broader measure that encompasses the total value of production. In many practical applications, particularly when considering market-based activities without significant non-market outputs, gross output and revenue may be equivalent.
Understanding gross output is essential for economic input-output analysis and for linking economic and environmental data in LCA studies, as it provides the monetary basis for calculating production ratios and economic allocation factors.
