The Challenges of Linking Sectoral and Economy-wide Models

Submitted by Jean-Pierre Roux | published 22nd Apr 2013 | last updated 29th Apr 2013


Introduction

Policy makers and researchers in the MAPS (Mitigation Action Plans and Scenarios Programme) countries, namely Brazil, Chile, Colombia, Peru and South Africa are interested in knowing what the socio-economic implications of proposed mitigation actions in their countries will be. Understanding the developmental benefits of acting on mitigation can provide a strong case for more ambitious mitigation action. Where costs of mitigation actions outweigh benefits, it is important to understand clearly who might bear the burden of such costs, to be able to manage them effectively. To carry out such analysis to provide good information, researchers would have to link sectoral models that project the impact of mitigation actions within sectors, with economy-wide models. This is because these sectoral models cannot provide us with the complete set of answers we are looking for, on their own. Sectoral models such as those for energy and those for land-use often do not include variables like employment and poverty and when they do, represent only the direct impacts in the sector, not the ripple effects throughout the economy and society. On the other hand, we cannot use economy-wide models to simulate the necessary shocks brought about by mitigation actions in the various sectors. It is therefore necessary to link sectoral and economy-wide models to provide rigorous information on the socio-economic implications of mitigation actions.

The linking of these models is however complex and has not been perfected by anyone, despite efforts to address the challenges of providing socio-economic analysis of mitigation (Dubash 2009; Halsnæs & Shukla 2008; La Rovere et al. 2011; Pan 2003; Urban 2010; Winkler & Marquard 2009). It is therefore important that researchers consider the challenges that they are likely to encounter as they attempt to link these models. This will inform them of the feasibility of achieving the desired linkages. Identifying these challenges will also help researchers to think about possible solutions.

Reference

Moyo, A. Winkler, H. Wills, W. 2012. The Challenges of Linking Sectoral and Economy-wide Models. [Available Online] http://www.mapsprogramme.org/the-challenges-of-linking-sectoral-and-econ.... Cape Town: MAPS Programme