Sensitivity of Modeling Results to Technological and Regional Details: The Case of Italy’s Carbon Mitigation Policy

Gabriele Standardi, Yiyong Cai and Sonia Yeh

No 9557, EcoMod2016 from EcoMod

Abstract: This paper carries out a systematic assessment on the sensitivity of Computable General Equilibrium models to technological and geographical scales in evaluating the economic impacts of carbon mitigation policies. We start with a basic version of a global CGE model and database, which considers Italy as one single economic unit and has one technology in the electricity sector. We then disaggregate the electricity sector into a bundle of various generation technologies, and split Italy into 20 sub-national regions to create more spatially disaggregated versions of the model. The comparison across different model specifications enables us to quantify the importance of technological and regional disaggregation in response to a given policy by carefully laying out the causal inferences that drive the differences of results, and quantitatively assessing the impacts on the results within the realm of the climate policies that we examined in this study. Taking Italy as an example, we find that the estimation for carbon price and economic cost of a de-carbonization pathway by a model with technological and regional details can be lower than a model without such details by up to 40%. Additionally, the effect of representing regional details appears to be several times more important than the effect of representing the details of electricity technology in both the estimated carbon prices and the estimated impacts on electricity production. Our results for Italy highlight the importance of modeling uncertainties of these two key assumptions, which should be appropriately acknowledged when applying CGE models for policy impact assessment. Our conclusions can be generalized to different countries and policy scenarios not in terms of magnitudes of results but in terms of economic explanation. In particular, intra-national trade and the sub-national sectoral/technological specialization are important variables to understand the economic dynamics behind these outcomes.

Keywords: Italy; General equilibrium modeling (CGE); Energy and environmental policy (search for similar items in EconPapers)
Date: 2016-07-04
New Economics Papers: this item is included in nep-cmp, nep-ene and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://ecomod.net/system/files/Standardi_Ecomod.pdf

Related works:
Journal Article: Sensitivity of modeling results to technological and regional details: The case of Italy's carbon mitigation policy (2017)
Working Paper: Sensitivity of Modeling Results to Technological and Regional Details: The Case of Italy’s Carbon Mitigation Policy (2017)
Working Paper: Sensitivity of Modeling Results to Technological and Regional Details: The Case of Italy’s Carbon Mitigation Policy (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ekd:009007:9557

Access Statistics for this paper

More papers in EcoMod2016 from EcoMod Contact information at EDIRC.
Bibliographic data for series maintained by Theresa Leary ().