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The Economic Consequences of Climate Change: a CGE Approach Roberto Roson

The Economic Consequences of Climate Change: a CGE Approach Roberto Roson Università Ca’Foscari, ICTP and FEEM CGE Workshop , Trieste, December 2003. Motivation. Existence of CGE modelling team within the EEE programme Illustration of non-conventional use of CGE models

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The Economic Consequences of Climate Change: a CGE Approach Roberto Roson

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  1. The Economic Consequences of Climate Change: a CGE Approach Roberto Roson Università Ca’Foscari, ICTP and FEEM CGE Workshop , Trieste, December 2003

  2. 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

  3. Integrated Assessment Models Myth and Reality

  4. 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?

  5. Strategy: • A two-stages procedure • “Pseudo-Calibration” • Impact Analysis

  6. 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?)

  7. Impact Analysis

  8. How to build a simulation experiment (simplified illustrative example)

  9. 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";

  10. 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 ;

  11. ! ! 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________________________

  12. Early Results: Sea Level Rise

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