Modelling Sustainable Development

Modelling Sustainable Development

Transitions to a Sustainable Future

The Fondazione Eni Enrico Mattei series on Economics, the Environment and Sustainable Development

Edited by Valentina Bosetti, Reyer Gerlagh and Stefan P. Schleicher

This insightful book explores the issue of sustainable development in its more operative and applied sense. Although a great deal of research has addressed potential interpretations and definitions of sustainable development, much of this work is too abstract to offer policy-makers and researchers the feasible and effective guidelines they require. This book redresses the balance.

Chapter 12: The Energy–Environment–Economy Model for Europe (E3ME)

Terry Barker, Sebastian De-Ramon and Hector Pollitt

Subjects: economics and finance, environmental economics, environment, environmental economics


Terry Barker, Sebastian De-Ramon and Hector Pollitt 12.1 INTRODUCTION This section provides a short non-technical description of the Energy– Environment–Economy Model for Europe (E3ME), developed by Cambridge Econometrics (CE). More details are available at For acknowledgements and references please refer to the online manual at: 12.2 AN OVERVIEW OF THE E3ME MODEL Short- and Long-term Effects of E3 Policies E3ME is intended to meet an expressed need of researchers and policymakers for a framework for analysing the long-term implications of Energy– Environment–Economy (E3) policies, especially those concerning research and development (R&D) and environmental taxation and regulation. The model is also capable of addressing annual short-term and medium-term economic effects as well as, more broadly, the long-term effects of such policies over the next 20 years, such as those from the supply side of the labour market. E3ME includes the EU-25 (as of 2006), Norway and Switzerland; it is being expanded to include for new EU member states. The E3ME Approach E3ME is an annual medium-term sectoral simulation model, estimated by formal econometric methods. It is not an equilibrium model, but it has the detail and adopts some of the methods of computable general equilibrium (CGE) models. It provides an analysis of the movement of the long-term 179 Modelling Sustainable Development 30/04/2009 12.33 Chap. 12 p. 180 180 Modelling Sustainable Development outcomes for key E3 indicators in response to policy changes. It can be used for dynamic policy simulation and for forecasting and projecting...

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