Modeling for Developing Countries: Issues and Challenges P. R. - PowerPoint PPT Presentation

Modeling for Developing Countries: Issues and Challenges P. R. Shukla Indian Institute of Management Ahmedabad, India Presented in the ‘13th AIM International Workshop’ Tsukuba, Japan, February 17-18, 2008 Indian Institute of Management, Ahmedabad, India

(S ome Key) Issues and Challenges • Modeling Economic Reforms � Growth Scenarios � Institutions/ Laws � Skills/ Knowledge/ Technology � Technological Change • Modeling Transitions � Demographic Transitions (Age, Rural/Urban, Migration) � Income Transitions (Saving/ Consumption) • Modeling Market Distortions/ Incomplete Markets � Dual Economy � Informal Markets � Policy Distortions • Modeling Non-Market Priorities � Equity � Sustainability/ Environment � Geopolitics Indian Institute of Management, Ahmedabad, India

Presentation Agenda • Developing Scenarios � Backbone Infrastructures � Labor Force (Age/Capabilities) � Saving/ Consumption � Investments • Modeling Urban Development Transitions � Infrastructure Supply � Income/ Behavior NOT IN THIS PRESENTATION (But very important) • Modeling Energy Market Distortions � Non-Commercial Energy � Differential Prices & other Distortions • Modeling Non-Market Priorities � Sustainability/ Environment � Geopolitical Risks (Regional Cooperation) Indian Institute of Management, Ahmedabad, India

Demographic Drivers Year: 2000 Pop: 1021 Million Population (Million) 1593 1600 1449 0.47% Female Male 1183 1.02% 1200 Age 849 15 - 60 years 1.67% Female 18-62 Yrs Male Age 800 Growth Rate 555 2.15% 358 400 2.22% 0 80 80 60 60 40 40 20 20 0 20 40 60 80 0 20 40 60 80 1950 1970 1990 2010 2030 2050 Population (million) Population (Million) Labor Force (Million) Year: 2050 Pop: 1593 Million 1000 915 795 Female 0.70% Male 800 Male Female 1.46% 595 600 Age 15 - 60 years 18-62 Yrs 2.54% Age 360 400 Growth Rate 210 2.74% 200 133 2.30% 80 60 40 20 0 20 40 60 80 80 60 40 20 0 20 40 60 80 0 Population (Million) 1950 1970 1990 2010 2030 2050 Population (million) Indian Institute of Management, Ahmedabad, India

Drivers of Economic Growth � Human Capital High Labor Supply ⎯ Increasing Education ⎯ Migration (intra & inter county) ⎯ � R&D Increasing Government/ Private Expenditure ⎯ International Knowledge Flows ⎯ R&D Collaborations ⎯ � Technology Infrastructures ⎯ Savings Rate ?? Learning, transfers, deployment ⎯ 40 37 35.0 35 � Behavioral Changes 33.0 32 30 High Savings Rate 24.6 ⎯ 25 22.8 Changing Lifestyles ⎯ 20.6 20 � Governance 15 10 Institutions ⎯ 5 Laws ⎯ Policies 0 ⎯ 1980 1990 2000 2010 2020 2030 Indian Institute of Management, Ahmedabad, India

S cenarios Architecture Global & Regional Base Cooperation High Low GDP- 8% CAGR (2005-30) 9% Growth 8% Growth High Energy Reform (ER) - Moderate Reforms (Base) Global Environ (GE) -CO 2 650 ppm (CO2e) Local Environment (LE) -SO 2 Moderate 7% Growth 6% Growth Low Regional Cooperation (RC) - Moderate Globalization (G) – Moderate Imports (I) -Moderate Regional Co- Economic Energy Environment operation Reforms Reform Reform Local Regional 6% 7 % 9% Energy Global Coal Reform Environment Energy Security Environment Cooperation GDP- 6% GDP- 7% GDP – 9% ER – Improved LE – Year 2005 ER - Low ↓ RC - Low ↓ ER - High ↑ Coal Supply GE - LCS SO 2 Emission I - Low RC - Low ↓ G – High ↑ RC- High ↑ RC - High =Year 2030 G - Low ↓ G – High ↑ Indian Institute of Management, Ahmedabad, India

Modeling Urban Development Indian Institute of Management, Ahmedabad, India

Demographic Transitions: Urban/ Rural Urban & Rural population of India (Medium Variant) 90 Rural 80 Urban 70 60 % Share 50 40 30 20 10 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 Year Indian Institute of Management, Ahmedabad, India

Urbanization in India Census Urban Urban to Total Growth Rate No. of Year Population Population (%) UAs/Towns Decadal Annual (%) (million) (%) 1951 62 17.3 41.4 3.5 2843 1961 79 18.0 26.4 2.3 2365 1971 109 19.9 38.2 3.2 2590 1981 159 23.3 46.1 3.8 3378 1991 217 25.7 36.2 3.1 3768 2001 285 27.8 31.1 2.7 4368 Indian Institute of Management, Ahmedabad, India

Mega Cities • As per the UN definition a mega city has > 10 million population. At Indian Mega cities present there are 20 mega cities in the world, out of which three are in Delhi ! . India (Mumbai, Kolkata, Delhi). (12.8 Million) • By 2015, there will be 33 mega-cities, Ahmedabad Kolkata ! . ! . (4.5 (13.2 27 of them in the developing world. Million) Million) Mumbai ! . (16.4 Hyderabad ! . Million) (5.5 • By 2025, there are likely to be close Million) to 40 mega cities, out of which 6 are Chennai Bangalore . ! ! . (6.4 expected to be Indian cities. (5.7 Million) Million) In India, cities with more than 4 million population are classified as mega cities. At present there are 7 such cities. Indian Institute of Management, Ahmedabad, India

Ahmedabad City tudy of Guj arat, India A Case S Indian Institute of Management, Ahmedabad, India

Ahmedabad: City Growth Indian Institute of Management, Ahmedabad, India

Ahmedabad City Population • 1991: 3.31 million • 2001: 4.51 million Area • 1991: 250 sq.km • 2001: 450 sq.km Type Land Cover (%) Existing Proposed Built-up 40 30 Area under Plantation 5 18 Un-built area 10 27 Paved area 30 9 Tar surfaces (roads) 15 15 Ahmedabad City (October 2000) Vegetation Water Built-up area Open Indian Institute of Management, Ahmedabad, India

Ahmedabad: City Built-Form Decadal change Land Cover (1991-2000) Very Dense built-up area 46% Medium Dense built-up area 227% Built-up + Sparse Vegetation 91% Barren -38% Sparse Vegetation -23% Dense Vegetation -35% Water bodies -45% Total Sand 91% Indian Institute of Management, Ahmedabad, India

Vehicles in Ahmedabad (2004) � Total number of vehicles = 1.45 million (majority two wheelers) � Approximately 1.4 vehicles per family � About 50% are personal vehicles (4-wheelers & 2-wheelers) � Buses and taxis 7%; 3-wheelers 13% � On an average 100,000 vehicles are added every year Indian Institute of Management, Ahmedabad, India

Ahmedabad: Industries � Textile Process House � Foundry, Crushing and Grinding Units � Thermal Power Plant � Coal Yards and Ash Yards/Ponds � Dyes, Dyes Intermediates and Chemical Industries � Dairy, Flour Mills, Bakeries, Gram and Groundnut Roasting Units � Precious Metal Refining Units � Brick Kilns and Incinerators Indian Institute of Management, Ahmedabad, India

Ahmedabad: Electricity Consumption 4000 Year Domestic Commercial Industrial Others 3500 Consumption (Mill. KHW) 3000 1990 19% 9% 61% 11% 2500 1995 24% 11% 55% 10% 2000 1500 2000 32% 13% 42% 13% 1000 500 2005 35% 14% 45% 7% 0 1990 1995 2000 2005 Source: Ahmedabad Electricity Company Indian Institute of Management, Ahmedabad, India

Proj ected Growth of Greater Ahmedabad 6.5 Million People, 500 sq.km 10 Million People, 800-900 sq.km Kalol Kalol Gandhinagar Gandhinagar Ahmedabad Ahmedabad Indian Institute of Management, Ahmedabad, India

Modeling Mitigation and Adaptation Indian Institute of Management, Ahmedabad, India

Mitigation and Adaptation Options Planned interventions in Ahmedabad: 2007 • Air Pollution Control Action Plan • Use of CNG in public and semi-public modes of transport • Energy efficient buildings • Strengthening of public transport systems: BRTS • Sabarmati River Front Development Project • Kankaria Lake Front Development Project • Encouraging Urban Plantation Indian Institute of Management, Ahmedabad, India

Energy Conservation Options Industrial Sector: Scope for energy savings in streelights Example: Ahmedabad city • Energy audits and housekeeping • Technology upgradation Type of connections Number • Ordinary 278 Residential & Commercial: • Tubelights (40W) 25,734 • CFLs to replace incandescent lamps • CFLs (11W) 13,848 • Mercury 2,657 • Efficiency improvements in cooling devices • Sodium 37,036 • LPG replaces coal and wood • Fluid 296 � Energy savings to the extent of Transport: 20-30% may be achieved by • CNG in auto rickshaws replacing tubelights and ordinary lamps with CFLs • Vehicle fuel consumption improvement Indian Institute of Management, Ahmedabad, India

Energy Efficient Buildings Torrent Research Center, Ahmedabad • 12 ° -13 ° C drop compared to temperature outside the building • Inside temperature variation generally below 4 ° C as compared 14 ° C to 17 ° C outside • About 200 Ton air-conditioning plant capacity is saved • Construction cost 12% more than that of a conventional building • Annual savings in electricity consumption @ Rs. 6 million. • The pay-back period of additional capital cost @ 2 years. Indian Institute of Management, Ahmedabad, India