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 15: Economic Impacts of GHG Emission Reductions: An Overview of Multiple Model Calculations

Reyer Gerlagh, Stafan P. Schleicher, Walter Hyll and Gregor Thenius

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

Extract

Reyer Gerlagh, Stefan P. Schleicher, Walter Hyll and Gregor Thenius 15.1 INTRODUCTION This chapter explores the effects of CO2 taxes on CO2 emissions, energy use and gross domestic product (GDP), based on a simulation exercise carried out as part of the TranSust network.1 The TranSust network stimulated economic modeling targeted to support policies that aim at the transition to sustainable economic structures. Eleven research partners cooperate in TranSust on developing the next generation of economic models explicitly targeted to sustainability issues. These partners employ various types of models for the economic analysis of sustainability. Our aim is to understand better the relation between these models and results of the analysis. We therefore grouped the models used by the project partners into computable general equilibrium (CGE), econometric, growth and energy system models. This breakdown allows us to see common patterns among models of the same kind, when assessing, for example, the marginal abatement costs of emission reductions. In the first part of the chapter we briefly report on an earlier model comparison study by Resources for the Future (RFF). That study assessed the linkage between various model features and assumptions of economic– energy models and (different) outcomes with respect to estimates of marginal abatement costs for reducing carbon emissions. The second part of the chapter describes the results of the TranSust model comparison. In the third part of the chapter we look at the (marginal) abatement costs from an aggregate perspective. More precisely, we define (marginal) abatement costs as the GDP...

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