wang ssy 20150708_1730_upmc_jussieu_-_amphi_durand

MRICES-CIECIA：A new multi-

regional integrated assessment model

on climate change economics

Zheng Wang, Gaoxiang Gu, Jing Wu，Changxin Liu, Rui Huang

Institute of Policy and Management, CAS

East China Normal University

Some practical challenges encountered in IAM

In many existing IAM, the national economies are independent and thus cannot reflect the reality of the current economic integration. In particular, the emission reduction policies might arouse the global economic crisis.

Existing technical economic model of technological advancement are more inclined to consider energy technologies, without considering the changes brought about by the technological advances of the industrial structure, and this change is the basis of carbon emission intensity decreased

Therefore, the need to build a global economic interaction and evolution of the IAM contains industrial structure, which implies the need to consider the evolution of general equilibrium and economic dynamics

MRICES is a Prototyping of CIECIA

MRICES: Multi-factor Regional Integrated Climate change Economic assessment model System, it is a development of RICE

CIECIA: Capital, Industrial Evolution and Climate change Integrated Assessment model

CIECIA is dynamic general equilibrium system with Endogenous Technological Progress

MRICES-CIECIA Structure

A multi-national-sectoral dynamic general equilibrium model

Endogenous technological progress mode with knowledge capital accumulation and process technology evolution

international capital flows with different patterns

Global carbon cycle model with three-carbon pools

Economical model: production

Production foundation

Progress on technical level of labor (Romer, 1986)

Knowledge capital accumulation (Buonanno，Carraro，Galeotti, 2003)

( )j j j j

t t t tA B K Z j j

tB t

1 Z1j j j

t Z t tZ Z I j j j

Z t tI I

Economical model: evolution

' *

, , , , , , , 1 , , , ,ln( ) ln( )k j i t k j i t n j k i t na a

* * *

1, , , , , , , , , , , ,

' ' ' ' *

1, , , , , , , , , , , , , , , , , 1 ,1 1

* * *

1, , , , 1 , , , , 1 , , , , 1

, , , ,

, , , , if

, , , , Otherwise

j i t n k j i t n I j i t n

J J

j i t k j i t I j i t k j i t i t k j i t n i tk k

j i t n k j i t n I j i t n

a a a

a a a a p a p

a a a

, , , , (0; )j k i t n N ,

jj t

t j tj j

t t

Za b c

Z K

Technological progress is accomplished by the process of innovation, process innovation is an evolutionary selection process, and the process of innovation occurs stochastically (Lorentz, Savona, 2008). The variance of technological shock which follows normal distribution is controlled by knowledge capital

Economical model: international

capital flows

International capital flows balanced based on equilibrium of ROI (Jin, 2012)

international capital flows based Capital attractive (by Wang, Ge, 2007)

Mix Pattern

,,

, ,

,

exp ln 1

y jx x tx y j y y t

i j i t t t y y

x t t

X XTK K w L

K X

,

,

,,,,,

2

1( , , )

i j

x y y

x ti jx yx yi j

g

t

TKS

TKR i j t

I

, 1

1 , 1

, 1

(1 )

1( , , ) E E

(1 ) (1 )

1 1

j li t ji i

i tg

i tk l k l

sX

R i j t RX

s s s s

, 1 2( , , ) (1 ) ( , , )j

i tR R i j t R i j t

Carbon cycle system model

Single level carbon cycle system （Nordhaus，Yang，1996）

Three levels of carbon cycle （Svirezhev et al 1999）

Technical improvements carbon emissions

1t t t t t tQ V So O

1590 1 590c c

t t tQ

1

0

1 ln tt tT T

, , , , , ,

j e j

i t i j E j i t i tE a Y , , ,

j c j

t j e i t i te iQP E

J j

t t tjQ QP QL

Model: Climate System

Climate damage function Nordhaus Pattern

Weitzman Pattern

Carbon tax module

1,

, ,

0, 2

1

19

j

j tN

i j t

j

t

b

DT

1, ,

, , 2 6.754

1

120.46 6.081

j

j i tW

i j t

t t

b

T T

, , , , , ,

1

Ic tax in tax c tax out

i j t i j t i j t

i

I I

*

, , , , , , ,1 -c tax out j g j j c

i j t i j t t i i t j e i tI R I E

System structure

System Interface

Parameter correction

International capital flow patterns

Knowledge capital investment rate

Carbon cycle

=0.345

China UAA Japan EU India Russia CAE HDC MDC LDC

0.0141 0.0257 0.0332 0.0165 0.005 0.01 0.018 0.0014 0.0041 0.0016

Calibration (2007-2011)

GDP

Z-test：Z=0.4810

International capital flows

Z test：Z=0.081

Energy use

Z-test：Z=0.0062

Carbon Emission

Z-test：Z=0.0284

=0.9968

=0.9323

=0.9978

=0.9950

BAU: GDP growth of countries

0

10

20

30

40

50

60

70

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Trill

ion

US

Do

llar

GDP CHN

USA

JPN

EU

IND

RUS

ODC

HDC

MDC

LDC

BAU: GDP per capita of countries

0

2

4

6

8

10

12

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

10

th

ou

san

d U

S D

olla

rs

GDP per capita

WorldCHNUSAJPNEUINDRUSODCHDCMDCLDC

BAU: Changes of industrial structure

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

China

OthServ

Ins&Fin

Trans&Comm

Trd&Busi

Const

HvyMnfc

ChemInd

LghtMnfc

Mtl&Mn

Enrg

FdPro

Agri

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

USA

OthServ

Ins&Fin

Trans&Comm

Trd&Busi

Const

HvyMnfc

ChemInd

LghtMnfc

Mtl&Mn

Enrg

FdPro

Agri

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

EU

OthServ

Ins&Fin

Trans&Comm

Trd&Busi

Const

HvyMnfc

ChemInd

LghtMnfc

Mtl&Mn

Enrg

FdPro

Agri

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Japan

OthServ

Ins&Fin

Trans&Comm

Trd&Busi

Const

HvyMnfc

ChemInd

LghtMnfc

Mtl&Mn

Enrg

FdPro

Agri

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

Russia

OthServ

Ins&Fin

Trans&Comm

Trd&Busi

Const

HvyMnfc

ChemInd

LghtMnfc

Mtl&Mn

Enrg

FdPro

Agri

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

India

OthServ

Ins&Fin

Trans&Comm

Trd&Busi

Const

HvyMnfc

ChemInd

LghtMnfc

Mtl&Mn

Enrg

FdPro

Agri

BAU：Carbon Emissions and temperature rising

0

500

1000

1500

2000

2500

3000

3500

4000

4500

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

MtC

Carbon Emissions

CHN USA JPN EU IND RUS ODC HDC MDC LDC0

100

200

300

400

500

600

700

800

0

0,5

1

1,5

2

2,5

3

3,5

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

pp

m

℃

Temperature rising and concentration of carbon dioxide in the atmosphere

temperature rising concentration of carbon dioxide in the atmosphere

Scenario analysis ：Knowledge

Capital Investment Policy

Policy Scenario 1：



CHN USA JPN EU IND RUS ODC HDC MDC LDC

0.025 0.0257 0.03 0.0165 0.01 0.015 0.018 0.01 0.01 0.01


0.03 0.035 0.035 0.025 0.02 0.025 0.025 0.02 0.02 0.02


0.04 0.04 0.04 0.04 0.035 0.04 0.04 0.035 0.035 0.035

Knowledge capital investment policy:

temperature rises more than 2℃

0

0,5

1

1,5

2

2,5

3

3,5

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

MtC

Temperature rising in Scenarios

Scenario 1 Scenario 2 Scenario 3

Knowledge capital investment policy -

cumulative utility change

-2

0

2

4

6

8

10


%

Changing rates of cumulative utilities in Scenario 1

2007-2025 2007-2050 2007-2075 2007-2100

2007-2025 Global 2007-2050 Global 2007-2075 Global 2007-2100 Global

-2

0

2

4

6

8

10

12

14


%


2007-2025 2007-2050 2007-2075 2007-2100


0

2

4

6

8

10

12

14

16

18


%


2007-2025 2007-2050 2007-2075 2007-2100


Knowledge capital investment

policy：carbon emissions changes

0

500

1000

1500

2000

2500

3000

3500

4000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

MtC

Carbon emissions in Scenario 1


0

500

1000

1500

2000

2500

3000

3500

4000

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

MtC



0

500

1000

1500

2000

2500

3000

3500

2010 2020 2030 2040 2050 2060 2070 2080 2090 2100

MtC



Global abatement schemes

Stern program, Nordhaus program, UNDP program, equal per capita emissions program (He programs), cumulative emissions per capita equal program (Ding program)

Wang program-Steady economic growth program, developed by 2050 emission reduction targets consistent with the Stern program, and maintaining the 2050 level of emissions after 2050; Russia in 2050 to 60% reduction；China's carbon emissions by 2050 decrease of 15% compared to 2010, to 2100 to reduce carbon emissions by 12% compared to 2050; India and developing countries to maintain the level of emissions in 2010; less developed countries do not participate in the simulation process emissions.

Effective Pareto improvement program: the economies of the cumulative effect to 2100 were greater than the reference scenario, and to meet the 2100 target of temperature control and CO2 concentration control objectives

Assessments of global cooperating

abatement schemes

0

50

100

150

200

250

300

350

400

450

500

0

0,5

1

1,5

2

2,5

pp

mv

℃

Temperature rising and Atmospheric concentration equivalent of CO2

Temperature rising Atmospheric concentration equivalent of CO2

Assessment of global abatement schemes –

the changing rates of cumulative utilities

-2

-1

0

1

2

3

4


(%)

Stern Scheme 2007-20252007-20502007-20752007-21002007-2025 Global2007-2050 Global2007-2075 Global2007-2100 Global

-2

-1

0

1

2

3


(%)

Nordhaus Scheme 2007-20252007-20502007-20752007-21002007-2025 Global2007-2050 Global2007-2075 Global

-2

-1

0

1

2

3


(%)

UNDP Scheme 2007-20252007-20502007-20752007-21002007-2025 Global2007-2050 Global2007-2075 Global

-2

-1

0

1

2

3

4


(%)

Convergence on carbon emissions per capita Scheme

2007-20252007-20502007-20752007-21002007-2025 Global2007-2050 Global2007-2075 Global

-3

-2

-1

0

1

2

3

4

5


(%)

Convergence on accumulated carbon emissions per capita Scheme (2007-2100)


-3

-2

-1

0

1

2

3

4

5


(%)



-3

-2

-1

0

1

2

3

4

5


(%)



-1,5

-1

-0,5

0

0,5

1

1,5

2

2,5

3

3,5


(%)

Global economic growth Scheme


-2

-1

0

1

2

3

4


(%)

Pareto Improvement Scheme

2007-20252007-20502007-20752007-21002007-2025 Global2007-2050 Global2007-2075 Global2007-2100 Global

Abatement targets in Pareto improvement Scheme

By 2050 By 2100 Carbon permits 2007~2050 (GtC)

Carbon permits 2007~2100 (GtC)

China 25% reduction based on 2005 level 40% reduction based on 2050 level 84.46 128.93

USA 75% reduction based on 1990 level 40% reduction based on 2050 level 45.92 59.60

Japan 90% reduction based on 1990 level 40% reduction based on 2050 level 8.05 9.04

EU 95% reduction based on 1990 level 40% reduction based on 2050 level 28.96 31.11

India Reduce to 2005 level 20% reduction based on 2050 level 19.15 33.61

Russia 50% reduction based on 1990 level 40% reduction based on 2050 level 17.71 28.65

Other developed countries 98% reduction based on 1990 level 70% reduction based on 2050 level 15.90 16.13

High developing countries 20% reduction based on 2005 level 20% reduction based on 2050 level 49.08 87.72

Middle developing countries 10% reduction based on 2005 level 20% reduction based on 2050 level 26.00 46.09

Low developing countries Start reduction from 2045; maintain 2045’s emission level between 2046 and 2050

maintain 2050’s emission level 14.30 69.23

Conclusion

In the baseline scenario, China, India and other developing countries in the future will maintain high economic growth rates. However, their per capita GDPs are still low; global carbon emissions will keep increasing trend, leading to 3.13 ℃ temperature rising till 2100, higher than 2 ℃ control target.

After 2050, along with the rapid growth of developing countries, the GDP shares of the secondary industrial sectors in developed countries increase slightly, facing a phenomenon of re-industrialization。

Conclusion

Improving knowledge capital investment rate will effectively reduce the carbon intensities of countries. However, relying on knowledge capital investment policy as the only measure cannot achieve global climate protection.

The global abatement schemes assessed in this study are all effective. Among them, the Pareto Improvement Scheme guarantees the benefits of cumulative utilities of all countries, and thus is most feasible.

THANKS 谢谢

wang ssy 20150708_1730_upmc_jussieu_-_amphi_durand

Science