New Activities of CGE Model Development 21th Feb. 2010 Kyoto - PowerPoint PPT Presentation

New Activities of CGE Model Development 21th Feb. 2010 Kyoto University Shinichiro Fujimori, Toshihiko Masui and Yuzuru Matsuoka

Presentation outline • Current issues in CGE modeling activities – Original data issues – Model structures • Identification of the issues • Proposition of solutions to those issues

Climate change and CGE model CGE models participated in EMF21 • CGE model simulation contributed to the climate change issue – GHG, Mitigation cost and Economic impact • A lot types of / similar models have been developed – AIM/CGE, SGM ….

Purpose of this presentation • Answer to those questions – What is needed to the CGE modeling activities? Validate the results with • Original data issues the historical statistics • Model structures – How can we overcome the issues?

Original data issues 350 World Bank 300 Government csp (bn US$) GTAP OECD IO table 250 UN Misallocated data 200 150 100 450000 50 Non-specified industry 400000 0 Construction 350000 1970 1980 1990 2000 Wood and Wood Products Energy consumption (ktoe) Textile an Leather 300000 China’s government Paper, Pulp and Print 250000 consumption Food and Tobacco Mining and Quarrying 200000 Machinery 150000 Transport Equipment GTAP is not consistent with Non-Ferrous Metals 100000 original statistics Non-Metallic Minerals 50000 Chemical and Petrochemical Iron and Steel 0 1971 1976 1981 1986 1991 1996 2001 US industry energy consumption (IEA Energy balance)

Purpose of this presentation • Answer to those questions – What is needed to the CGE modeling activities? Validate • Original data issues CGE simulation results • Model structures historical statistics – How can we overcome the issues?

Frameworks and key assumption • Regions; 3 (OECD, BRICs, non-OECD) • Period; 2005  1971 (1 year step) 45000 • Exogenous parameters 40000 GDP constant price (Bil 2005US$) 35000 – GDP 30000 25000 NON-OECD 20000 – Saving propensity BRICS 15000 OECD 10000 – Government consumption 5000 0 – OECD’s CPI 1971 1976 1981 1986 1991 1996 2001 – Differences of factor prices among sectors (agr, fossil fuel mining, industry, service sectors)

Industrial structure in OECD 100% 100% 90% 90% 80% 80% Industrial share (%) 70% Industrial share (%) 70% 1.4 60% 60% SER 50% SER 50% 1.2 IND 40% IND 40% Ratio (CGE/statistics) (-) 1 30% AGR 30% AGR 20% 20% 0.8 AGR 10% 10% 0.6 IND 0% 0% 1971 1976 1981 1986 1991 1996 2001 0.4 SER 1971 1976 1981 1986 1991 1996 2001 0.2 CGE Statistics 0 1971 1976 1981 1986 1991 1996 2001 CGE/Statistics • CGE : non-change industrial structure • Statistics : change industrial structure

Results(1) CO2 emissions 7000 7000 6000 6000 5000 5000 CO2 emission (TgC) CO2 emission (TgC) 1.4 4000 4000 NON-OECD NON-OECD 1.2 3000 3000 BRICS BRICS Ratio (CGE/statistics) (-) 1 OECD OECD 2000 2000 0.8 1000 1000 OECD 0.6 0 0 BRICS 1971 1976 1981 1986 1991 1996 2001 1971 1976 1981 1986 1991 1996 2001 NON-OECD 0.4 CGE Statistics 0.2 0 1971 1976 1981 1986 1991 1996 2001 CGE/Statistics • CGE < Statistics • OECD is the most different

CO2 emissions and energy consumption 1.4 1.4 1.2 1.2 Ratio (CGE/statistics) (-) Ratio (CGE/statistics) (-) 1 1 0.8 0.8 OECD OECD 0.6 0.6 BRICS BRICS NON-OECD NON-OECD 0.4 0.4 0.2 0.2 0 0 1971 1976 1981 1986 1991 1996 2001 1971 1976 1981 1986 1991 1996 2001 Energy consumption CO2 emission • Energy consumption and CO2 emissions show similar trajectories • Energy consumption is the key issue

Discussions • What makes the difference between statistics and CGE? Production function • How can production functions be modified? Productivity, Energy efficiency • Does it make any improvements to the forecasting simulation? Empirical evidences for changing the model assumptions • Are there any other functions need to be modified? Trade and consumption function

Purpose of this presentation • Answer to those questions – What is needed to the CGE modeling activities? • Original data issues • Model structures – How can we overcome the issues?

Overview of the model development Statistical Data management Database and reconciliation 1971-2005 SAM 106 regions Energy IO Dynamic calibration Preparation of assumption Functions CGE model Parameters (Main body) Exogenous Simulation for Assumptions 2005-2050

Model characteristics • Based on IFPRI’s model (Lofgren, 2002) • Expansion – Regions; [World (30-40 regions)] / [Country] – Period; 1971-2050 – Productive activities; 25-30 (multi-power sectors) – Institutional sectors; Household, Government, Enterprise – Dynamic Recursive – World market for each goods

Overview of the model development Statistical Data management Database and reconciliation 1971-2005 SAM 106 regions Energy IO Dynamic calibration Preparation of assumption Functions CGE model Parameters (Main body) Exogenous Simulation for Assumptions 2005-2050

Data management and reconciliation • Main purposes – Supplement missing data – Reconcile the inconsistent data • Data management platform Almost – GAMS code finished – EXCEL and GDX file • Using Historical statistics – International and country statistics • Easy to control sector and region classifications

Reconciliation results 450000 350 World Bank Non-specified industry 400000 Construction 300 Government csp (bn US$) GTAP 350000 Wood and Wood Products Energy consumption (ktoe) 250 OECD IO table Textile an Leather 300000 UN Paper, Pulp and Print 200 250000 Food and Tobacco 150 Mining and Quarrying 200000 Machinery 100 150000 Transport Equipment 50 Non-Ferrous Metals 100000 Non-Metallic Minerals 0 50000 Chemical and Petrochemical 1970 1980 1990 2000 Iron and Steel 0 1971 1976 1981 1986 1991 1996 2001 450000 350 Non-specified industry 400000 Estimation Construction 300 Government csp (bn US$) World Bank 350000 Wood and Wood Products Energy consumption (ktoe) Textile an Leather 250 GTAP 300000 Paper, Pulp and Print OECD IO table 200 250000 Food and Tobacco UN Mining and Quarrying 150 200000 Machinery 100 150000 Transport Equipment Non-Ferrous Metals 100000 50 Non-Metallic Minerals 50000 0 Chemical and Petrochemical Iron and Steel 1970 1980 1990 2000 0 1971 1976 1981 1986 1991 1996 2001

Japan Industrial energy consumption 120000 120000 Non-specified industry Non-specified industry Construction Construction 100000 100000 Wood and Wood Products Wood and Wood Products Energy consumption (ktoe) Energy consumption (ktoe) Textile an Leather Textile an Leather 80000 80000 Paper, Pulp and Print Paper, Pulp and Print Food and Tobacco Food and Tobacco 60000 60000 Mining and Quarrying Mining and Quarrying Machinery Machinery 40000 40000 Transport Equipment Transport Equipment Non-Ferrous Metals Non-Ferrous Metals 20000 20000 Non-Metallic Minerals Non-Metallic Minerals Chemical and Petrochemical Chemical and Petrochemical 0 Iron and Steel 0 Iron and Steel 1971 1976 1981 1986 1991 1996 2001 1971 1976 1981 1986 1991 1996 2001 IEA Energy balances Reconciliation results

China Industrial energy consumption 600000 500000 Non-specified industry Non-specified industry 450000 Construction Construction 500000 400000 Wood and Wood Products Wood and Wood Products Energy consumption (ktoe) Energy consumption (ktoe) 350000 Textile an Leather Textile an Leather 400000 Paper, Pulp and Print Paper, Pulp and Print 300000 Food and Tobacco Food and Tobacco 300000 250000 Mining and Quarrying Mining and Quarrying 200000 Machinery Machinery 200000 Transport Equipment Transport Equipment 150000 Non-Ferrous Metals Non-Ferrous Metals 100000 100000 Non-Metallic Minerals Non-Metallic Minerals 50000 Chemical and Petrochemical Chemical and Petrochemical Iron and Steel Iron and Steel 0 0 1971 1976 1981 1986 1991 1996 2001 1971 1976 1981 1986 1991 1996 2001 IEA Energy balances Reconciliation results

Korea Industrial energy consumption 45000 45000 Non-specified industry Non-specified industry 40000 40000 Construction Construction 35000 35000 Wood and Wood Products Wood and Wood Products Energy consumption (ktoe) Energy consumption (ktoe) Textile an Leather Textile an Leather 30000 30000 Paper, Pulp and Print Paper, Pulp and Print 25000 25000 Food and Tobacco Food and Tobacco Mining and Quarrying Mining and Quarrying 20000 20000 Machinery Machinery 15000 15000 Transport Equipment Transport Equipment Non-Ferrous Metals Non-Ferrous Metals 10000 10000 Non-Metallic Minerals Non-Metallic Minerals 5000 5000 Chemical and Petrochemical Chemical and Petrochemical 0 Iron and Steel 0 Iron and Steel 1971 1976 1981 1986 1991 1996 2001 1971 1976 1981 1986 1991 1996 2001 IEA Energy balances Reconciliation results