New Horizons in Environmental Economics series
INTRODUCTION The environment is a complex system where social and natural forces are mutually interacting with each other. Without a systematic analysis, forecasting environmental issues is impossible. As human activities become diverse and intensive, the complexity of mutual relations in the system increases, and this makes forecasting more difficult. Since there exists no forecasting model which can perfectly reproduce complicated real-world phenomena, selecting some areas, fields or indices out of a whole system of natural and social systems is a realistic approach. A number of approaches have been carried out to obtain future perspectives on the condition of the environment and development in a region or the whole world (Morita, 1995; IPCC, 1997). These approaches can be roughly classified into two categories. One of them is a top-down approach where one draws some empirical relationships among indices from a macroscopic viewpoint and forecasts the future based on certain premises or scenarios (for example, Meadows et al., 1972). In order to obtain a reliable result by this approach, it is crucial to determine whether an empirical rule obtained in the past can be applied to the future, and whether scenarios drawn will likely be realized. Another is a bottom-up approach based on the accumulation of very detailed data from finely divided areas and different sectors (for example, Japan Science and Technology Agency, 1992; AIM Project Team, 1995). Models under this approach are becoming larger and more complicated, and intensive effort is needed to establish a complete dataset. Some factors might cause...
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