Optimization based structural decomposition analysis as a tool for supporting environmental policymaking

Abstract

A new tool for supporting environmental policymaking presented in this paper combines the ease of interpretation of structural decomposition analysis in the environmentally extended input-output (EEIO) model with versality of MINLP optimization. The approach allows finding those coefficients in EEIO model in the case of which a small change of their levels leads to a large reduction of industrial GHG emissions. In the illustrative empirical example the proposed approach is first implemented in GAMS and next used to identify GHG-emissions-important IO coefficients in Poland.