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THE IEEM PLATFORM AND NCA-BASED MODELING
OnilBanerjee,Inter-AmericanDevelopmentBankMar8nCicowiez,UniversidadNacionaldeLaPlataMarkHorridge,VictoriaUniversityRenatoVargas,CHWResearchSebas8anDudek,IDBConsultant
Kigali,Rwanda,June5to7,2017.WorldBankWAVES7thAnnualPartnerMeeBng.
IEEM Integrated Economic-Environmental Modeling
IEEM Integrated Economic-Environmental Modeling
• Wehaveaccounts,nowwhat?
• Fromaccountstomodels(integra8ngNCAintoSNA?).
TheIntegratedEconomic-EnvironmentalModelingPlaNormandEvidence-BasedPolicyModeling.
• Exploratoryscenarios-inves8nginirriga8on.
• Targetseeking-NDCs.
• Policyscreening-SDGs.
• Retrospec8veevalua8on-inves8ngintourism.
• GeJngspa8al-IEEM+ESMandGreenGrowth.
OUTLINE
IEEM Integrated Economic-Environmental Modeling
• NCAasinforma8onsystem.
• Indicatorsformonitoring/issues:
• Waterproduc8vity,energyintensity,pollu8onperunitoutput,investmentinenvironment,wealth.
• Guatemala:
• In60years,Guatemalalost50%forestcover;95%illegal.
• Only54%ofHHfuelwoodcouldbesuppliedlegally.
• RealPolicyImpact:strategiesforcontrolofillegallogging;fuelwood;forestincen8ves.
USES OF NCA: INDICATORS
IEEM Integrated Economic-Environmental Modeling
USES OF NCA: EVIDENCE-BASED POLICY
• Models:representtheessen8alfeaturesoftheobjectofinterestinanidealizedorsimplifiedway.
Source:BasedonIPBES,2016
IEEM Integrated Economic-Environmental Modeling
NATURAL CAPITAL BASED MODELING
• Spacepen?Modelsfitforpurpose,fromsimpletocomplex.Dependsontheques8on/resources($+t)/capacity.
• Scenarioanalysis:
• Extendedinput-outputmodel;enviroflowstodemand.
• IEEM:IntegratedEconomic-EnvironmentalModellingPlaNorm.
IEEM Integrated Economic-Environmental Modeling
• MineralandEnergyResources• Land• SoilResources• TimberResources
• Aqua8cResources• WaterResources
Firms
Households
Produc'on
Consump'on
PRODUCTS EMPLOYMENT
Provisioningecosystemservices(rawmaterialsforproduc8on)
Non-provisioningecosystemservices
EffluentsandEmissions
Environmentalinvestments
INTEGRATED ECONOMIC-ENVIRONMENTAL MODELING
EXPLORATORY SCENARIOS WITH IEEM
past present futureWell-b
eing
EXPLORATORY SCENARIOS
past present futureWell-b
eing
TARGET-SEEKING SCENARIOS
past present future
Well-b
eing
RETROSPECTIVE POLICY EVALUATION
past present future
Well-b
eing
Gap
POLICY-SCREENING SCENARIOS
past present futureWell-b
eing PolicyA
PolicyB
AGENDA SETTING DESIGN
IMPLEMENTATION REVIEW
IEEMNCA
AGENDA SETTING: EXPLORING VIABILITY WITH IEEM
Target
ObservedTrajectory
ExpectedPathways
Interven8onScenarios
IEEM Integrated Economic-Environmental Modeling
• Policyques8onfromAUSGovernment:whatwouldbetheeconomicimpactofUS$3billioninvestmentinirriga8oninFlindersGilbert,NWQueensland?
AGENDA SETTING: EXPLORING VIABILITY WITH IEEM
IEEM Integrated Economic-Environmental Modeling
• Region:4%morejobs,6%higherincome.
• Na8on:worseoff.Netpresentvalue:-US$51million.
• Alterna8veFUTURES:
• Fasterexportgrowth,NPV:US$86million.
• Climatechangeimpact,MurrayDarling,NPV:US$36million.
• Alterna8veFACTS
RESULTS
TARGET-SEEKING SCENARIOS WITH IEEM
past present future
Well-b
eing
EXPLORATORY SCENARIOS
past present futureWell-b
eing
TARGET-SEEKING SCENARIOS
past present future
Well-b
eing
RETROSPECTIVE POLICY EVALUATION
past present future
Well-b
eing
Gap
POLICY-SCREENING SCENARIOS
past present futureWell-b
eing PolicyA
PolicyB
AGENDA SETTING DESIGN
IMPLEMENTATION REVIEW
IEEMNCA
POLICY DESIGN: TARGET-SEEKING SCENARIOS WITH IEEM
Target
ObservedTrajectory
ExpectedPathways
Interven8onScenarios
IEEM Integrated Economic-Environmental Modeling
• Guatemala:responsiblefor<0.1%ofglobalemissions.
• BAU=53.85milliontonsCO2equivalentin2030.
• Reduceemissions11.2%,by6.04Mtons;or22.6%,by12.19Mtons-withfinancialsupport.
• Targetsectors:forestry,agricultureandtransportsectors.
TARGET-SEEKING: GUATAMALA’S NATIONALLY DETERMINED COMMITMENTS
IEEM Integrated Economic-Environmental Modeling
• TRNS-EFF:15%increaseefficiencyinfossilfuelcombus8onintransport(freightshipping)sector.
• TRNS-ELE:Subs8tute15%offossil-fuelbasedenergywithelectricityintransportsector(samenumberofterajoulesgenerated).
TRANSPORT SECTOR SCENARIOS
IEEM Integrated Economic-Environmental Modeling
RESULTS: TRANSPORT SECTOR EMISSIONS CHANGE BY 2030
IEEM Integrated Economic-Environmental Modeling
RESULTS: ECONOMY-WIDE EMISSIONS CHANGE BY 2030
IEEM Integrated Economic-Environmental Modeling
EFFICIENCY + ZERO DEFORESTATION:
efficiency+health,withcomplementarystrategyofzerodeforesta8on.
EFFICIENCY + HEALTH:
25%moreefficientfuelwoodcookstoves;healthbenefitsagriculturallaborproduc8vity.
• Fuelwoodsupplies57%ofGuatemala’sna8onalenergyconsump8on.
• Issues:deforesta8on;10millionm3deficit;5,000prematuredeathsperyear,and;1%GDPloss.
TARGET-SEEKING: GUATEMALA FOREST SECTOR AND FUELWOOD SCENARIOS
IEEM Integrated Economic-Environmental Modeling
RESULTS: ECONOMY-WIDE EMISSIONS CHANGE BY 2030
IEEM Integrated Economic-Environmental Modeling
RESULTS: BEYOND GDP; GENUINE SAVINGS
Transmissionmechanism:
• Increaseinforeststock.
• Loweremissions.
• Lessexpenditureonfuelwood=moreincomeforconsump8onandsavings.
POLICY-SCREENING SCENARIOS WITH IEEM
past present futureWell-b
eing PolicyA
PolicyB
EXPLORATORY SCENARIOS
past present futureWell-b
eing
TARGET-SEEKING SCENARIOS
past present future
Well-b
eing
RETROSPECTIVE POLICY EVALUATION
past present future
Well-b
eing
Gap
POLICY-SCREENING SCENARIOS
past present futureWell-b
eing PolicyA
PolicyB
AGENDA SETTING DESIGN
IMPLEMENTATION REVIEW
IEEMNCA
POLICY DESIGN: POLICY SCREENING WITH IEEM
Target
ObservedTrajectory
ExpectedPathways
Interven8onScenarios
IEEM Integrated Economic-Environmental Modeling
IEEM Integrated Economic-Environmental Modeling
IrrigatedAgriculture
SDG2,ZeroHunger,Target2.3:doubleagriculturalproduc8vityandruralincomes.
Strategy:increaseirrigatedagriculture.
Increase of irrigated area: 106,300 ha.
Investment: US$7.95 million
Time horizon: 5 years
SDG 2, Target 2.3
SDG
POLICY SCREENING: SDG 2 AND IRRIGATED AGRICULTURE
IEEM Integrated Economic-Environmental Modeling
WaterandSanita8on
SDG6,WaterandSanita8on,Target6.1and6.2:waterandsanita8onforall.
Strategy:increasecoverageofwaterandsanita8on.
Increase water and sanitation coverage by
6.2% and 10% to 81.5% and 66%, respectively
Investment: US$1.67 billion
Time horizon: 13 years
SDG 6, Target 6.1 and 6.2
SDG
6,2%
10%
0%
20%
10%
30%
40%
50%
60%
70%
80%
90%
100%
75.3% 81.5%
56.0%
66.0%
POLICY SCREENING: SDG 6 AND WATER AND SANITATION
IEEM Integrated Economic-Environmental Modeling
RESULTS: ECONOMIC AND POVERTY IMPACTS
• 41%and83%gapremaintodoubleagriculturaloutputandincome,respec8vely.
• Povertyimpacts:2.42millionpeopleareliredfrompoverty;100,000peopleasributedtoinvestments.
• Nega8veNPVforwaterandsanita8on,thoughisbasichumanright(UN64/292de2010)
• Irriga8oninvestmentcompensateswithcombinedNPVofUSS$1.4milmillion.
100
50
0
25
75
Agriculturalproduc8on
41%GAP
83%GAP
Income
Percen
t
IEEM Integrated Economic-Environmental Modeling
Totalgreenhousegasemissionsincreasedby642,346tonsofCO2.
Waterconsump8onpercapitaacrossallusesincreasedby1,860ML/capita.
36,528hadeforestedby2030;addi8onal9,820hadeforestedwithinvestment.GenuinesavingsincreasesbyUS$595million.
RESULTS: ENVIRONMENT
IEEM Integrated Economic-Environmental Modeling
INTEGRATED ANALYSIS REVEALS
Certainlinesofac8on(2.3-ZeroHunger)cancontributetovariousSDGs:SDG1-Elimina8ngPoverty,and;SDG8-Promo8ngSustainableEconomicDevelopmentandEmployment(increaseGDPbyUS$1.37billion).
Synergies: Perverse impacts: Trade-offs:advancestowardSDG2implyaddi8onaldeforesta8onwhichmovesawayfromachievingSDG15-Promo8ngSustainableUseofForests.Increasedemissionsslowsprogresstoward,SDG13-Ac8ononClimateChange.
RETROSPECTIVE POLICY EVALUATION WITH IEEM
past present future
Well-b
eing
Gap
EXPLORATORY SCENARIOS
past present futureWell-b
eing
TARGET-SEEKING SCENARIOS
past present future
Well-b
eing
RETROSPECTIVE POLICY EVALUATION
past present future
Well-b
eing
Gap
POLICY-SCREENING SCENARIOS
past present futureWell-b
eing PolicyA
PolicyB
AGENDA SETTING DESIGN
IMPLEMENTATION REVIEW
IEEMNCA
POLICY REVIEW: RETROSPECTIVE POLICY EVALUATION WITH IEEM
Target
ObservedTrajectory
ExpectedPathways
Interven8onScenarios
IEEM Integrated Economic-Environmental Modeling
• InvestmentofUS$13millioninmunicipalityinNicaraguabetween2012and2016.
• Tourismevalua8onscomplexduetolackofcounterfactual.
• Retrospec8veeconomicevalua8onwithIEEMrequiresconstruc8onofbaselineandpost-investmentIEEM.
RETROSPECTIVE TOURISM POLICY EVALUATION WITH IEEM
Percentofpeopleabovepovertyline
Time,T
T0 T5
Observedpercentabovepovertyline
....
Produc8onTechnology
PublicTransport
Baseline
TOURISMIMPACT
IEEM Integrated Economic-Environmental Modeling
RESULTS: POVERTY IMPACTS
• 80%abovepovertylineinbusinessasusual.
• Simulatedotherpolicy/investmentimpacts84%abovepovertyline.
• Differencebetweenes8matedandobservedistourisminvestmentimpact.
90
88
86
84
82
80
78
76
74
72
70
2012 2013 2014 2015 2016
Baseline OtherInvestments Observed
Percen
tofp
eopleabovepo
vertyline
TOURISMINVESTMENTSIMPACT
IEEM Integrated Economic-Environmental Modeling
POLICY SCREENING: IEEM + ECOSYSTEM SERVICES MODELLING (ESM)
POLICY-SCREENING SCENARIOS WITH IEEM
past present futureWell-b
eing PolicyA
PolicyB
EXPLORATORY SCENARIOS
past present futureWell-b
eing
TARGET-SEEKING SCENARIOS
past present future
Well-b
eing
RETROSPECTIVE POLICY EVALUATION
past present future
Well-b
eing
Gap
POLICY-SCREENING SCENARIOS
past present futureWell-b
eing PolicyA
PolicyB
AGENDA SETTING DESIGN
IMPLEMENTATION REVIEW
IEEMNCA
POLICY DESIGN: POLICY SCREENING WITH IEEM + ESM
Target
ObservedTrajectory
ExpectedPathways
Interven8onScenarios
IEEM Integrated Economic-Environmental Modeling
• Regula8ngecosystemservices,e.g.climateregula8on(carbon)anderosionreten8on/sedimenta8on
• Culturalandaesthe8cecosystemservices
Firms
Households
Produc'on
Consump'on
PRODUCTS EMPLOYMENT
IEEM + ESM
Non-provisioningecosystemservices
Scenarioimpactsonecosystemservice
supply
Ecosystemservicesupplyfeedbackstoeconomy/IEEM
IEEM Integrated Economic-Environmental Modeling
IEEM APPLIED TO RWANDA’S GREEN GROWTH STRATEGY
• Achievemiddleincomecountrystatus.
• Transformeconomyfromsubsistence-basedtoknowledge-based.
• ImportantaspectsofStrategyaretoincreaseagriculturalproduc8vityandforestcover.
IEEM Integrated Economic-Environmental Modeling
SCENARIOS
Increaseforestcoverto30%,plan8ng103,504ha.
Cost:US$285.6millionover12years.
FOR1
Fuelwoodprovides86%ofenergy.Moreefficientcookstoves/charcoalkilnsimproveefficiencyby
25%.
Cost:US$4.5millionover5years.
FUEL
Increaseirrigatedareaby85,473hafor25%
increaseinproduc8vity.
Cost:US$972.5millionover12years.
IRRIG
IEEM Integrated Economic-Environmental Modeling
FOR1 RESULTS: GDP, DIFFERENCE FROM BAU
• FORexpansionisincompe88onwithagriculture.
• FUELallowsrealloca8onoffactorstoothersectors(knowledge/serviceseconomy)
IEEM Integrated Economic-Environmental Modeling
FOR2 LAND USE CHANGE BY 2035, NO COMPETITION BETWEEN USE
Increaseof123,292ha.agriculture;12,139ha.livestock;102,633ha.forestry.
IEEM Integrated Economic-Environmental Modeling
DECISION CRITERIA AND LAND USE CHANGE
IEEM Integrated Economic-Environmental Modeling
FOR2: LAND USE IN 2035
IEEM Integrated Economic-Environmental Modeling
BaselinecarbonstorageTonsofcarbon/pixel
FOR2scenariocarbonstoragein2035Tonsofcarbon/pixel
FUTURE ECOSYSTEM SERVICE SUPPLY
Source:Bagstadetal.Inprepara'on. Source:BasedonBagstadetal.Inprepara'on.
FOR MORE INFORMATION ON NCA-BASED MODELING AND IEEM, CONTACT:
Onil Banerjee onilb@iadb.org Tel: 1-202-942-8128
IEEM Integrated Economic-Environmental Modeling
IEEM Integrated Economic-Environmental Modeling
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