Presentation by Justin Johnson Assistant Professor University of Minnesota OECD INSPIRE Workshop Bio Risks impacts and dependencies in the financial sector

1. Economy Earth systems
e.g. Land-use change
Sustainability cannot consider Earth and the economy as separate. We
need integrated “Earth-Economy” modeling.
e.g. Providing clean water
Human Impact
Ecosystem Services
• Prior focus was on how
humans impact the
environment.
• We need to understand
how the environment
affects the economy
through biodiversity and
ecosystem services.
• We created a new
model, GTAP-InVEST, to
make this link explicit
and policy relevant
• GTAP: Global Trade
Analysis Project
computable general
equilibrium model
• InVEST: Integrated
Valuation of Ecosystem
Services and Tradeoffs

2. Economic shocks from
degraded ecosystem services
Projected land-use change
GTAP-InVEST Overview
• Currently includes 6 global ecosystem services
• Downscales projections of land-use change from regional level to
high-resolution (300 meter) pixels.
• We built the SEALS (Spatial Econometric Allocation Landscape Simulator) model
to make this possible.
• Created a new
version of GTAP-
AEZ with land-
supply curves

3. Key result
from newest
runs of
GTAP-InVEST
1. Failing to protect ecosystem services hurts low-income
countries most.
2. Policies to conserve ecosystem services benefits low-
income countries most.
3. Investing in nature can provide win-wins
4. Must consider impacts and dependencies for
countries/corporations.

4. Research Advance 1:
Downscale 337 regions to 8
billion 300m land-use, land-
cover grid-cells.
Research Advance 2:
Endogenized the expansion
of cropland, pasture and
forestry
Research Advance 3: Fully-
linking an Earth Economy
model means we can
observe the macroeconomic
risks present in degraded
natural capital. (GDP is
endogenous to nature)

5. Edogenized land-use change via
land-supply curves
• For each region, we
calibrated a land-
supply curve
• Bringing more land
into the economy
requires a higher
price, rising
asymptotically with
the limit
• Shape of the curve determined
by high-res suitability data.
• Unique for each AEZ.