Investments in Green Projects and Value-added GDP: An Environmentally Integrated Multiregional SAM Approach

Darlington Agbonifi (darlington.agbonifi@univr.it)
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Darlington Agbonifi: Department of Economics (University of Verona)

No 02/2024, Working Papers from University of Verona, Department of Economics

Abstract: This paper presents an integrated methodology to simultaneously estimate the socioeconomic and environmental impacts of public-financed investments in green projects on the labor markets, value-added, and households induced consumption expenditures in a multiregional economy in equilibrium. I construct a novel dataset and implement an environmentally integrated multiregional social accounting matrix (EI-MRSAM) modelling technique on the regional macroeconomic investment analyses for Italy. Results show that Lombardy’s intra-regional investment impact on value-added (GDP) share accounts for almost 78%, while 22% accrues to the rest of Italy in terms of interregional value-added spillover effects through trade channels. The public investments impact on the regional and national economy decreases by around 10% of value-added after internalizing the environmental costs of climate change damages induced by industrial greenhouse gas (GHG) emissions. I then conduct a counterfactual ex-ante macro-policy evaluation of an endogenous increase by 25% of the baseline investments to each of thematic missions which represents the key areas of the public policy interventions. I find that the return-on-investment in digital and innovative public-administration as most efficient in terms of potential regional value-added growth compared to other counterfactual outcomes. The impact on consumption expenditures and induced GHG emissions are also consistent with those of value-added.

Keywords: EI-MRSAM model; investments in green projects; value-added GDP; climate change; GHG emissions; environmental valuation; digital transformation (search for similar items in EconPapers)
JEL-codes: C67 D57 F18 H54 Q56 R12 (search for similar items in EconPapers)
Pages: 33
Date: 2024-01
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-ppm
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