Energy infrastructure and their impacts on societies’ capital assets: A hybrid simulation approach to inclusive wealth

Abstract

Measuring how energy policy affects intergenerational well-being is a problematic task policymakers face. There is a compelling need for a comprehensive evaluation criterion that is versatile enough to allow for exploring different possibilities and options. The inclusive wealth framework is a suitable tool for such a task, as it accounts for the changes in the three major capital assets –produced, human, and natural- that compose a nation's wealth. Here, we apply the inclusive wealth framework within a hybrid simulation model to evaluate energy infrastructure projects in terms of their impacts on different capital assets. We chose hybrid simulation as a technique that allows for a better realization of technologies, as well the economy as a whole. The developed model is generalized and can be applied to different economies as well as all types of energy projects. In addition to accounting for the capital assets, we also account for CO2 damages and health capital. We provide the simulation for different proposed projects representing different fuel cycles in Belgium and Egypt. The results show how the model can be used to demonstrate the changes brought to wealth by the different projects and how policymakers can change policies to make wealth take more favorable tracks.