Search

The Amazon biome, despite its resilience, is being pushed by unsustainable economic drivers towards an ecological tipping point where restoration to its previous state may no longer possible. This is the result of self-reinforcing interactions between deforestation, climate change and fire. In this paper, we develop scenarios that represent movement towards an Amazon tipping point and strategies to avert one. We assess the economic, natural capital and ecosystem services impacts of these scenarios using the Integrated Economic-Environmental Modeling (IEEM) Platform linked with high resolution spatial land use land cover change and ecosystem services modeling (IEEM+ESM). This paper’s main contributions are developing: (i) a framework for evaluating strategies to avert an Amazon tipping point based on their relative costs, benefits and trade-offs, and; (ii) a first approximation of the economic, natural capital and ecosystem services impacts of movement towards an Amazon tipping point, and evidence to build the economic case for strategies to avert it. We find that a conservative estimate of the cumulative regional cost through 2050 of an Amazon tipping point would be US$256.6 billion in Gross Domestic Product. Policies that would contribute to averting a tipping point, including strongly reducing deforestation, investing in climate-adapted agriculture, and improving fire management, would generate approximately US$339.3 billion in additional wealth. From a public investment perspective, the returns to implementing strategies for averting a tipping point would be US$29.5 billion. Quantifying the costs, benefits and trade-offs of policies to avert a tipping point in a transparent and replicable manner can pave the way for evidence-based approaches to support policy action focusing on the design of regional strategies for the Amazon biome and catalyze global cooperation and financing to enable their implementation., Centro de Estudios Distributivos, Laborales y Sociales

This paper evaluates the economic and environmental impacts of implementing Costa Ricas Decarbonization Plan, focusing specifically on the Agriculture, Forestry and Other Land Uses (AFOLU) sectors. To do so, we apply the Integrated Economic-Environmental Modeling (IEEM) framework for Costa Rica, linked with high resolution spatial land use land cover and ecosystem services modeling (IEEMESM). This is the first economy-wide analysis of Costa Ricas Decarbonization Plan that integrates both economic and ecosystem services impacts. Such an integrated approach is critical for understanding cross-sectoral implications of decarbonization despite the sector-specific focus of AFOLU, while considering the impacts on future ecosystem services flows and wealth. Our results indicate that the positive cumulative wealth impacts of the full decarbonization of Costa Ricas AFOLU sectors are on the order of US$8,747 million by 2050 and generally enhances the future flow of ecosystem services. Decarbonization of AFOLU is pro-poor, lifting 4,530 out of poverty by 2050. From a public investment perspective, decarbonization generates economic returns of US$1,114 million when natural capital and environmental quality are considered. The IEEMESM Platform developed in this paper provides a strong foundation for future analysis and refinement of proposed decarbonization strategies for the country, while weighing the relative costs and benefits of the economic, environmental and social dimensions in an integrated way.

In this paper, we assess the economy-wide impact of Climate Change (CC) on agriculture and food security in 20 Latin American and the Caribbean (LAC) countries. Specifically, we focus on the following three channels through which CC may affect agricultural and non-agricultural production: (i) agricultural yields; (ii) labor productivity in agriculture, and; (iii) economy-wide labor productivity. We implement the analysis using the Integrated Economic-Environmental Model (IEEM) and databases for 20 LAC available through the OPEN IEEM Platform. Our analysis identifies those countries most affected according to key indicators including Gross Domestic Product (GDP), international commerce, sectoral output, poverty, and emissions. Most countries experience negative impacts on GDP, with the exception of the major soybean producing countries, namely, Brazil, Argentina and Uruguay. We find that CC-induced crop productivity and labor productivity changes affect countries differently. The combined impact, however, indicates that Belize, Nicaragua, Guatemala and Paraguay would fare the worst. Early identification of these hardest hit countries can enable policy makers pre-empting these effects and beginning the design of adaptation strategies early on. In terms of greenhouse gas emissions, only Argentina, Chile and Uruguay would experience small increases in emissions.

In this paper we evaluate the economic, natural capital and ecosystem services impact s of strategies for conserving Colombia’s rich natural capital endowment. Specifically, we consider Government program proposals for establishing Payment for Ecosystem Services (PES), implementing more sustainable silvopastoral systems and expanding habitat banking. We develop and apply the Integrated Economic - Environmental Modeling (IEEM) Platform linked with spatial Land Use Land Cover (LULC) and Ecosystem Services Modeling ( IEEM+ ESM) to shed light on the multi-dimensional impacts of these programs from the perspective of sustainable economic development and intergenerational wealth. Advancing the state-of-the-art in integrated economic-environmental modeling, our framework for the first time integrates dynamic endogenous feedbacks between natural capital, ecosystem services and the economic system to fully capture how changes in natural capital and ecosystem service flows affect the economy and vice versa. Our approach quantitatively models the economy, natural capital and ecosystem services as one integrated and complex system at a high level of spatial resolution across Colombia’s 32 Departments. We demonstrate how valuing biodiversity in public policy and investment analysis can make the difference between an investment that is economically viable and one that is not. Without accounting for the value of biodiversity, the proposed PES and habitat banking programs are not economically viable. Including the value of biodiversity, both PES and habitat banking become strong investment propositions with a net present value of US$4.4 billion and US$4.9 billion, respectively. The economic and environmental benefits of enhancing Colombia’s natural capital base and future ecosystem service supply are demonstrated and regionally differentiated, which provides a strong empirical evidence base to inform the spatial targeting of policies to maximize economic, environmental and social outcomes .

This paper describes how Natural Capital Accounting (NCA) can be integrated into economy wide analytical frameworks to enhance evidence based decision making. Examples from applications of the Integrated Environmental Economic Modelling (IEEM) Platform show how explicitly accounting for the contributions of the environment to the economy in economic forecasting can lead to substantially different policy recommendations, overcoming some of the scope limitations of traditional economic performance analysis. Furthermore, the paper describes how NCA can be integrated into more traditional economic performance measurements, such as the System of National Accounts and their indicators such as adjusted Gross Domestic Product and Genuine Savings. Integration of natural capital into economy-wide analytical frameworks leads to better policy uptake of research findings and it empowers policymakers to avoid short-sighted decisions, which, although they can generate short-term economic gain, can have adverse consequences for economic, social, and environmental sustainability in the long run.

The year 2020 is a critical year for sustainable development policy and practice with the review and renewal of various international commitments including the Sustainable Development Goals, the Convention on Biological Diversity and the Paris Agreement. The post-2020 agenda needs to be informed by more robust analytical approaches that capture the interactions between the economy, society and the environment. In this paper, we review the state of the art in available models and datasets that lay the groundwork for future analytical work to inform this agenda. Based on this review, we propose an integrated modeling approach for global analysis to underpin international policy discourse and advocacy, and; a sub-global approach focusing on evaluating specific strategies and policy portfolios to make progress toward sustainability commitments considering detailed local country context. Both approaches rely on integrating whole of economy computable general equilibrium models with spatial land use land cover and ecosystem services models. Endogenizing feedbacks between modeling system components ensures that evidence is based on interactions between all system components. Recent advances in methods, data and available tools discussed herein reduce barriers to entry for this type of complex systems analysis and increases the timeliness of policy advice.

In 2014, the United Nations published the first International Standard for environmental-economic statistics, known as the System of Environmental-Economic Accounting (SEEA).. As more countries adopt and implement the SEEA, the availability of consistent environmental and economic information increases the need for analytical tools that can use this data to respond to policy relevant questions. In this paper, we present a workflow to develop an environmentally-extended social accounting matrix, which can serve as the basic database for the development of environmentally-extended computable general equilibrium models. To illustrate, and given its comprehensive implementation of the SEEA, we apply this workflow to the Guatemalan case and the Integrated Economic-Environmental Modeling (IEEM) Platform., Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

The growth of cultural tourism globally has presented an important opportunity for public investment in tourism to drive economic development in developing countries. With Bolivia's regional disparities in income and opportunity, it is critical to understand the regionally differentiated welfare impacts of public investment. We develop a first multi-regional economy-wide model for Bolivia and apply it to the economic analysis of a US$26 million investment in tourism to diversify export earnings and reduce poverty. While the framework is more data intense than national level economy-wide models, a multi-regional approach is powerful for shedding light on regional trade-offs, benefits and costs, and enables analysis of smaller investment and demand shocks than that typically possible in a national level framework

Rwanda’s Nyungwe National Park is a biodiversity hotspot with the most endemic species in the ecoregion as well as the highest number of threatened species internationally. In addition to great biological diversity, Nyungwe National Park supplies significant ecosystem services to the Rwandan population including water provisioning and tourism services. Tourism in the Park has strong potential for improving the sustainable management of the Park for continued provision of natural habitat and critical ecosystem services. This paper explores quantitatively the economic impacts of adjustment in Park visitation fees and tourism demand as a source of revenues to improve Park tourism opportunities and ongoing operations and maintenance where budgetary restrictions are particularly acute. The methods developed in this paper are novel in integrating the results of stated preference techniques with regional economy-wide modelling approaches to capture multi-sectoral, direct, indirect and induced impacts. Such methods have strong potential for assessing revenue generation alternatives in other contexts where Park Managers are faced with the need to generate additional revenue for sustainable park management while facing diminishing budget allocations., Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

In this study we develop an evidence-based tool to help to guide policy and investment choices, to maximize developmental returns from tourism. Specifically, we develop a tourism-extended social accounting matrix and computable general equilibrium and microsimulation models customized for tourism investment analysis. To demonstrate the approach, we develop these data structures for Belize, at both national and regional levels. The framework developed herein can be used to quantify the direct and indirect, and shortand long-run impacts of tourism investments. Anticipating application of the approach to tourism investment analysis in the Central American Region, we provide a stock take of the availability of data to develop a similar suite of models for other countries in the region., Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

There is a debate in the literature on the appropriate methods and metrics for evaluating the economic impacts of tourism investments. Available analytical techniques include input-output modelling, computable general equilibrium modelling, cost benefit analysis, expenditure-based methods, and others. Metrics of benefits often include indicators such as gross regional product, household income and measures of welfare, while the choice of appropriate metrics will in part be conditioned by from whose perspective the analysis is undertaken. In this paper, we capitalize on the strengths of general equilibrium and cost benefit analytical techniques and develop an integrated approach to evaluating public investments in tourism. We apply the approach to the evaluation of a US$6.25 million tourism investment in Uruguay from the perspective of a multi-lateral development bank and the beneficiary government. The approach developed here is powerful in that it captures first and subsequent rounds of investment impacts both on the benefits and costs side; resource diversion and constraints are accounted for, and; the estimation of benefits is consistent with the welfare economics underpinnings of cost benefit analysis.

The Sustainable Development Goals (SDGs) are a universal call to action to end poverty and protect the environment. The Government of Guatemala is prioritizing the SDGs it will focus on and defining lines of action to make progress towards achieving them. In this paper, we apply the Integrated Economic-Environmental Modelling platform for Guatemala (IEEM-GUA) to evaluate the economic, environmental and wealth impacts of strategies for achieving the SDGs. We evaluate specific lines of action to achieve the second SDG to achieve food security and promote sustainable agriculture, and; the sixth SDG to achieve water and sanitation coverage for all. We find that significant new investment in these areas would be required to meeting these SDGs and that the overall pace of economic growth is critical. IEEM applied to the SDGs lends transparency and structure to the prioritization and agenda setting process. It sheds light on the need for complementary policies to reconcile lines of action that can inadvertently move progress toward specific SDGs in opposite directions. Finally, an advantage of an integrated framework such as IEEM is its ability to highlight trade-offs, potential win-wins and inter-linkages between SDGs, where one line of action can make progress towards multiple SDGs simultaneously.

Ex-ante economic impact analyses are required to demonstrate the development impact and economic viability of loans and grants extended by multi-lateral development banks. These assessments are performed under tight time constraints and often in data poor environments. This paper develops a framework for assessing development interventions in data poor environments and applies it to the analysis of the Sustainable Tourism Program, a US$15 million loan from the Inter-American Development Bank to the Government of Belize to foster tourism development in emerging destinations and enhance participation of low income people in the tourism value chain. This paper contributes to the literature in two critical ways: (i) the paper develops a generalizable approach to building dynamic computable general equilibrium models for development policy analysis in data poor environments; (ii) realistic expectations of agent behavioral responses to development interventions are required to calibrate model simulations. To estimate business as usual tourism arrivals and expenditure, auto-regressive integrated moving average methods were used. To estimate agent response to the development intervention, a survey-based quasi-contingent valuation approach was employed. These projections and information on investment structuring and costs were used to calibrate the model shocks. Results of this analysis show that the proposed investment will have positive impacts on Belize’s economy by hastening economic growth. Gross domestic product increases 3% by 2040 and unemployment falls from 12% to 10%. Cross validating with a break-even scenario confirms that the Government of Belize would recover all investment costs even if actual agent demand response were considerably less than forecast. The model developed here may be applied to the ex-ante economic analysis of other sectoral development interventions ranging from agricultural policy to fiscal policy, from integration and trade, to health and education., Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

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.

Ex-ante economic impact analyses are required to demonstrate the development impact and economic viability of loans and grants extended by multi-lateral development banks. These assessments are performed under tight time constraints and often in data poor environments. This paper develops a framework for assessing development interventions in data poor environments and applies it to the analysis of the Sustainable Tourism Program, a US$15 million loan from the Inter-American Development Bank to the Government of Belize to foster tourism development in emerging destinations and enhance participation of low income people in the tourism value chain. This paper contributes to the literature in two critical ways: (i) the paper develops a generalizable approach to building dynamic computable general equilibrium models for development policy analysis in data poor environments; (ii) realistic expectations of agent behavioral responses to development interventions are required to calibrate model simulations. To estimate business as usual tourism arrivals and expenditure, auto-regressive integrated moving average methods were used. To estimate agent response to the development intervention, a survey-based quasi-contingent valuation approach was employed. These projections and information on investment structuring and costs were used to calibrate the model shocks. Results of this analysis show that the proposed investment will have positive impacts on Belize's economy by hastening economic growth. Gross domestic product increases 3% by 2040 and unemployment falls from 12% to 10%. Cross validating with a break-even scenario confirms that the Government of Belize would recover all investment costs even if actual agent demand response were considerably less than forecast. The model developed here may be applied to the ex-ante economic analysis of other sectoral development interventions ranging from agricultural policy to fiscal policy, from integration and trade, to health and education.

This study develops a linked regional computable general equilibrium and micro-simulation (RCGE-MS) model to assess the regional economy-wide and poverty impacts of a US$36 million investment in tourism in the south of Haiti. The first social accounting matrix for Haiti with a base year of 2012/2013 was constructed to calibrate the model. This research addresses three key gaps identified in the tourism impact assessment literature. First, a destination-specific tourism demand and value chain analysis was used to calibrate the shocks implemented in the model. Second, the RCGE-MS approach moves beyond the representative household configuration to enable more robust analysis of tourism investment impacts on poverty and income inequality. Third, results of this modelling were used to inform a social cost-benefit analysis to provide greater transparency in the evaluation of trade-offs between investment alternatives. Results of this analysis showed a positive impact on sectoral activity, especially for the hotel and restaurant sector (182.1% in 2040) and a 2.0% increase in Gross Regional Product by 2040. The South's exports fell 4.7% below baseline and imports were 6.1% higher due to the inflow of foreign exchange, the appreciation of the regional real exchange rate, increased demand for most goods and services, and limited regional productive capacity. The rate of unemployment fell from 26% to 23%. The investment helped lift some of the region¿s poorest out of poverty, reducing the poverty headcount by 1.6 percentage points. Driving this result was an increase in employment, wages and non-labor income. The linked RCGE-MS approach proves to be a powerful tool for assessing how tourism investments affect regional economic activity and revealing the mechanisms through which tourism can contribute to increased employment opportunities and poverty reduction.

The Bangladesh Integrated Water Resources Assessment project studied water resources in Bangladesh from both a physical and a socio-economic perspective. We examined water supply and water demand issues, where demand has both physical components (irrigation water demand) and socio-economic components (urban and industrial demand, demand for food and hence irrigation). We examined historical water use and crop production, and the likely future water use influenced by climate change population growth and a growing economy. We also examined the impacts of changing water on the national economy and on the vulnerability of individuals and households.

A consistent methodology enabling the estimation of the economic losses associated with drought and the comparison of estimates between sites and across time has been elusive. In this paper, we develop an ecosystem service approach to fill this research gap. We apply this approach to analysis of the Millennium Drought in the South Australian portion of the Murray-Darling Basin which provided a natural experiment for the economic estimation of hydrological ecosystem service losses. cataloguing estimates of expenditures incurred by Commonwealth and state governments, communities and individuals, we find that nearly $810 million was spent during the drought to mitigate losses, replace ecosystem services and adapt to new ecosystem equilibria. The approach developed here is transferable to other drought prone regions, providing insights into the potentially unexpected consequences of drought and ecosystem thresholds and socioeconomic and political tipping points after which ecosystem restoration may become very costly. Our application to the South Australian Murray-Darling Basin demonstrates the potential of this approach for informing water, drought preparedness and mitigation policy, and to contribute to more robust decision-making. Refereed/Peer-reviewed