FEEM Sustainability Index 2011: Methodological Approach and Main Results
In: FEEM (Fondazione Eni Enrico Mattei), Review of Environment, Energy and Economics (Re3), January 2012
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In: FEEM (Fondazione Eni Enrico Mattei), Review of Environment, Energy and Economics (Re3), January 2012
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In: Review of Environment, Energy and Economics (Re3), June 2012
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The paper explores the implications of achieving the EU27 Resource Efficiency target by 2030 for the future sustainability of the area. The target involves increasing by well over 30% within 2030 EU27 Resource Productivity, which would correspond to nearly double the annual growth rate of the pre-crisis period. The analysis uses a model-based index (FEEM Sustainability Index, FEEM SI) conceived to assess sustainability across time and countries. FEEM SI builds on the recursive-dynamic computable general equilibrium (CGE) model ICES-SI, which considers jointly variables belonging to the three sustainability dimensions (economy, society, and environment). The indicators produced in this framework are first normalized and then aggregated by using some elicited weights and a non-linear methodology. The 30% increase of EU27 Resource Efficiency by 2030 is achieved by applying an ad-valorem tax to the use of mining resources, and offsets the negative effects on the economy (slightly lower GDP and Investment rate) with considerable benefits for the environment. This implies a +1.02% increase in overall EU sustainability with respect to the reference "no policy" scenario.
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In: MEDPRO Technical Paper No. 25
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In: Review of Environment, Energy and Economics (Re3), Forthcoming
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In: CMCC Research Paper No. 199
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Working paper
The present research describes a climate change integrated impact assessment exercise, whose economic evaluation is based on a CGE approach and modeling effort. Input to the CGE model comes from a wide although still partial set of up-to-date bottom-up impact studies. Estimates indicate that a temperature increase of 1.92°C compared to pre-industrial levels in 2050 could lead to global GDP losses of approximately 0.5% compared to a hypothetical scenario where no climate change is assumed to occur. Northern Europe is expected to benefit from the evaluated temperature increase (+0.18%), while Southern and Eastern Europe are expected to suffer from the climate change scenario under analysis (-0.15% and -0.21% respectively). Most vulnerable countries are the less developed regions, such as South Asia, South-East Asia, North Africa and Sub-Saharan Africa. In these regions the most exposed sector is agriculture, and the impact on crop productivity is by far the most important source of damages. It is worth noting that the general equilibrium estimates tend to be lower, in absolute terms, than the bottom-up, partial equilibrium estimates. The difference is to be attributed to the effect of market-driven adaptation. This partly reduces the direct impacts of temperature increases, leading to lower damage estimates. Nonetheless these remain positive and substantive in some regions. Accordingly, market-driven adaptation cannot be the solution to the climate change problem.
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In: Environment and development economics, Band 15, Heft 5, S. 515-533
ISSN: 1469-4395
ABSTRACTHuman-generated greenhouse gases depend on the level and emissions intensity of economic activities. Therefore, most climate-change studies are based on the models and scenarios of economic growth. Economic growth itself, however, is likely to be affected by climate-change impacts. These impacts affect the economy in multiple and complex ways: changes in productivity, resource endowments, production and consumption patterns. We use a new dynamic, multi-regional computable general equilibrium (CGE) model of the world economy to answer the following questions: Will climate-change impacts significantly affect growth and wealth distribution in the world? Should forecasts of human-induced greenhouse gas emissions be revised, once the climate-change impacts are taken into account? We found that, even though economic growth and emission paths do not change significantly at the global level, relevant differences exist at the regional and sectoral level. In particular, developing countries appear to suffer the most from the climate-change impacts.
In: Environmental and resource economics, Band 69, Heft 4, S. 787-810
ISSN: 1573-1502
The FEEM project APPS – Assessment, Projections and Policy of Sustainable Development Goals – focuses on the quantitative assessment of the seventeen Sustainable Development Goals (SDGs), adopted by the United Nations at the end of September 2015. The project consists of two phases. The first, retrospective, computes indicators for all SDGs in 139 countries and then derives a composite multi-dimensional index and a worldwide ranking of current sustainability. This allows informing on strengths and weaknesses of today socio-economic development, as well as environmental criticalities, all around the world. The second phase, prospective, aims at evaluating the future trends of sustainability in the world by 2030. The assessment of the SDGs is carried out by means of an extended version of the recursive-dynamic computable general equilibrium ICES macro-economic model that includes social and environmental indicators. The final goal is to highlight future challenges left unsolved in the next 15 years of socio-economic development and to analyze costs and benefits of specific policies to support the achievement of proposed targets. This paper presents the methodology and the results of the retrospective assessment. Five main steps are described: i) screening of indicators eligible to address the UN SDGs; ii) data collection from relevant sources; iii) organization in the three pillars of sustainability (economy, society, environment); iv) normalization to a common metrics; v) aggregation of the 25 indicators in composite indices by pillars as well as in the multi-dimensional index. The final ranking summarizes countries' sustainability performance. As expected, Middle-North European countries are at top of the ranking (Sweden, Norway and Switzerland the first three), with the most industrialized European countries such as Germany and UK, however, penalized by insufficient environmental performance. Other highly developed countries are between 24th (Canada) and 52nd place (United States). The emerging nations are scattered in our sustainability ranking. Brazil (43rd) and Russia (45th) precede China (80th) and India (102nd), the latter two especially penalized because of their social complexity. The worst performances, in terms of overall sustainability, are in Sub-Saharan Africa (Comoros, the Central African Republic and Chad occupy the last places in the ranking).
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The present research proposes a macroeconomic assessment of the role of waste incineration with energy recovery (WtE) and controlled landfill biogas to electricity generation and their potential contribution to a CO2 emission reduction policy, within a recursive-dynamic computable general equilibrium model. From the modelling viewpoint, introducing these energy sectors in such a framework required both the extension of the GTAP7 database and the improvement of the ICES production nested function. We focus our analysis on Italy as a signatory of the GHG reduction commitment of 20% by 2020 wrt 1990 levels proposed by the European Community; the rest of the world is represented by 21 geo-political countries/regions. It is shown that albeit in the near future WtE and landfill biogas will continue to represent a limited share of energy inputs in electricity sector (in Italy, around 2% for WtE and 0.6% for biogas in 2020) they could play a role in a mitigation policy context. The GDP cost of the EU emission reduction target for the Italian economy can indeed be reduced by 1% when the two energy generating options are available. In absolute terms, this translates into an annuitized value of 87-122 million €.
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Deforestation is a major source of CO2 emissions, accounting for around 17% of total annual anthropogenic carbon release. While the cost estimates of reducing deforestation rates vary considerably depending on model assumptions, it is widely accepted that emissions reductions from avoided deforestation consist of a relatively low cost mitigation option. Halting deforestation is therefore not only a major ecological challenge, but also a great opportunity to cost effectively reduce climate change negative impacts. In this paper we analyze the impact of introducing avoided deforestation credits into the European carbon market using a multiregional Computable General Equilibrium model - the ICES model (Inter-temporal Computable Equilibrium System). Taking into account political concerns over a possible 'flooding' of REDD credits, various limits to the number of REDD allowances entering the carbon market are considered. Finally, unlike previous studies, we account for both direct and indirect effects occurring on land and timber markets resulting from lower deforestation rates. We conclude that avoided deforestation notably reduces climate change policy costs - by approximately 80% with unlimited availability of REDD credits - and may drastically reduce carbon prices. Policy makers may, however, effectively control for these imposing limits to avoided deforestation credits use. Moreover, avoided deforestation has the additional positive effect of reducing carbon leakage of a unilateral European climate change policy. This is good news for the EU, but not necessarily for REDD regions. Indeed we show that REDD revenues are not sufficient to compensate REDD regions for a less leakage-affected and more competitive EU in international markets. In fact, REDD regions would prefer to free ride on the EU unilateral mitigation policy.
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Increasing material use efficiency is important to mitigate future supply risks and minimize environmental impacts associated with the production of the materials. The policy mix presented in this paper aims to reduce the use of virgin metals in the EU by 80% by 2050. We used a heuristic framework and a systems perspective for designing the policy mix that combines primary instruments (aimed to achieve the 80% reduction target – e.g. a materials tax, technical regulations and removal of environmentally harmful subsidies) and supportive instruments (aimed to reduce barriers to implementing the primary instruments and to contribute towards the policy objectives – e.g. research & development support, and advanced recycling centers). Furthermore, instruments were designed so as to increase political feasibility: e.g. taxes were gradually increased as part of a green fiscal reform, and border-tax adjustments were introduced to reduce impacts on competitiveness. However, even in such a policy mix design ongoing ex-ante assessments indicate that the policy mix will be politically difficult to implement – and also fall short of achieving the 80% reduction target. Nonetheless, we suggest combining primary and supportive instruments into coherent and dynamic policy mixes as a promising step towards system reconfigurations for sustainability.
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In: FEEM Working Paper No. 28.2016
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Working paper
The reduction of GHG emissions is one of the most important policy objectives worldwide. Nonetheless, concrete and effective measures to reduce them are hardly implemented. One of the main reasons for this deadlock is the fear that unilateral actions will reduce a country's competitiveness, and will benefit those countries where no GHG mitigation measures are implemented. This kind of argument is also often used to explain why some governments and many business leaders are not in favour of the EU 30% GHG mitigation target that has been proposed to replace the previous 20% GHG emission reduction objective approved by the EU within the well-known 20-20-20 climate and energy package. By developing and applying a recursive, dynamic, very detailed CGE model with energy generation from both fossil fuel and renewable sources, we address this issue by estimating the cost for different EU countries and industries of the EU climate and energy package under a set of alternative international scenarios on global GHG mitigation efforts. Results show that, thanks to the EU economic recession, achieving a 20% GHG emission reduction entails a moderate cost for the European Union - about 0.5% of EU GDP - even in the case of EU unilateral action. This cost could be reduced to almost zero if not only the European Union, but also the other major world economies, comply with the low pledge Copenhagen Accord. A 30% GHG emission reduction target would certainly be more costly: the total loss in the European Union would be 1.26% of EU GDP in the case of EU unilateral action, whereas the total cost would be 0.55% of EU GDP if all major economies reduce their own GHG emissions according to the low pledge Copenhagen Accord. Both border tax adjustments and free allocation of carbon permits are shown to be successful in reducing some adverse competitiveness effects of the EU GHG mitigation policy into energy intensive sectors, but at the expenses of the other economic sectors.
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