Transcript The GEM-E3 Model - Potsdam Institute for Climate Impact Research

Introduction to GEM-E3 (with special
emphasis on impacts assessments)
(JRC PESETA II project)
2.
1. Juan-Carlos Ciscar *
Potsdam, September 18, 2013
* The views expressed are purely those of the authors and may not in any circumstances be regarded as stating an official position of the
European Commission
Outline
1. GEM-E3 Model
2. JRC PESETA II, EU assessment
3. Conclusions
The GEM-E3 Model:
General Equilibrium Model for
Energy-Economics-Environment
interactions
www.GEM-E3.net
The GEM-E3 Model: The Development
The model is a result of a collaborative effort by a consortium
involving:
Core modelling team
• National Technical University of Athens (Coordinator)
• Catholic University of Leuven (Centre for Economic Studies)
• University of Mannheim and Centre of European Economic Research
(ZEW)
Contributors
• University of Toulouse (IDEI)
• University of Strathclyde
• Stockholm School of Economics
• Ecole Centrale de Paris (ERASME)
• Catholic University of Leuven (CORE)
• Middlesex University
Partially funded by the European Commission, Programme JOULE,
DG-XII/F1
The GEM-E3 Model: Overview (1/3)
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Computable General Equilibrium model
• representing multiple production sectors and countries
• integrating energy and environment in the economy
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to simulate
• the simultaneous competitive equilibrium of all markets: goods,
labour, energy, pollution permits etc.;
• the endogeneous response of producers/consumers to
environmental/energy policies (abatement, policy limits, taxes);
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to evaluate
• costs and benefits (including the environmental dimension)
• distributional effects of policy instruments (different taxes and
subsidies, auctioning, permits, command-and-control)
The GEM-E3 Model: Overview (2/3)
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The model simulates an economy with:
• multiple sectors, each producing a homogeneous commodity
• a single representative firm operates in each sector
• minimizing cost under CRTS technology
• deriving optimal demand for production factors (including all
other commodities, labour and capital)
• a single representative household
• maximizing utility
• allocating revenues to consumption of commodities and
savings
• determining labour supply
• and a Government ensuring transfer distribution and applying
policy through
• taxes, consumption, investments etc.
The GEM-E3 Model: Overview (3/3)
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The economy is open to foreign competition
• Imported goods combine with domestic production to form
supply
• Consumers (final, intermediate, government etc.) may
substitute domestic and foreign commodities to form
demand
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The stock of capital is fixed within the period (either sectorally
or for the country or World wide)
• Constraining production possibilities in static terms
• while dynamically accumulating (through investments)
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Labour market includes unemployment
The GEM-E3 model: Framework
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Data:
• Input/Output tables (GTAP-8)
• Bilateral Trade matrices (GTAP-8)
• Employment
• Environment
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Mixed Complementarily formulation using GAMS/PATH solver
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Templates for scenario building and result reporting
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Baseline scenario
The GEM-E3 model sectors
19 Sectors
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Agriculture
Coal
Refined Oil and coke
Crude oil
Gas
Electricity transmission and
distribution
Ferrous & non-ferrous, ore,
metals
Chemical Products
Other Energy-Intensive
Industries
Electrical Goods
Transport Equipment
Other Equipment Goods
Industries
Consumer Goods Industries
Building And Construction
Land Transport
Air Transport
Water Transport
Other Market Services
Non-Market Services
Power technologies
• 10 Power Technologies
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Coal Conventional thermal
Oil Conventional thermal
Gas Conventional thermal
Nuclear
Biomass
Hydro
Wind
PV & Solar
Coal CCS
Gas CCS
The GEM-E3 regional detail
• All EU27 member states individually
represented
• USA
• Canada
• Japan
• Oceania
• China
• India
• Russian Federation
• Brazil
• Rest of Annex I
• RoW
The GEM-E3 variables and parameters
Exogenous
• Population
• Government consumption
and investment
• Government tax, subsidy
and social benefit policies
• Technical Progress
• Total Factor Productivity
• Technical Progress
Embodied in Production
Inputs
• Elasticity Parameters
• Technical coefficients in
investment and
consumption matrices
Endogenous (volumes values and deflators)
• All the elements of the
Social Accounting Matrix
• Consumption by purpose
• Investment and Capital
• Bilateral Trade
• Labour market
participation employment
and unemployment
• Basic Interest Rate
• Emissions and damages
• Welfare and GDP Index
The GEM-E3 Model: Simulation
GEM-E3 SAM
Economic circuit
• The model computes the price vector that simultaneously
clears the product, capital and labor markets
Advantages of CGE modelling
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Consistency
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Theory (microeconomics foundations, within a consistent
macroeconomic framework)
Data (National Accounts, SAM)
Structural model (versus reduced-form models): explain
behavior of agents in markets, taking into account institutions
Takes fully into account the spill-over effects across sectors,
consumers, government and other countries
Transparency
Systematic analysis; not mechanical
Flexibility
Can address a broad range of policy issues: climate and energy,
taxation, trade, agriculture, etc.
Criticisms / disadvantages of CGE
modelling
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Weak empirical validation (calibration versus econometric
estimation)
The critical role of functional forms
Simplification of exogenous elements of the model
Data requirements
Heavy computational load
2. 2. JRC PESETA II project
EU Adaptation Strategy
• Following the Green Paper (2007) and White Paper
(2009) on adaptation, the EU Strategy on Adaptation to
Climate Change was adopted in April 2013 (European
Commission Communication)
• The JRC PESETA II project provides background
evidence on climate impacts in the Impact Assessment
of the Communication.
Questions of interest
• What are the climate impacts (reference and 2ºC)
• What are the distributional implications of climate
impacts? Fairness and equity issues
• How much adaptation can reduce climate
impacts?
• Are spatial (cross-country) spillovers significant?
Integrated, granular modelling
• Multi-disciplinary impact assessment
• Soft-link of models
• High space-time resolution of climate data (T, P, other),
common to all impacts (considers spatial correlation)
• Run detailed physical impact models for each impact
category
• Integration of market impact results under a
Computable General Equilibrium (CGE) model: overall
economic effects, direct + indirect; trade effects
3 stages in the integration
Socioeconomic scenario: GDP, population assumptions
Climate model
Stage 1:
Modeling
future
climate
Climate data
(T, P, SLR)
Agriculture
model
Physical
impacts
agriculture
Valuation
agriculture
impacts
Coastal
Systems
model
River
Flooding
model
Tourism
model
Physical
impacts
coasts
Physical
impacts
floods
Physical
impacts
tourism
Valuation
coasts
impacts
Valuation
floods
impacts
Valuation
tourism
impacts
General Equilibrium model
Economic
impacts
Stage 2:
Modeling
physical
impacts
Stage 3:
Modeling
economic
impacts
PESETA II Project strategy
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Building climate impact modeling capabilities at JRC
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Existing data and resources within JRC
Operational and research models
Learning-by-doing within JRC
To support the EC services on adaptation policy
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EU adaptation strategy
DG AGRI, CLIMA, ENER, ENV, MOVE, REGIO, Others
Climate models (A1B)
Acronym
RCM
GCM
C4I-RCA-HadCM3
RCA
HadCM3
CNRM-ALADIN-ARPEGE
ALADIN
ARPEGE
DMI-HIRHAM5-ARPEGE
HIRHAM5
ARPEGE
DMI-HIRHAM5-BCM
HIRHAM5
BCM
DMI-HIRHAM5_ECHAM5
HIRHAM5
ECHAM5
ETHZ-CLM-HadCM3Q0
CLM
HadCM3Q0
KNMI-RACMO2-ECHAM5
RACMO2
ECHAM5
METO-HadRM3Q0-HadCM3Q0
HadRM3Q0
HadCM3Q0
MPI-REMO-ECHAM5
REMO
ECHAM5
SMHI-RCA-BCM
RCA
BCM
SMHI-RCA-ECHAM5
RCA
ECHAM5
SMHI-RCA-HADCM3Q3
RCA
HADCM3Q3
 ensemble of 12 RCM/GCM combinations
 spatial resolution of 25 km
Climate models (E1)
Acronym
RCM
GCM
MPI-REMO-ECHAM5-r1
REMO
ECHAM5 (BC r1)
MPI-REMO-ECHAM5-r2
REMO
ECHAM5 (BC r2)
MPI-REMO-ECHAM5-r3
REMO
ECHAM5 (BC r3)
 spatial resolution of 50 km
 3 runs with same RCM-GCM combination
 different boundary conditions GCM
 captures much less uncertainty in future climate for
E1
Temperature change (°C) in climate runs for
2071-2100, compared to 1961-1990
Reference
Northern Europe
UK & Ireland
Central Europe north
Central Europe south
Southern Europe
EU
Reference Reference
variant 1
variant 2
2°C
3,8
4,8
3,4
3,2
2,1
2,8
3,0
3,2
2,9
3,7
3,8
3,7
1,7
2,0
2,0
2,4
1,4
2,1
2,1
2,3
3,1
3,9
2,4
2,4
PESETA II Impact categories
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Sectoral impact categories teams
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- Climate tipping points (IPTS)
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CGE modeling for the integration
Agriculture physical modelling (IES)
Agriculture economic modelling (IPTS)
Forest fires (IES)
Tree species habitat suitability (IES)
River flood (IES)
Tourism (IPTS)
Energy (IPTS)
Transport (IPTS)
Human health (IPTS)
Climate data input per impact category
Sector
Transport
Human Health
Tourism
Agriculture
River Floods
Energy
Forest Fires
Forest Species Habitat Suitability
Input variables
Average Temperature
Maximum Temperature
Average Precipitation
Maximum Temperature (June-September)
Average Temperature
Average Temperature
Maximum air temperature
Minimum air temperature
Total Precipitation
Global solar radiation
Air relative humidity maximum and minimum
Wind speed
Reference evapotranspiration
Vapour pressure deficit
Maximum and Average Temperature
Precipitation
Humidity
Windspeed
Solar + thermal radiation
Albedo
Dewpoint temperature
Average Temperature
Average Precipitation
Wind Speed
Average Air Temperature
Relative Humidity
Wind Speed
Average Precipitation
Average Temperature
Maximum Temperature
Minimum Temperature
Average Precipitation
Time resolution
Spatal Resolution
Daily
25x25, 50x50 Km
Daily
NUTS 2 Regions
Daily
NUTS 2 Regions
Daily
25x25, 50x50 Km
Daily
25x25, 50x50 Km
Daily
Country
Annual
25x25, 50x50 Km
Annual; Monthly
Monthly
Monthly
Annual; Monthly
25x25, 50x50 Km
Preliminary economic results
(Impact Assessment of 2013 Adaptation Strategy)
(based on JRC PESETA II, and FP7 ClimateCost
results for Agriculture and Coasts)
Shock implementation into GEM-E3
Impact
Agriculture
Yield change
Model implementation
Productivity change for crops
Coastal
areas
Migration cost
Additional obliged consumption
Sea floods cost
Capital loss
River
Residential buildings
damages
Production activities losses
Additional obliged consumption
floods
Energy
Capital loss
Households: Change in subsistence
Heating and cooling demand energy demand
changes
Service sector: Change in electricity
and fuel (per unit of product)
Changes in cost of road
asphalt binder application & Additional obliged consumption
bridge scouring
Transport
infrastructure Net change in costs related
Forest Fires
to extreme flooding & winter conditions
Capital loss
Burned area damage
Capital loss
Reconstruction costs
Obliged consumption
Reference run, 2080s
(Welfare change, million €)
Coastal
areas
Northern Europe
-2,485
UK & Ireland
-7,616
Central Europe north -21,483
Central Europe south -6,011
Southern Europe
-4,659
EU
-42,253
Impact categories (million €)
Sum of impacts
Forest
River
Energy Agriculture
Transport million € €/person
Fires
Floods
2,284
712
1
212
-801
-78
-3
8,050
-1,100
5
-2,965
-434
-4,060
-61
18,762
-4,379
5
-469
-748
-8,310
-56
6,427
-2,541
-435
-3,210
-874
-6,644
-54
-31,258
-10,491
-2,419
-1,037
-194
-50,057
-369
4,266
-17,799
-2,844
-7,469
-3,050
-69,149
-138
Source: JRC PESETA II, ClimateCost (agriculture, coasts)
Reference run, 2080s
(Welfare change, % of GDP)
Coastal
areas
Northern Europe
-0.4%
UK & Ireland
-0.4%
Central Europe north -0.7%
Central Europe south -0.3%
Southern Europe
-0.2%
EU
-0.4%
Energy Agriculture
0.3%
0.4%
0.6%
0.3%
-1.2%
0.0%
0.1%
-0.1%
-0.1%
-0.1%
-0.4%
-0.2%
Forest
Fires
0.0%
0.0%
0.0%
0.0%
-0.1%
0.0%
River
Sum of
Transport
Floods
impacts
0.0%
-0.1%
0.0%
-0.2%
0.0%
-0.2%
0.0%
0.0%
-0.3%
-0.1%
0.0%
-0.3%
0.0%
0.0%
-1.9%
-0.1%
0.0%
-0.7%
Regional welfare change (%GDP), Reference
and 2ºC
1.00
0.50
Transport
Coastal areas
0.00
Energy
Agriculture
Forest Fires
River Floods
-0.50
-1.00
-1.50
Northern Europe
UK & Ireland
Central Europe
north
Central Europe
south
Southern Europe
2°C
Reference
2°C
Reference
2°C
Reference
2°C
Reference
2°C
Reference
2°C
Reference
-2.00
EU
Coastal impacts, 2080s, adaptation
(Welfare change, million €)
Northern Europe
UK & Ireland
Central Europe north
Central Europe south
Southern Europe
EU
No
Adaptation
Adaptation
-2,485
-43
-7,616
-181
-21,483
-844
-6,011
-378
-4,659
-132
-42,253
-1,577
Uncertainty: Range of impacts for River Floods
(Welfare change, million €)
Northern Europe
UK & Ireland
Central Europe north
Central Europe south
Southern Europe
EU
Worst case
Reference
Best case
-493
-13,462
-3,702
-9,818
-4,489
-31,965
212
-2,965
-469
-3,210
-1,037
-7,469
-26
110
-383
-57
-2,603
-2,958
Transboundary effects
(Welfare change, million €)
Northern Europe
UK & Ireland
Central Europe north
Central Europe south
Southern Europe
EU
Coast / Central
Europe North
Agriculture /
Southern Europe
-491
-1,677
-20,518
-1,966
-1,530
-26,181
-173
-798
-1,380
-1,209
-14,979
-18,540
Conclusions
- JRC PESETA II as a pilot study: soft-linking of JRC models
- Fruitful cooperation within JRC
- Contribution to IA of Adaptation Strategy
Next
1.
2.
3.
4.
Water, land use
Non-market impacts, extremes
Dynamic perspective: climate change and growth
Damage function derivation?
Thanks for your attention!
[email protected]
http://peseta.jrc.ec.europa.eu/