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SESSION 1: Rob Dellink, OECD_ Land Water Energy Nexus - CIRCLE workshop Oct. 2014

SESSION 1: Rob Dellink, OECD_ Land Water Energy Nexus - CIRCLE workshop Oct. 2014

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SESSION 1: Rob Dellink, OECD_ Land Water Energy Nexus - CIRCLE workshop Oct. 2014

  1. 1. THE LAND-WATER-ENERGY NEXUS: CONSEQUENCES FOR ECONOMIC GROWTH Rob Dellink Environment Directorate, OECD CIRCLE Ad-hoc expert workshop Paris, 2 October 2014
  2. 2. • Soft-linking different models – Using the output of one model as input to another – Using a common baseline so models all share the same set of underlying common drivers (plus a set of model-specific drivers) – Harmonise on other elements in the scenario storyline where possible • Staged modelling approach – ENV-Growth provides macroeconomic projections – ENV-Linkages provides sectoral economic projections and emissions – IMAGE provides biophysical impacts and bottlenecks – Economics feedbacks to ENV-Linkages where possible 2 Linking different modelling tools
  3. 3. The first stages of the modelling track Land-water-energy nexus: IMAGE model suite Structural economics & environmental pressure: ENV-Linkages Macroeconomics: ENV-Growth 3 Stand-alone modules for e.g. natural resources Climate change: ENV-Linkages climate module Air pollution: range of models
  4. 4. 4 • Computable General Equilibrium (CGE) model • Multi-regional, multi-sectoral • Full description of economies • All economic activity is part of a closed, linked system • Simultaneous equilibrium on all markets • Structural trends, no business cycles • Dynamics • Solved iteratively over time (recursive-dynamic) • Capital vintages • Link from economy to environment • Greenhouse gas emissions linked to economic activity • Other pollutants forthcoming… • Potential future work on water use? The ENV-Linkages model … and back
  5. 5. • Make use of the details of the CGE model where possible – sectoral disaggregation – explicit production function – captures both direct and indirect effects – relatively well-established for climate change damages, but for other environmental challenges the links to economic variables is much less clear • Keep separate where needed – Valuation of non-market damages 5 Incorporating feedbacks into a general equilibrium model
  6. 6. 6 Linking IMAGE output to ENV-Linkages • The direct impacts are included in the IMAGE model • ENV-Linkages calculates macroeconomic costs, which includes indirect impacts Impacts on economic growth Indirect impacts Direct impact Sector Agricul-ture Changes in crop product-ivity Changes in crop prices Changes in food prices Changes in trade specialization of agriculture / food products Changes in prices and demands of other goods Changes in household income and government revenues … Change in GDP Change in welfare
  7. 7. THANK YOU! For more information: www.oecd.org/environment/CIRCLE.htm www.oecd.org/environment/modelling rob.dellink@oecd.org

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