The dynamic approach of modelling regional recovery investment policies using environmentally-extended SAM Matrix

Darlington Agbonifi ()
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Darlington Agbonifi: Department of Economics (University of Verona)

No 04/2023, Working Papers from University of Verona, Department of Economics

Abstract: This paper analyzes the socioeconomic and environmental dynamic impacts of an exogenous public-financed increases in infrastructure investments and modernization projects (CIS) of around EUR 1097 billion for the 2021-2026 period on industrial outputs, household employment and income distribution, in the Italian province of Taranto using an environmentally extended Social Accounting Matrix (ESAM) techniques for the year 2015. This method reconciles the analysis of the impact of an investment policy aiming at climate neutrality on a local economy. As well as an in-depth evaluation of the intersectoral production linkages through trade and multiplier analysis, with the cost-benefit (CB) analysis of a large-scale investment project. The evaluation of the dynamic impacts on the local economy produces a benefit/cost ratio of 5.63 that increases to 7.88 when the CB analysis of the project, and therefore the revenues generated during the operational period, are also included. The inclusion of environmental externalities associated with industrial greenhouse gas (GHGs) emissions reduces by about 16% the benefit/cost ratio in the construction period. In the operational period, when we assume that green production technologies are adopted, the reduction of the ratio is more consistent. The distributional impact of the investments on the annual income of households is also acceptably equitable.

Keywords: Policy Impact Evaluation; Cost Benefit Analysis; Local Economic Development; SAM (search for similar items in EconPapers)
JEL-codes: C67 D57 Q56 Q58 R11 (search for similar items in EconPapers)
Date: 2023-04
New Economics Papers: this item is included in nep-ene, nep-env, nep-hme, nep-ppm and nep-ure
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