Introducing land use in OECD’s ENV-Linkages model Rob Dellink OECD Environment Directorate 9 February 2011, OECD Expert Meeting on “Climate change, Agriculture and Land use”,

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Transcript Introducing land use in OECD’s ENV-Linkages model Rob Dellink OECD Environment Directorate 9 February 2011, OECD Expert Meeting on “Climate change, Agriculture and Land use”,

Introducing land use in OECD’s
ENV-Linkages model
Rob Dellink
OECD Environment Directorate
9 February 2011, OECD Expert Meeting on “Climate change, Agriculture and Land
use”, Paris
Organisation for Economic Co-operation and Development (OECD)
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GE modelling at the OECD in
historical perspective
JOBS
ENV-Linkages
Linkages
WALRAS
GREEN
GREEN
Time
1987 1990 1992
1997 2000
2004
2011
MIT-EPPA
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The ENV-Linkages model
•
Computable General Equilibrium (CGE) model
• Full description of economies
• Simultaneous equilibrium on all markets
• Structural trends, no business cycles
•
All economic activity is part of a closed, linked system
• World divided into 29 regions (15 for modelling analysis)
• Each economy divided into 26 sectors (with focus on energy)
•
•
Recursive-dynamic: horizon 2005-2050; vintages of capital
Link from economy to environment
• Greenhouse gas emissions linked to economic activity
• Damages from climate change not assessed: model only assesses
the costs of policies, without valuing their environmental benefits
• Working on feedback link from climate to economy (impacts)
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Regional aggregation
Aggregation ENV-L: 15 Regions
Region ID
Label
CAN
JPK
OCE
RUS
USA
WEU
Canada
Japan & Korea
Oceania
Russia +
USA
European Union & EFTA
RAN
Rest of Annex I
BRA
CHN
IDN
IND
MEA
MEX
ZAF
ROW
Brazil
China +
Indonesia
India
Middle East & Northern Africa
Mexico
South Africa
Rest of the World
Aggregation ENV-L: 29 Regions
Region ID
Label
CAN
JPN
OCE
RUS
USA
E15
ENO
UKR
TUR
BRA
CHN
IDN
IND
MEA
MEX
ZAF
RCA
TAN
WAF
SEA
Canada
Japan
Oceania
Russia +
USA
European Union 15
EU countries non OECD
Ukraine +
Turkey
Brazil
China +
Indonesia
India
Middle East
Mexico
South Africa
Rest Central America
Asia-Stan
Western Africa
Southeastern Asia
Organisation for Economic Co-operation and Development (OECD)
Region ID
Label
KOR
Korea
EOC
EFT
RCE
Rest of EU OECD
EFTA
Rest of Central Europe
NAF
Northern Africa
RSA
SAF
EAF
STA
Rest South America
Rest of Southern Africa
Eastern Africa
Rest of South Asia
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Sectoral aggregation
•
5 agriculture related sectors
• Rice cultivation, other crops, livestock, forestry, fisheries
•
4 primary energy related sectors
• Crude oil, coal, gas, petroleum refineries
•
5 electricity related technologies (‘sectors’)
• Fossil fuel, hydro/geothermal, nuclear, solar/wind, biomass/waste
•
6 energy intensive industries
• Non-ferrous metals, iron & steel, chemicals, fabricated metal
products, paper and paper products, non-metallic minerals
•
6 other sectors
• Food products, other mining, other manufacturing, transport
services, services, construction & dwellings
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Describing economic activity:
production
•
Smooth production functions describe how producers can
choose among different technologies
• Multi-level constant elasticity of substitution (CES) functions
• Works well because sectors are aggregated across many different
firms
•
Adjustments of the generic production function or specific
sectors
•
•
•
•
•
•
Land input in Agriculture and Forestry sectors
Some other sectors have ‘natural resource’ (capacity constraints)
Fertilizer in crops production
Feed in livestock sector
Primary energy sources in fossil fuel electricity
Alternative technologies for electricity are almost perfect substitutes
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Data sources
•
Socio-economic data
• GTAP 7.1 database; UN Population projections; World Bank, IMF
macro projections
•
Environmental data
• CO2 emissions harmonized with IEA
• Agricultural emissions: CO2 from energy use; CH4 from rice
cultivation, enteric fermentation and manure; N2O from manure and
soils – only CH4 from rice linked to land use, others to production level
• Projections for non-CO2 GHG and LULUCF emissions (CO2) in the
process of harmonization with IMAGE
•
Land use data
• FAO for historic land use cover and deforestation rates
• IMAGE for land cover projections and conversion (deforestation,
afforestation) emission/sink rates
• OSIRIS REDD marginal abatement cost curves
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Creating a baseline projection
•
Projecting future trends in socio-economic developments
until 2050
• Not a prediction of what will happen!
• Be humble: we know very little about long-term future economic
activity
•
Based on a “conditional convergence” methodology
• Based on recent growth theory
• Countries further from their potential are expected to grow faster
• No direct convergence in levels of e.g. GDP, but convergence in
drivers of growth: total factor productivity, labour productivity
• Conditionally converging drivers plus exogenous trends in e.g.
population create an internally consistent set of future projections
• Methodology has been discussed and accepted at EPOC’s ad-hoc
expert meeting on the Outlook in November
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Drivers of GDP growth
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9
7
8
6
5
2010
2015
2015 --2030
Average 2030
2050
Other
Otherfactor
factorsupply
supply
Other
Otherfactor
factorproductivity
productivity
7
5
4
6
4
3
5
3
Other
Otherfactor
factorallocation
allocation
Capital
Capitalsupply
supply
Capital
Capitalproductivity
productivity
4
2
2
3
1
1
2
Capital
Capitalallocation
allocation
Labour
Laboursupply
supply
Labour
supply
0
0
1
Labour
Labourproductivity
productivity
Labour
productivity
-1
-1
0
ROW
ROW
ZAF
ZAF
MEX
MEX
MEA
MEA
IND
IND
IDN
IDN
CHN
CHN
BRA
BRA
RAN
RAN
WEU
WEU
USA
USA
RUS
RUS
OCE
OCE
JPK
JPK
-2
-1
-2
CAN
CAN
Labour
Labourallocation
allocation
Labour
allocation
Source: ENV-Linkages model projection
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Projections for emissions of CO2
from fossil fuel combustion
GtCO2e
60
ENV-Linkages (current
(current
ENV-Linkages
baseline)
baseline)
55
50
IEA-ETP 2010
2010
IEA-ETP
45
40
IEA-WEO 2010
2010
IEA-WEO
35
30
OECD Environmental
Environmental
OECD
Outlook 2008
2008
Outlook
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IPCC
IPCC 4AR
4AR Range
Range
2048
2050
2044
2046
2040
2042
2036
2038
2032
2034
2028
2030
2024
2026
2022
2020
2018
2014
2016
2010
2012
20
Source: draft ENV-Linkages model projection ; still to be harmonized with IMAGE
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Approach to introducing land use
(ongoing)
•
Step by step
• First focus on CO2 emissions from deforestation and afforestation
• Later expand agricultural sector and include bioenergy
•
Modelling land use change
• Multi-level CET structure for governing land use conversion
• Supply elasticity for managed land endogenously depends on land
availability (so-called land supply curve)
• Distinguish intensive vs. extensive margin response to climate policy
•
Introducing carbon pricing policies
• No emissions associated with land that stays in same category (apart
from agricultural GHG emissions)
• Carbon subsidy for afforestation
• Carbon tax for deforestation
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Nesting structure land use
Rice
Grains
Sugar
Oilseeds
Other crops
Livestock
Crops
Forestry
Agriculture
Managed land
Organisation for Economic Co-operation and Development (OECD)
Unmanaged land
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1800
1600
1400
1200
1000
800
600
400
200
0
2004
Resrt of America
Rest of Africa
Rest of Asia
Rest of Annex I
European Union & …
South Africa
Middle East
Russia +
Mexico
USA
Canada
India
Indonesia
Japan & Korea
China +
Oceania
2050
Brazil
mln ha
Land use in agriculture
Source: draft ENV-Linkages model projection ; still to be harmonized with IMAGE
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Applications with the extended
model
•
OECD Environmental Outlook
• Wide range of policy simulations focus on Climate change,
Biodiversity, Water, and Health & Environment
• Collaboration with IMAGE suite of models
•
Economic analysis of the Copenhagen Accord / Cancun
Decisions emission pledges
• Explicit treatment of REDD+ for non-Annex I parties
• Explicit treatment of land accounting rules rules for Annex I parties
•
Foreseen future policy analyses (to be determined)
• Energy subsidy reform: fossil fuels, bioenergy, renewables
• Integrated climate change and biodiversity policies
• Possibilities for REDD+ in fragmented carbon markets
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Contact
Rob Dellink
OECD Environment Directorate
[email protected]
+33 (0) 1 45 24 19 53
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