Abstract
Motivated by both the need to model recent structural economic changes and the need to understand better the nature of environmental–economic interactions, this paper introduces a continuous-time regional econometric input–output model for the Chicago economy that can be used to analyze, at disaggregated sectoral and temporal levels, the economic and environmental implications of changes exogenous to the economy. The model’s solution yields estimates of emission inventories, which may be used to analyze environmental implications of various economic changes and policy restrictions. This model is the first integrated economic–environmental model of which we are aware that has been formulated and estimated in continuous time for the regional economy of a metropolitan area. We believe that the model’s formulation will enable it to enjoy greater compatibility with natural science-based models, which share such a formulation and flexibility in projecting future emissions corresponding to alternative future economic scenarios and in evaluating emissions policies relevant to such scenarios.
Highlights
Since at least the time of the industrial revolution, it has been observed that changes in economic activity can induce changes in the natural environment
Trade data suggest that the transportation intensity of production is greater than before and that non-polluting industrial sectors are likely to account for a larger share of economic activity than polluting sectors. Motivated by both the need to model carefully these recent structural economic changes and the need to understand better the nature of environmental–economic interactions, we introduce in this paper a continuous-time regional econometric input– output model (REIM) for the Chicago economy (CREIM) that can be used to analyze— at disaggregated sectoral and temporal levels—the economic and environmental implications of changes exogenous to the economy
6 Conclusions In order to analyze the issues of environmental impacts and economic structural change, an integrated econometric–emission model in continuous time has been developed to project future emissions to reflect Chicago regional changes in both emission generation and the structure of the economy
Summary
Since at least the time of the industrial revolution, it has been observed that changes in economic activity can induce changes in the natural environment. Lenzen et al (2004) included a feedback-loop analysis with a detailed multiregional input–output model to calculate CO2 multipliers for trade between Denmark, Germany, Norway, Sweden and the rest of the world They constructed an 1199 by 1199 matrix containing total, region-specific multipliers of intermediate demand, trade, energy consumption and C O2 emissions and captured direct, indirect and induced effects of trade. In addition to those studies using input–output models to integrate the relationship between economic and environmental sectors, many simulation models for environmental impact analyses have integrated environmental components. The models are employed in simulations and forecasts of economic developments and their effects on markets and employment as well as global energy, resource and land consumption
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