James Lennox

CONSTRUCTING AN ENVIRONMENTALLY-EXTENDED MULTI-REGIONAL INPUT–OUTPUT TABLE USING THE GTAP DATABASE

The use of Multi-Regional Input–Output Analysis (MRIOA) for understanding global environmental problems is growing rapidly. Renewed interest in MRIOA has led to several large research projects focused on constructing detailed and accurate MRIOTs. However, very few researchers have made use of the already available and regularly updated database produced by the Global Trade Analysis Project (GTAP). We demonstrate and discuss how the GTAP database can be converted into an MRIOT without the need for additional balancing. An illustrative example uses the GTAP-MRIO to reallocate carbon dioxide emissions from producing to consuming countries. We suggest that an MRIOT that treats international transport exogenously is adequate until more reliable data on international transport margins and emissions are available. To focus resources and refine methods, a concerted research effort is needed to compare the results of the GTAP-MRIO model with the new MRIO datasets under development.

Modeling Basic Industries in the Australian Stocks and Flows Framework

Summary The Australian stocks and flows framework (ASFF) is a tool for establishing a coherent historical picture of the Australian physical economy and for testing long-term future scenarios (up to 2050 or even 2100). These scenarios can be used to investigate the long-term physical consequences of current and future choices affecting the physical dimensions of sustainability. In this article we describe the methodology for and construction of a key component of ASFF: a dynamic physical input-output model of material flows in the basic industries. The materials model in ASFF describes physical flows and their transformation by industrial processes. The model’s structure permits scenario analysis of long-term technological change by permitting time-varying input-output coefficients and vintage models of capital stocks. As a consequence, the model contains a large number of parameters, which can be left at default settings or adjusted as the modeler sees fit, in order to simulate the widest possible range of physically realizable scenarios. The materials model is built using a methodology that integrates bottom-up process analysis with topdown statistics on material and energy flows. We present some examples showing how the materials model has been implemented to model Australian heavy industries. Several possibilities for further developing the materials modelarealso described.

Impacts of high oil prices on tourism in New Zealand

Global oil supply is unlikely to meet rapidly growing global demand unless oil prices rise significantly. In New Zealand, a high oil price future threatens the tourism sector, which is a major source of export income. Using a two-stage general equilibrium modelling approach, the long-run economic effects of a permanent decline in the global oil supply are quantified. The tourism sector and especially tourism exports are disproportionately affected, due to a combination of income and price effects. Impacts differ significantly by inbound tourist market segments. The most distant markets are more adversely affected, but distance is only one of several important factors.

Directed technical change with capital-embodied technologies: Implications for climate policy

We develop a theoretical model of directed technical change in which clean (zero emissions) and dirty (emissions-intensive) technologies are embodied in long-lived capital. We show how obsolescence costs generated by technological embodiment create inertia in a transition to clean growth. Optimal policies involve higher and longer-lasting clean R&D subsidies than when technologies are disembodied. From a low level, emissions taxes are initially increased rapidly, so they are higher in the long run. There is more warming. Introducing spillovers from an exogenous technological frontier representing non-energy-intensive technologies reduces mitigation costs. Optimal taxes and subsidies are lower and there is less warming.

Modelling manufactured capital stocks and material flows in the Australian Stocks and Flows Framework

Manufactured capital stocks and their relationships to physical flows of materials and energy are of interest in the fields of industrial ecology and input-output analysis. Manufactured capital stocks embody technologies, which may be characterised by input-output (IO) relations. The rate and nature of technological and structural change in an economy are therefore related to the dynamics of these stocks. Certain capital stocks also act as substantial long-lived stores of materials in the anthroposphere. Additions to and scrapping of these stocks directly generate flows of new and used materials and wastes. This chapter is concerned with two relationships between manufactured capital stocks and material flows, and in particular, how they may be modelled in the field of industrial ecology. Examples are drawn from scenarios developed using the Australia Stocks and Flows Framework (ASFF) (Foran and Poldy 2002). Section two of this chapter deals with methodological and practical issues encountered in accounting for and modelling manufactured capital stocks. Both commonalities and differences between economic and physical perspectives on capital stocks are discussed. An example is given of historical and projected vehicle stocks in Australia. Section three deals with input-output modelling of technologies embodied in capital stocks, focussing particularly on the ‘bottom-up’ or ‘process modelling’ approach employed in ASFF. An example of process-based IO models for steel production in Australia is provided. Section four is concerned with dynamic models of stocks and flows in Industrial Ecology. A dynamic physical IO model (Lennox et al. 2004) within ASFF is described and an example of material

Capital-embodied Technologies in CGE Models

Computable general equilibrium (CGE) models are widely used to analyse macroeconomic and sectoral effects of climate policies. Developing new and improving existing carbon-free energy technologies will be crucial to limit the long-term economic costs of mitigation policies. Such technologies are largely embodied in capital goods; yet conventionally structured CGE models cannot capture capital-embodiment of sector-specific technologies. In this paper, we clarify the conceptual nature of the capital embodiment problem in multisector CGE models. Aggregating productive sectors and investment goods eliminates channels whereby specific technological changes are embodied in specific capital stocks. Nevertheless, capital-embodiment of sector-specific Hicks-neutral technical changes can be directly represented as investment-specific technical change (ISTC)