The Integrated Economic-Environmental Modelling Framework: An Illustration with Guatemala's Forest and Fuelwood Sectors

Abstract

This paper develops and operationalizes the Integrated Economic-Environmental Modelling (IEEM) platform which integrates environmental data organized under the first international standard for environmental-economic accounting with a powerful economy-wide modelling approach. IEEM enables the ex-ante economic analysis of public policies and investment on the economy and the environment in a quantitative, comprehensive and consistent framework. IEEM elucidates the two-way interrelationships between the economy and environment, considering how economic activities depend on the environment as a source of inputs and as a sink for its outputs. In addition to standard economic impact indicators such as gross domestic product, income and employment, IEEM generates indicators that describe policy impacts on the use of environmental resources, wealth and environmental quality which together determine prospects for future economic growth and well-being. To illustrate the analytical capacity of IEEM, the model is calibrated with Guatemala's environmental-economic accounts and applied to analysis of its forest and fuelwood sector where negative health and environmental impacts arise from inefficient household fuelwood use.

A Quantitative Assessment of Strategies to Achieve the Sustainable Development Goals: An Application to Guatemala

“…This analysis is undertaken using the IEEM platform developed in Banerjee et al (2016 and2017). IEEM is a decision-making platform that provides a quantitative, comprehensive and consistent framework for the analysis of public policy and investment impacts on the economy, the environment and wealth (Banerjee et al, 2017, Banerjee et al, 2016.…”

“…IEEM is a decision-making platform that provides a quantitative, comprehensive and consistent framework for the analysis of public policy and investment impacts on the economy, the environment and wealth (Banerjee et al, 2017, Banerjee et al, 2016. At the core of IEEM is a dynamic computable general equilibrium model, calibrated with data based on the System of National Accounts and the System of Environmental-Economic Accounting (SEEA) (United Nations et al, 2014).…”

Natural capital accounting for better policy

“…Source Adapted from Vardon et al (2016a) water fees and cost recovery (Nagy et al 2017;Oosterhuis 2017;Pule and Galegane 2017;Romero et al 2017a). Forest accounts inform forest policies (Banerjee et al 2017b;Castaneda et al 2017;Uwera et al 2017) or serve as basis for sustainable forest management plans (Forest Enterprise England 2017).…”

“…In a number of cases, NCA has been instrumental in identifying or clarifying issues or problems. These include the identification of wildlife using water in possible competition with other water users in Botswana (Pule and Galegane 2017), in the possibly unsustainable harvest of fuelwood in Guatemala (Banerjee et al 2017b) and in the assessment of forestry concessions in the Australia (Keith et al 2017). Colombia has used the accounts to assess the damages of the El Niño climate phenomenon in 2015 and to quantify the environmental benefits to be gained by Colombia in a peacetime scenario (Romero et al 2017b).…”

Reconciliation Once and for All: Economic Impact Evaluation and Social Cost Benefit Analysis

“…With detailed representation of the environment in integrated modelling frameworks such as the IEEM Platform, semi-inclusive measures of wealth and welfare such as genuine savings may also be reported (Arrow et al, 2012;Stiglitz et al, 2010;Banerjee et al, 2016c, Banerjee et al, 2017.…”