The Economic Consequences
of Climate Change:
a CGE Approach
Roberto Roson
Università Ca’Foscari, ICTP and FEEM
CGE Workshop , Trieste, December 2003
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Motivation
•
•
•
Existence of CGE modelling team within the EEE
programme
Illustration of non-conventional use of CGE models
Presentation of alternative modelling tools and
approaches
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Integrated Assessment
Models
Myth and Reality
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Inadequacy of Current IAM Models
•
•
•
the description of the world economic structure is often too
simplistic: limited number of industries (sometimes only one
good, available for both consumption and investment), poor or
absent description of international trade and capital flows.
the multi-dimensional nature of the impact of the climate change
on the economic systems is disregarded. This is usually
accommodated by specific ad-hoc relationships, making a certain
fraction of potential income “melting away” as temperature
increases
Are CGEs better?
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Strategy:
A two-stages procedure
•
•
“Pseudo-Calibration”
Impact Analysis
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The Pseudo-calibration
•
•
•
•
Obtain long-run estimates of endowments
stocks (G-cubed, IMAGE, etc.) and other
variables
Shock the GTAP 1997 calibration
equilibrium (2010, 2030, 2050)
What is GTAP?
A consortium, a data-set, a model (a
book?)
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Impact Analysis
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How to build a simulation
experiment
(simplified illustrative example)
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A Piece of Code
!<
Variables and base flows associated with private consumption
>!
Variable (all,i,TRAD_COMM)(all,s,REG)
ppd(i,s) # price of domestic i to private households in s #;
Variable (orig_level=VDPM)(all,i,TRAD_COMM)(all,s,REG)
qpd(i,s) # private hhld demand for domestic i in region s #;
Coefficient (ge 0)(all,i,TRAD_COMM)(all,r,REG)
VDPA(i,r) # private consumption expenditure on domestic i in r #;
Update (all,i,TRAD_COMM)(all,r,REG)
VDPA(i,r) = ppd(i,r) * qpd(i,r);
Read
VDPA from file GTAPDATA header "VDPA";
Coefficient (ge 0)(all,i,TRAD_COMM)(all,r,REG)
VDPM(i,r) # private consumption expenditure on domestic i in r #;
Update (all,i,TRAD_COMM)(all,r,REG)
VDPM(i,r) = pm(i,r) * qpd(i,r);
Read
VDPM from file GTAPDATA header "VDPM";
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A Command File
!________________________________num.cmf __________________________________
! This GEMPACK command file simulates a numeraire shock in gtap.tab.
!__________________________________________________________________________
!
! Original (i.e. pre-simulation) data files
!
Auxiliary files = gtap-ex ;
File GTAPSETS = sets.har;
File GTAPPARM = default.prm;
File GTAPDATA = basedata.har;
!
! Equations file information
!
Equations File = gtap-ex ;
Model = GTAP-ex ;
Version = 1 ;
Identifier = gtap-e extended by RR ;
!
! basic closure
exogenous
pop
psaveslack pfactwld
AND MANY OTHERS…
Rest Endogenous ;
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!
! Shock
!
Shock qo(ENDW_COMM,REG) = uniform 50;
!
! Solution method
!
Method = Johansen ;
!
Verbal Description =
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+
Model GTAP-EX
+
+
Experiment NUM: numeraire shock
+
+
Solution Method: Johansen
+
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++;
!
! Output File Specification (they are experiment dependent)
!
Solution
File = gexnum ;
!
! Updated (i.e. post-simulation) data files
!
Updated file GTAPDATA = gexnum.upd;
!
!
Save Environment File GTAPEX ;
!
! Options
!
Extrapolation accuracy file = YES ;
CPU = yes ;
NDS = yes ; ! Do no displays.
!
!
!__________________________End of file________________________
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Early Results: Sea Level Rise
Tab. I: No protection scenario: main econo mi c indicators
Land lost
(% change
w.r.t.
baseline)
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
-0.055
-0.032
-0.018
-0.153
-0.006
-0.184
-0.083
-0.151
Value of land lost
1997
million
US$
102
187
611
20
221
15556
324
13897
% of
GDP
0.0002
0.0010
0.0100
0.0001
0.0030
0.1010
0.0030
0.0600
GDP
(% change
w.r.t.
baseline)
Household
private
expendit.
(% change
w.r.t.
baseline)
CO 2
Emiss ions
(% change
w.r.t.
baseline)
-0.002
-0.001
-0.002
-0.001
0.000
-0.021
-0.030
-0.017
-0.031
-0.026
-0.023
0.011
0.001
-0.028
0.012
-0.025
0.010
0.012
0.005
0.035
0.015
-0.008
-0.024
-0.012
Tab. IV: Total protection scena rio: main econo mi c indicators
Coasta l protection
expenditure
Region
USA
EU
EEFSU
JPN
RoA1
EEx
CHIND
RoW
1997
million
US$
% of
GDP
5153
11213
23076
7595
71496
363856
11747
38808
0.010
0.025
0.332
0.032
0.799
0.185
0.106
0.148
Investment
induced by
coastal
protection
(% change
w.r.t. baseline)
0.151
0.302
3.179
0.242
9.422
2.235
1.254
1.817
GDP
(% change
w.r.t.
baseline)
0.001
-0.022
0.049
-0.009
0.103
0.015
0.003
0.009
Household
private
expendit.
(% change
w.r.t.
baseline)
-0.31
-0.35
0.59
-1.08
0.90
-0.08
-1.13
-0.25
CO 2
Emiss ions
(% change
w.r.t.
baseline)
-0.069
-0.160
-0.133
-0.344
-0.130
-0.069
-0.116
-0.115
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