Research project CP/14 (Research action CP)
Context
Since the Kyoto Protocol, the number of policy proposals and measures considered in order to reduce greenhouse gas emissions has significantly increased. Despite the importance of the challenges the three Belgian regions should face, and despite the frequent debate on policies to be adopted, there is no regional model in Belgium for helping to evaluate the economic policies. The permanent evolution of the Belgian state towards a federal structure and the prospect of allocating new responsibilities to the regions elucidate the necessity of developing a new powerful instrument for serving public authorities in their decision-making process. The goal of this project is to fill up this gap.
Project description
Objectives
The goal of this project is to develop a dynamic regional general equilibrium model of the Belgian economy (GreenMod) capable of evaluating, in an integrated manner, the different economic instruments that are being considered for environmental policies.
Beyond building this model as an instrument for helping in the decision-making process, the project will also explore the main challenges related to energy and climate policies in the socio-economic, energetic and environmental fields and especially the analysis of the impacts of policies and measures relating to the climate field. A special attention will be given to the tradable emission permits and their interaction with other instruments (fiscal, non-fiscal, voluntary agreements, etc.).
The two goals of this project are thus the following:
1. To build up a dynamic regional multi-sectoral general equilibrium model of the Belgian economy. The model will take into consideration all the interactions between the three regions (Brussels, Flanders and Wallonia) in order to assess the impacts of the economic measures related to energy and the environment. The model will include all the important sectors of the three regions. The model will be dynamic and will give the effects on the short but also on the medium and long term of the economic policies and external shocks. A special care will be given on the modelisation of the labour market in order to be able to measure the impacts of the different environmental measures on the labour force and on unemployment.
2. To develop some applications and analysis with the collaboration of the Users committee and the OSTC. As soon as GreenMod will be finished, it will be used as an important tool in the decision-making process, on a national as well as on a regional or sectoral level. The model will give the results of the different considered measures in sectoral terms (activity level, cost of production, competitiveness, etc.), macro-economic terms (national and regional public finance, balance of payments, etc.), socio-economic terms (employment, revenues, distribution) and environmental terms (production and consumption of energy, emissions of greenhouse gases).
Methodology
General equilibrium modelling allows the evaluation of the socio-economic, energetic and environmental impacts of the different economic instruments, should they be fiscal (direct and indirect fiscal policies, subvention, etc.) or non-fiscal (support for replacement technologies, etc.). This evaluation is realised under a coherent framework in terms of macro identities (national accounts and agent accounts), of distribution of the revenues in the economy (social accounting matrix) and under strict respect of the economic theories.
The tradable permits market will be fully integrated in the theoretical framework and will work under a coherent way with the other markets included in the model (such as the labour and the capital markets). The combination of different economic instruments will thus be possible and their effects will be estimated in a coherent way. The model will also allow the analysis of how the different measures can be complimentary to each other.
The project will include the following stages:
1. Construction of the database: GreenMod will require a very desegregate database. The first year of the project will mainly consist of the collect of the gross data, of their analysis, their harmonisation, and of the creation of regional social accounting matrix and their integration in the international database.
2. Construction of the model: the model will include sectoral models for each of the regions and models for the rest of the European Union and for the other major international economies.
3. Analysis and modelisation of the tradable pollution permits. An analysis of the different existing environmental models will be made in order to compare their results and state their differences. An analysis of the literature on the modelisation of the tradable permits market will also be done. Finally, an analysis of the difference in terms of cost of the reduction of the emissions between the different sectors of the economy will be realised.
4. As soon as the model is operational, applications and analysis will be made in collaboration with the User committee and the OSTC.
5. At the end of the research, a final report and a user guide will be done.
Interaction between the different partners
The team led by Prof. Ali Bayar at the Department of Applied Economics of the Free University of Brussels (DULBEA) will be in charge of building the regional/global general equilibrium model and its database."
The section relating to the tradable permits will be realised by a team of the UCL-CORE under the supervision of the Professor Thierry Bréchet.
Results and/or products
- A multi-regional and multi-sectoral database integrated in a multi-national database.
- A dynamic, multi-regional general, and multi-sectoral general equilibrium model of the Belgian economy.
- Baseline projections.
- Analysis of scenarios related to instruments defined by the Kyoto Protocol.
- Manual and guide for model users.
- Final report.
Partners
Activities
Since the Kyoto protocols, the tradable permits play a particularly important role, both at the European level and at the regional or sectoral level. The way the permit market is modelled is an important issue because it can have considerable impacts on the results. The tradable permit market will be introduced in GreenMod in a flexible way so that for simulation purposes we can easily include or exclude some sectors or geographic zones from the market. The dynamic feature of the model will allow us to evaluate different modes of operating of the markets: methods of distribution and life span of the permits, monitoring and penalties, quotas gradually more restraining, etc.
Contact Information
Promoter
Ali Bayar
Université Libre de Bruxelles (ULB)
DULBEA
50, avenue F.D. Roosevelt, C.P.140, B-1050 Brussels
Tel: +32 (0)2 650 41 15; Fax: +32 (0)2 650 41 37
Ali.Bayar@ulb.ac.be
http://www.ecomod.net
Partner
Thierry Bréchet
Université Catholique de Louvain (UCL)
CORE
34, voie du Roman Pays, B-1348 Louvain-la-Neuve
Tel: +32 (0)10 47 81 86 ; Fax: +32 (0)10 47 43 01
brechet@core.ucl.ac.be
http://www.core.ucl.ac.be
Users Committee
- Jacques Cornet - Ministère de la Région Wallonne - Direction générale des Ressources Naturelles et de l'Environnement (DGRNE) - Namur
- Nancy Da Silva - SPF Santé publique, Sécurité de la Chaîne alimentaire et Environnement - Services fédéraux pour les Affaires environnementales - Bruxelles
- Paul Geeraert - FOD Volksgezondheid, Veiligheid van de Voedselketen en Leefmilieu - Federale Diensten voor het Leefmilieu - Brussel
- Albert Gilot - Bureau fédéral du Plan - Bruxelles
- Sara Ochelen - Ministerie van de Vlaamse Gemeenschap - AMINAL - Directoraat-generaal - Subcel Milieu-Economie - Brussel
- Didier Paquot - Union Wallonne des Entreprises - Département Economie - Wavre
- Olivier Parks - Ministère de la Région Wallonne - Direction générale des Ressources Naturelles et de l'Environnement (DGRNE) - Namur
- Dominique Simonis - Bureau Fédéral du Plan - Bruxelles
- Tine Tanghe - Ministerie van de Vlaamse Gemeenschap - Afdeling Natuurlijke Rijkdommen en Energie - Brussel
- Els Van Den Broeck - Ministerie van de Vlaamse Gemeenschap - AMINAL - Brussel
- Jeroen Van Laer - Vlaamse Milieumaatschappij (VMM) - Mechelen
- Joost Verlinden - Federaal Planbureau - Brussel
