An integrated IO and CGE approach to analysing changes in environmental trade balances

Citation

Turner K, Gilmartin M, McGregor PG & Swales JK (2011) An integrated IO and CGE approach to analysing changes in environmental trade balances. Stirling Economics Discussion Paper, 2011-04.

Abstract
Input-output (IO) tables and demand-driven multiplier techniques are absolutely appropriate for conventional pollution attribution (accounting) analyses as they provide all the required information on pollution embodied in intersectoral interactions and interregional trade flows. However, as a model of how the economy adjusts in response to a marginal change in activity, IO is unlikely to be appropriate as it is only a very special case of general equilibrium models. We propose an integrated IO and computable general equilibrium (CGE) approach, with CGE analysis of the impacts of a change in activity and model results used to inform an IO attribution analysis of pollution embodied in interregional trade flows before and after the change is introduced.

Keywords
Regional CGE modelling; Interregional input-output; CO2 trade balance; Environmental attribution; Carbon dioxide Environmental aspects Econometric models; Regional economics; equilibrium (Economics)

JEL codes

• D57: General Equilibrium and Disequilibrium: Input-Output Tables and Analysis
• D58: Computable and Other Applied General Equilibrium Models
• R15: General Regional Economics: Econometric and Input-Output Models; Other Models
• Q56: Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth