Review of Business and Economics Studies
Volume 2, Number 1, 2014
Table 3. Review of the complementarity of models in creating a green economy analysis. Information Provided Model
Input-Output (I-O)
Input-Output (I-O)
Energy and other System Engineering models Information received
Energy and other System Engineering models
Geographical Information System (GIS) and InVEST
Computable General Equilibrium (CGE models)
System Dynamics (SD) (e. g., T21)
* Projections, planned capacity expansion
Spatial distribution of employment, material flow
* Projections, economic growth across sectors
* Projections, with feedbacks across sectors
Water availability for cooling, proximity of transport means for fuels (e. g., coal)
GDP, for energy demand estimation
Socio-economic impacts of energy choices, repercussions on energy demand
Economic growth
Socio-economic impacts of environmental trends/policies: direct, indirect and induced.
Energy flow, for value chain analysis
Employment in Geographical sectors affectInformation Sysing or impacted tem (GIS) and by the environInVEST ment
Emissions and fuel/water requirements from/for power generation
Computable General Equilibrium (CGE models)
Employment and material flow (for extended CGEs)
Energy price Spatial information, (production natural resource cost) and investstocks (for extendment informaed CGEs) tion
System Dynamics (SD) (e. g., T21)
Employment, material and energy flow
Energy system Spatial information, natural resource structure, conSAM structure struction, O&M stocks, ecosystem services costs
Long-term feedback responses (e. g., rebound effect)
* Input-Output tables generally only provide information to other models. These data, used as inputs are then simulated using econometrics, optimization and System Dynamics.
• The SAM and MACRO are particularly useful in analyzing consumer subsidies from a macroeconomic perspective, with data (such as household surveys) being necessary to carry out a detailed assessment of the impact on household (e. g., considering income classes, regional differences among the population and other social factors). • MARKAL and MACRO are needed instead to analyze producer subsidies, with the former emphasizing the biophysical dimensions of the energy sector, and the latter estimating the economic impacts of decisions on energy supply. As mentioned above, the MARKAL, MACRO and the SAM can be very complementary, strengthening the analysis that otherwise would be carried out with each of them used independently. In fact, the basic accounting structure and much of the underlying data of CGE models are derived from a SAM, making them useful and easy to implement for the analysis of consumer subsidies; and MARKAL has been improved and expanded by linking it with CGE models, making them excellent tools to use in conjunction when analyzing producer subsidies.
The figure below shows how the three tools can be used in a synergetic manner to make use of the strengths of each of them and carry out a solid and easily replicable analysis of the implications of rationalizing fossil fuels. The combined utilization of these three tools is necessary to generate coherent projections, and analyze them in the context of the rationalization of fossil-fuel subsidies. In this respect, several policy-related questions can be analyzed, starting from the various options for subsidy removal (e. g., what reduction, by when, and in which shape/form), and ending with the potential reallocation of avoided public expenditure (to which household groups, and with which policy intervention option). Additional analyses become relevant depending on the scenarios simulated, and these include the differences between short and long term impacts, as well as policy and system responses.
5. Conclusions While not aiming at identifying the best methodologies and models for the definition and analysis of green
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