Developing countries exploring pathways to climate compatibility

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Econ Lab 2012: horses for courses

There are a number of complex models that researchers can use to assess the socio-economic implications of mitigation actions and it is important that they choose the one that’s best suited to the specific task at hand. As noted by Prof. Rob Davies, an economist and research associate with the Human Sciences Research Council in South Africa, it is essential that we choose the right horse for each course.

This is one of the important messages that came from the MAPS and CDKN Econ Lab (workshop) held in Cape Town from 6 to 8 August 2012. The purpose of Econ Lab was to have discussions and share ideas on the different methodological approaches researchers are using, or planning to use, to analyse the impact of mitigation actions in their countries.

The workshop started off with researchers from Brazil, Chile, Colombia and Peru presenting on the key questions in relation to climate change, mitigation actions and their socio-economic impacts. Some of the common areas of interest that came up were; the implications of mitigation actions or policies on economic growth, employment, poverty and competiveness. There were concerns about social and land conflicts, and about sectors such as fisheries that were not relevant in terms of emissions but were significantly affected by their impacts.

The relevance of starting with the key questions was to identify the mitigation actions and socio-economic indicators that would be impacted for each country, that is, ‘the course’. The model or models that would be used to carry out the analysis would therefore be ‘the horse’.

Prof. Shukla, from the Indian Institute of Management in Ahmedabad, highlighted that climate policies involve many different disciplines, which need to interface, hence the development and use of Integrated Assessment Models (IAM) that typically have more than one type of model. He also mentioned that one of the models in the IAM is usually more complex than the rest depending on the focus of the modeler or the question being answered. While these IAMs provide a more holistic approach, it can take up to two years to develop. Lessons can be drawn from how IAMs work and this can be used in developing linkages between sectoral and economy-wide models that countries are already working on or have expertise in.

Some MAPS countries, namely Brazil and South Africa have already started doing work on linking the sectoral and economy-wide models. The Brazilians have developed IMACLIM-S, which is a static economy-wide model and will work on linking this model with energy and land use models. This is because current emissions in Brazil are largely from the deforestation of the Amazon, although the energy sector is expected to be the main source of emissions in the long term. Emissions in South Africa are mainly from the energy sector. The Energy Research Centre (University of Cape Town) already has a well-developed energy model (SATIM) and some progress has been made in linking this with the South African Treasury’s CGE model (E-SAGE).

Researchers from the other MAPS countries are still deciding on which models to use with country specific issues strongly influencing their choices.

Currently IAMs are not the right ‘horse’ for the MAPS countries, given time limitations and other constraints, nonetheless we can still learn a lot from these models. One could also not simply take the IMACLIM model and apply it to the other countries as it requires a fair amount of time to construct and specific skills to develop. Countries do not necessarily have the technical capacity required to do so and hence IMACLIM would not be suited for their ‘course’. An economy-wide model linked to an energy model would be the right horse for South Africa but not for Peru, as their current focus is on land-use policies and their socio-economic implications.

Clearly, all the MAPS countries need to ensure that they have the right ‘horse’ for the right ‘course’!

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