Abstract
Abstract In response to rapidly growing energy demands, Chinese authorities plan to invest more in hydropower development. However, there are concerns about the possible effects on macroeconomy. This paper uses SinoTERM, a dynamic multi-regional computable general equilibrium model (CGE) of the Chinese economy, to analyze the economic impact of large hydropower development projects. The model features regional labor market dynamics and an electricity subdivision module with substitutability between various types of electricity generation. The results suggest that hydropower development will boost economic growth in the project region. Most sectors in the project region will benefit from the hydropower development such as other services, health, and education, while some sectors will suffer a loss in output because of the substantial increase in real wages. For the national, every 10,000 yuan investment can drive the national GDP growth of 1,000 yuan, and the cost is expected to be recovered in ten years. By the end of 2040, the real national wage will be around 0.16% higher than the baseline scenario. The project could only be justified if net environmental benefits outweigh this loss.
Highlights
Many developing countries are investing in hydropower to increase the degree of electrification and improve national development (Siciliano et al, 2015)
In order to estimating the long-time economic impact of large hydropower projects, we use a dynamic multi-regional model of China – SinoTERM (The Enormous Regional Model), we extend the old version of SinoTERM by introducing regional labor market dynamics and an electricity subdivision module with substitutability between various types of electricity generation
The extended SinoTERM model includes detailed information of sectors and regions(electricity generation is disaggregated into four sectors: Coal-electricity, which uses coal to generate electricity; Hydroelectricity, nuclear electricity, and renewable and gas electricity), especially power generation sectors
Summary
Many developing countries are investing in hydropower to increase the degree of electrification and improve national development (Siciliano et al, 2015). Liu et al (2015) applied a static multi-regional CGE model that provides a lot of information about the region to assess the economic and social impact of hydropower development in China. In order to estimating the long-time economic impact of large hydropower projects, we use a dynamic multi-regional model of China – SinoTERM (The Enormous Regional Model), we extend the old version of SinoTERM by introducing regional labor market dynamics and an electricity subdivision module with substitutability between various types of electricity generation. According to CES (Constant Alternative Elasticity), the resources of the power distribution industry come from these power generation industries This model could simulate continuous multiphase economy impact from hydropower, include many indirect and induced effects.
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