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Environmental economics

Strategic economic modelling and foresight

Global integrated assessment to support EU future environment policies (GLIMP) (2012)

Drawing on a complex global modelling exercise carried out over two years, this project shows the relationships - by year 2050 - between the EU and other world regions in four critical areas: fisheries; phosphorus (see as scarce resources); long-term bioenergy prospects; and biofuels - history and projections for land use change to 2020. Its focus is on environment-related issues whereby actions within the EU, or the fact that no actions are being taken, are expected to have significant consequences elsewhere in the world, or where the EU needs global partners to effectively address a problem. This global, model-based assessment produced as well a world baseline scenario for 2050 that was carefully coordinated with the OECD environmental outlook to 2050.

EU Resource efficiency perspectives in a global context (2011)

This study provides a global, model-based analysis of five distinct resource themes: energy; land, phosphorus, fresh water and fish stocks. The assessment finds that, with ambitious global efforts, there is substantial potential to improve efficiency in the use of these resources:

  • the increase in global annual energy use between 2010 and 2050 could be limited to less than 25%. For greenhouse gas emissions, this would halve the gap between the situation of unchanged policy and the 450 ppm CO2 eq mitigation scenario.
  • net global agricultural expansion between 2010 and 2050 may be halted, with expansion in Africa reduced by half, by improving the efficiency of agricultural production, consumption and food supply chains.
  • the global increase, up to 2050, in the use of phosphorus fertilisers from primary sources could be limited to 11%, mainly by making better use of manure and by recycling phosphorus from human excreta.
  • globally, water efficiency, in all sectors combined, could be improved by 25%.
  • fish stocks may recover and marine biodiversity may improve if a temporary reduction in fishing efforts is implemented.

  • Final report (pdf ~ 8.2 MB)

Macroeconomic modelling of sustainable development and the links between the economy and the environment (2011)

This study examines the economic underpinning for resource policy. It provides a matrix of risks for Europe's future use of different resources: the nature of the risks, timescales, examples and quantifications of risks. The study notes an ongoing shift in Europe to resource imports: by 2030 two thirds of resource use will be either imports or use outside the EU. Marginal abatement cost curves are developed, showing that resource use can be reduced with benefits in terms of jobs and growth. A number of policy simulations are carried out, with the conclusion that we could realistically reduce the total material requirements of the EU economy by 17%, and that this could boost GDP by up to 3.3% and create between 1.4 and 2.8 million jobs. Every percentage point reduction in resource use is worth around 23 billion Euros to business and could lead to up to 100,000 to 200,000 new jobs.

 

Sustainability Scenarios for a Resource Efficient Europe (2011)

This study analyses scenarios for sustainability and resource efficiency for the global and European economy up to and beyond 2050. These scenarios cover different resources (raw materials, metals, energy, climate water, land biodiversity) and economic sectors (construction and housing, agriculture and food, industry and manufacturing, transport). The report provides the baselines, the assumptions for the key underlying variables used in modelling, as well as the assumptions made about entering new variables in models or modelling suites to explore sets of parameters that create a vision for a Resource efficient EU by 2050 (i.e. how resource availability, efficiency, etc is factored into the scenarios and models). The report identifies and recommends models and modelling approaches to assess policies to deliver a vision of a resource efficient Europe and to measure progress in achieving it, recognising the importance of cross-cutting policies and issues. For example, the linkages between resources and the economy that do not involve economic transactions and are not well-covered in existing models. The study also identifies key gaps in the existing models, such as the links between land use change and climate change, as well as omissions due to the limited understanding of the nature, direction and strength of these links.

Scoping Study on the Macroeconomic View of Sustainability (2010)

This study examine whether the current macroeconomic models are up to the task of evaluating policy from a sustainable development viewpoint or whether they 'miss' something that may systematically bias them. The analysis focused on sixty of the most used models, and looked at them in the light of what both neoclassical and ecological economics would suggest is needed and important. Three major constraints were spotted, which in certain circumstances could be material for policy makers: the often one-way linkages from economy to environment; physical limits, such as stocks and maximum carrying capacities are not usually covered in the analysis; the models are not good for making a proper assessment of ‘extreme’ scenarios. There is particular scope for improvement in the modelling of resource use but recommendations also cover: the role of technology; non-linear relationships, thresholds, limits; and, uncertainty. Overall, it should be possible to move macroeconomic models towards a more systematic modelling of the two-way linkages between the environment and the economy, and to allow for a more comprehensive assessment of how the economic, environmental and social aspects of our societies affect each other.

Study on the evolution of some deforestation drivers and their potential impacts on the costs of avoiding deforestation scheme (2010)

The study describes the drivers for deforestation in the main regions in which it happens, namely Latin America and the Caribbean, Sub-Saharan Africa and Pacific Asia. On a global scale, the most important identified direct drivers for deforestation are agricultural expansion for food and energy production, followed by infrastructure development and wood extraction. The study estimates, using GLOBIOM and G4M models, the effects of changes in drivers on deforestation levels. Six shock areas are identified for quantitative modelling analysis: increased demand for biofuels, wood, meat, infrastructure and for biodiversity schemes. Some shock areas are analyzed on a global scale as well as for each of the 3 hotspots regions while the policy shocks related to infrastructure development and biodiversity protection are modelled both on a global scale and at a geographic-explicit level, namely the Congo Basin. The scenarios chosen do not necessarily seek full realism since the objective is rather to understand which kind of drivers is more important than other. Consequently, the technical details of the study are not as robust as they can be in more specific analysis fully dedicated to a specific driver, since some compromises in the modelling had to be made.

The study concludes that the two policy shocks leading to the worst consequences in terms of additional deforestation are an increase in consumption of 1st generation biodiesel and an increase in meat consumption. The Latin America and Caribbean region is predicted to experience, across all scenarios, the highest levels of deforestation worldwide between 2020 and 2030. By analyzing associated annual marginal costs of avoiding certain degrees of deforestation under the various shock scenarios, the modelling exercise also shows that world demand has significant implications in terms of financing a REDD mechanism: with more ambitious avoided deforestation targets, the need for financing not only becomes higher but also less predictable as the impacts of possible shocks become more influential.

Land use modelling : Implementation - Preserving and enhancing the environmental benefits of land use services (2010)

A new open source land allocation model - the EU-ClueScanner – has been developed in order to assess the environmental impacts of land use change in Europe at a 1 km2 scale, with a time horizon of 2030. The report describes the methodology used in order to develop this model and the related set of environmental, economic and social indicators. In addition to the reference scenario (IPCC B1), the report describes eight policy alternatives that were used as examples for testing the model. These policy alternatives relate to biofuel production, increased biodiversity protection and climate change adaptation and mitigation measures related to water management and soil protection. The implementation of the modeling framework shows that it is successful in simulating different spatial land use policy options, in identifying hotspots of change and in providing results in terms of specific indicators. The annex to the report explains how scenarios, indicators and data can be changed in order to study different policies.

Scenarios and models for exploring future trends of biodiversity and ecosystem services changes (2009)

This study addressed the use of scenarios, models and other quantitative tools for exploring future trends in biodiversity and their impacts on ecosystem services. The study reviewed the different scenarios and models used to explore future trends in biodiversity loss and ecosystem change and their associated impacts on ecosystem services. It summarised the key findings from recent global and regional assessments, assessed the limitations of existing models with respect to their suitability for producing robust projections of changes in biodiversity and ecosystem services, instigated a peer-review of the study’s’ initial conclusions during a expert workshop and finally it proposed a set of options for suitable models and scenarios to be used in future studies such as for 'The Economics of Ecosystems & Biodiversity (TEEB)' and other assessments. The results of this study are of general use for policy analysis and reflection on biodiversity and ecosystem services issues.

Modelling of EU land-use choices and environmental impacts - Scoping study (2008)

This scoping study has allowed the identification of key trade-offs over land use, as reviewed how climate, socio-economic and policy drivers may affect these trade-offs, and what is the optimal scale for the assessment of drivers and impacts of land use changes. The contractor has performed a detailed inventory of on-going and forthcoming research and has assessed how it can contribute to the building of a modelling framework.

Cost of policy inaction - scoping study (2006)

This study examines the possibility to use cost of policy inaction (COPI) for analysis of environmental policies, and provides some pointers for how DG Environment might use the tool. COPI is defined as the environmental damage occurring in the absence of additional policy or policy revision. COPI is an instrument best used in the early phases in policy development, when the emphasis is on identifying problems, warning, communicating the need for policy action, and perhaps also sketching the urgency relative to other issues and indicating which sectors need to take action or revise their policies.