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Ecological and Environmental
Economics Programme
Integrated assessment models (IAMs)
Research Group
Core aim
- To develop mathematical models to
understand the interactions between physical,
environmental and economic systems.
- To provide an economic assessment of
environmental problems and to design polices
to address them.
- To organise training activities for researchers
from developing countries.
Areas of interest
- Dynamic ecological models
-Indicators of sustainable development
- Integrated assessment models (IAMs)
Research group based at ICTP
IAMs Research Group
Activities focuses on the integration
between global climate models, regional
models of climate impacts and economic
models to assess the economic
consequences of climate impacts in a
coherent framework.
Research addresses the socio-economic
dimension of climate change, mitigation and
adaptation policies.
Focus on the economic (welfare)
assessment of impacts of climate change.
Researchers
 Roberto Roson – Scientific Co-ordinator
 Rossella Bargiacchi
 Maria Berrittella
 Andrea Bigano
 Francesco Bosello
 Alvaro Calzadilla
 Marco Lazzarin
 Hugo Loza
 Francesco Pauli
 Prakash Raj Sapkota
 Jian Zhang
Overall Approach
INTEGRATED ASSESSMENT
characterised by:
 Modularity: comprehensive analysis of
climate change impacts through a consistent
and multidisciplinary integration of different
modelling tools.
 General Equilibrium: All the main economic
linkages and propagation mechanisms can be
highlighted. Direct and indirect consequences
are taken into account. Multiple regions and
sectors.
IAM (Integrated Assessment Model) as a
PUZZLE OF:
 Different interlinked models
 Different interlinked economic regions and
sectors
The world is not divided into cells of a grid,
but into economic areas and each areas into
economic
sectors.
All
these
“cells”
communicate
through
economic
and
environmental mechanisms.
A simple IAM
Environmental system
Extreme events
Changes in emissions
and land cover
Econ.
Pressures
Change in
Production and
consumption
patterns
Policies
Mitigation
Adaptation
Vulnerability
Envir.
Pressures
Sea level rise
Air, Water, Land
quality and
availability
Changes in Water,
Land, Air, Capital,
Labour stock
and productivity
Econ. impacts
Envir. impacts
Climate change
and variability
Economic system
Limitations of Currently Available
IAMs

Many IAMs are one-way: from given socioeconomic scenarios to climate implications;

Some dynamic two-way models suffer from
serious limitations, both in the climate and in
the economic modules. In particular, on the
economic side:
 Trade linkages (goods and capital flows)
are disregarded or poorly modeled.
 The multi-dimensional nature of climate
impacts is missing.
Research Strategy
Focus on economic implications. Development
and updating of an existing data base and
modelling structure (GTAP).
Flexible, “umbrella” project: incorporation and
economic evaluation of different climate change
impacts structured as parallel researches.
Co-operation with other research institutes to
improve the quality of climatic information and of
physical impacts of climate change (Hamburg,
ABARE, PIK, … ) and with Weather and Climate
group above all.
Research in Practice
(1) Defining the Benchmark. “Pseudo-calibration”
process in order to get a reference case “without
climate change”.
(2) Impact assessment: Climate change impacts
translated in terms of “shocks” on key economic
variables are used to perturb the benchmark
equilibrium.
(3) Dynamic analysis: Climate change impacts on
paths of economic growth.
The Pseudo-Calibration
•
This refers to obtaining a picture of the
future world economy. In practice long-run
estimates of primary inputs (land, labour,
capital and natural resources) stocks and
productivity (G-cubed, IMAGE, etc.) are
used to:
•
Shock the model 1997 calibration to obtain
future benchmark equilibria (2010, 2030,
2050).
Impact Assessment
Climate Change
Physical Impacts
Economic Shocks (perturbation of benchmark equilibria)
Economic and Welfare Assessment
How the model works
Climate Models
Sea-Level
Health
Endowments
Tourism
Land-Use
Productivity
General Equilibrium
Interactions in the
World Economy
Water
...
Dem. Structure
Impact Analysis #1:
Sea Level Rise
• No protection = loss of land resources
• Full protection = extra investment
needed (displaces current consumption)
Impact Analysis #2:
Human Health
• Variations in labour productivity/human
resources
• Exogenous change in the pattern of
expenditure for the public sector
Impact Analysis #3:
Tourism
• Changes in demand structure within the
Market Services sector
• International income transfers
Impact Analysis #4:
Extreme Events
• Estimates of the increased likelihood of
extreme events
• Simulations of specific extreme events
= losses of productive resources
• Exogenous increase of demand for
insurance services
Impact Analysis #6:
Energy Demand
• Exogenous variation of energy demand
for production and consumption
Impact Analysis #7:
Agriculture and Land Use
• Variations in crop yields = land
productivity
• Relative prices drive optimal land use
patterns
• Land patterns determine land
endowments for different sub-industries
in agriculture
Impact Analysis #8:
Water
• Water as a non-marketed “hidden”
factor -> overall industrial productivity
• The functioning of an industry for
“effective water” production
The dynamic version
• Endogenous dynamics of capital and
debt accumulation
• Exogenous dynamics of technology,
productivity, etc, AND environmental
shocks
• Myopic (recursive), rational, and quasirational expectations
EEE Programme
The Abdus Salam ICTP
Adriatico Guesthouse - 7th floor
e-mail: [email protected]
http://www.ictp.trieste.it/~eee/