Table Regional disaggregation in models

Model Regions represented_

IEA 3 OECD regions (North America, Europe, and Pacific); Africa; Asia; Latin America; Middle East; East Europe; former Soviet Union; China

MR USA; other OECD (OOECD) nations; the former USSR (SU) and Eastern Europe (EE); China; the rest of the world (RoW) ERM USA; OOECD West; OOECD Asia; centrally planned Europe; centrally planned Asia; Middle East; Africa; Latin America;

South and East Asia Nordhaus Globally aggregated

GREEN 3 OECD regions (North America, Europe and Pacific); ex-

USSR; China; energy exporting LDCs (EELDCs); an aggregate RoW sector

WW EU; North America (Canada and USA); Japan; OOECD; oil _exporters (OPEC and non-OPEC); rest of the world (RoW)

Regional disaggregation

Regional disaggregation again differs in the models from a single global sector in the Nordhaus study to seven regions in the GREEN model and ten regions in the IEA model (see Table 3.3). This makes comparisons of results for different regions across models more difficult and has not been attempted here (a detailed study has been done by OECD, Hoeller et al. 1992, and Dean and Hoeller 1992).

Of the IEA model's ten regions only the three OECD regions have been modelled in great detail, the other regions are modelled in lesser detail and China's energy system is imposed exogenously on the model due to data limitations. Each of the MR model's five major geopolitical regions has two sub-models with a two-way linkage between them, and a dynamic non-linear optimisation is employed to simulate either a market or a planned economy. In GREEN and WW all regions have the same structural characteristics and Nordhaus's model is globally aggregated.

Even when regions of the world are disaggregated the parameters in each region are often based on or refer to data from the OECD region (e.g. the GREEN model), which reduces the apparent heterogeneity available to the analyst. As many of the important features of international decision making are connected with division of abatement burdens, and relative abatement costs in different regions, this greatly reduces the ability of some of these models to model the effectiveness of different policy instruments.

Sectoral disaggregation

Since in all models the energy sector is obviously disaggregated from the rest of the economy, differences lie in the amount of disaggregation inside each energy sector (number of fuels and technologies available), and the number of other sectors, or productive factors, which can be substituted for energy.

The MR model has a detailed energy sector split into electric and non-electric energy, each of which has a menu of current and future conversion technologies or fuels to choose from; these energy supplies include exhaustible hydrocarbon resources and also 'backstop' technologies. Associated with each technology are the cost and carbon emissions per unit activity level, upper bounds on the speed of introduction of each new technology and lower bounds on rates of decline. Therefore, the MR model concentrates on adjustments through substitution among energy forms, both fossil and non-fossil, and accounts for substitution among energy and other factors through its production function. However, it does not account for changes in final demand composition.

Contrastingly, the GREEN model includes changes in the structural composition of the economy by using three separate sectors, namely, agriculture, energy intensive industries and other industries and services. The energy sector itself is split into five sub-sectors: coal mining, crude oil, natural gas, refined oil products and electricity gas and water supply (non-fossil energy). Therefore, this model while less detailed on the energy side can investigate the impacts of higher energy prices in different sectors of the economy, and thus trade.

In the WW model each region has four non-traded primary factors: primary factors excluding energy, carbon-based energy sources (deposits of oil, coal and gas), other energy sources, and sector specific skills and equipment in the energy intensive manufacturing sector. There are three internationally traded commodities: carbon-based energy products, energy intensive manufacturing and other goods (all other GNP) and two non-traded goods (non-carbon energy products and a composite energy product). There is domestic market clearing within each economy, with nested functional structures representing production and demand in each region.

The model uses CES production functions at each of the three stages of production: production of carbon or non-carbon energy from primary factors and respective energy resources; production of composite energy from carbon and non-carbon energy; and production of energy intensive and other goods from primary factors, energy, and sector specific factors. A carbon tax increases the price of carbon-based energy sources and composite energy products. The price change and the extent of substitution (between carbon-based energy sources and non-carbon energy products and between composite energy and other inputs) will depend upon elasticity values used at the respective nodes in the nesting of substitution possibilities.

Sectoral disaggregation depends upon the focus of each model. For example, those models (MR, IEA and ERM) developed as detailed energy models obviously incorporate a large number of energy sources. Results are sensitive to the number of energy sources included, the intra-fossil fuel substitution possibilities and the extent of substitutability between fossil and non-fossil fuel sources as well as the availability of backstop technologies. The WW model and Nordhaus assume only two fuels—a composite fossil fuel and one non-fossil fuel. Thus intra-fossil fuel substitution is not considered at all in these models; in the short run this biases costs for carbon abatement upwards in these models, as initially significant reductions in carbon emissions are possible by switching between high carbon intensity (such as coal) and lower carbon intensity (natural gas) fuels.

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  • daryl
    What is regional disaggregation and future climate?
    11 days ago

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