Information for a developmental approach to mitigation: linking sectoral and economy-wide models for Brazil, Chile, Colombia, Peru and South Africa

Abstract

Improved tools are required to deliver good information for decision-making on the potential socio-economic benefits of a transition to a low-carbon society. This article reports on modelling approaches to answer policy-relevant questions carried out research teams in Brazil, Chile, Colombia, Peru and South Africa. The teams link detailed models of sectors with economy-wide models and report methodological findings. Combining bottom-up and top-down models holds the promise of addressing short and long-term time-frames technological change, economy-wide interactions, direct costs, emissions reductions, and broader socio-economic implications of mitigation. While making different choices of models, common challenges were identified around: communication between the two models; treatment of time; convergence criteria; trade-offs between model accuracy and requirements of stakeholder processes; and level of integration of sectors within the economy-wide model. The teams each examined a diverse range of mitigation actions. By assuming the same range of carbon prices (US$10, US$20 and US$50 per ton of CO₂-eq) results can be compared, while understanding that variation may also be due to assumed differences in carbon pricing mechanisms, recycling of revenue and models chosen. The studies for Brazil and Chile found relatively higher emission reductions at this medium carbon price than those for South Africa and Colombia. Our analysis of the socio-economic implications suggests that emissions reductions with a medium carbon tax would be accompanied by Gross Domestic Product (GDP) losses ranging from 0.5% of GDP to 3%. Three studies further examined implications for employment and wages and found negative effects, which could be softened only to some extent by recycling of revenue.

Keywords:

• mitigation
• development
• climate change
• Latin America
• Southern Africa

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Erratum

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. The full model documentation for SATIM is provided by ERC’s modelling group at www.erc.uct.ac.za, and source file and supporting spreadsheets for running the model with the ANSWER-TIMES model builder are available at http://bit.ly/1OUGxM1

2. Model documentation for IMACLIM-R is provided by CIRED at http://www.imaclim.centre-cired.fr/IMG/pdf/imaclim_v1.0.pdf

3. See Wills et al. notably Section 3 of the working paper on ‘Brazilian Mitigation Scenarios Beyond 2020’ (Wills et al., 2014) at http://www.mapsprogramme.org/wp-content/uploads/Wills-etal-Brazilian_mitigation_scenarios.pdf.

4. Documentation for the Computable General Equilibrium Model of Colombia for Climate Change (the acronym in Spanish is MEG4C) is described by Delgado et al., (2014b), including how the climate application of the model builds on established modelling frameworks. The methodology for aggregation through MEG4C is available in detail on the DNP site on a synthesis of economic impacts of climate change in Colombia (in Spanish) https://colaboracion.dnp.gov.co/CDT/Ambiente/Impactos%20economicos%20Cambio%20climático.pdf

5. Benavides et al. detailed the modelling approach taken by researchers from University of Chile and Pontificia Universidad Católica (Benavides et al., 2015); and information about the models and related databases is available on the MAPS Chile homepage www.mapschile.cl Interested readers are additionally referred to the report on Phase 2, http://economia.uc.cl/publicacion/maps-chile-2014-opciones-de-mitigacion-para-enfrentar-el-cambio-climatico-resultados-de-fase-2/

6. The methodology used by IIAP for analysis of agroforestry systems is detailed in Vasquez-Boas et al. available at http://www.erc.uct.ac.za/Research/CDKN/14-VasquezBoas-etal-Agroforestry-stsyems.pdf (Vasquez Baos et al., 2014); and the detailed calculations at http://wp.me/p3hHt8-tz