AIM/Material Model 1. Modified Structure 2. India Application

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1 AIM/Material Model 1. Modified Structure 2. India Application Ashish Rana (NIES, Japan) The 8 th AIM International Workshop March 2003, Tsukuba

2 Part 1: Modified Structure Need for application to countries with limitations of dataset APEIS training workshop in Delhi Coverage in this workshop AIM/Material Model Summary (This session) For understanding AIM/Material model What is AIM/Material model? Model formulation Necessary Toshihiko data for MASUI simulation and Ashish RANA National Institute for Environmental Studies Future scenario Features, model and necessary data Session 4: Asia Pacific Integrated Model (AIM): Introduction to Component Models (Cont.) APEIS Capacity Building Workshop on Integrated Environment Assessment in the Asia Pacific Region Training (Session 5) Operation of AIM/Material model Application (Session 7) October 24-26, 26, 2002 Application of AIM/Material model to India and Japan Hotel Grand Inter-Continental, New Delhi, India

3 -What is AIM/Material Model?- Structure of AIM/Material Model produced commodity production sector pollution waste CO2 energy intermediate pollution management recycle market import export abroad capital labor CO2 energy intermediate pollution waste household env. capital labor CO2 energy final demand environmental Industry/investment government

4 Modifications Waste management sector is unified Import matrix not used Possible to include natural resources sectors Presentation of Dr. Masui in next session

5 -Model formulation- Formulation of AIM/Material Production sector Investment Sector 1 Sector 2 Sector 3 Final Consumption Sector 1 Sector 2 Sector 3 Supply Price Endowment Input Output Intermediate inputs Commodity 1 X 11 X 12 X 13 C 1 I 11 I 12 I 13 Y 11 +Y 21 +Y 31 P 1 Commodity 2 X 21 X 22 X 23 C 2 I 21 I 22 I 23 Y 12 +Y 22 +Y 32 P 2 Commodity 3 X 31 X 32 X 33 C 3 Y 33 P 3 Capital K 1 K 2 K 3 P K K * Labor L 1 L 2 L 3 P L L * Final disposal W 3 P W W * Commodity 1 Y 11 Y 21 Y 31 P 1 Commodity 2 Y 12 Y 22 Y 32 P 2 Commodity 3 Y 33 P 3

6 -Model formulation- Formulation of AIM/Material Market equilibrium Produced commodity { } j= 1 j= 1 j= 1 P Y ( X + C + I ) = 0 i ji ij i ij Pi Y 1 ji X 1 ij C j j i I = = j= 1 ij ( + + ) 0 production factor (capital, labor,...) { } j { } j { } j j * 3 * 3 K = 1 j K j= 1 j P K K = 0, P 0, and K K 0 * 3 * 3 L = 1 j L = 1 j P L L = 0, P 0, and L L 0 * 3 * 3 W = 1 j W j= 1 j P W W = 0, P 0, and W W 0

7 -Model formulation- Formulation of AIM/Material Balance of production sector = Balance of final demand sector H = PK K 1 j + P j L L j 1 j PW W = + = j= 1 j H 3 3 = PC i ( I i + ij ) Capital stock and investment for dynamics P X P K P L P W PY i= 1 i ij K j L j W j i= 1 i ij i= 1 j= 1 3 K = (1 δ ) K + I jt, + 1 j jt, i= 1 ij

8 -Model formulation- Formulation of AIM/Material Relationship between input and output Production function Demand function CES, Leontief, Cobb-Douglas, Linear,... Household: Maximize utility Production sector: Maximize profit Find equilibrium solution

9 - Necessary data for simulation- Dataset for AIM/Material Model IO table (commodity x commodity) U matrix (commodity x sector) Disaggregate pollution management V matrix (sector x commodity) Investment by sector Disaggregate pollution management Pollution flow by sector Generation, treatment, discharge, recycle,... Supply and demand of reused material

10 IO/U/V/investment/ pollution/reuse Input-Output table commodity 1 commodity 1 - Necessary data for simulation- household consumption, government consumption, investment, export total... commodity i final demand output : commodity i value added total output Distribution of produced commodity to production of commodity and final demand is presented. In order to produce commodity, what kind of inputs and how much of them are necessary.

11 IO/U/V/investment/ pollution/reuse - Necessary data for simulation- U matrix (Use matrix) commodity 1 sector 1... sector j final demand total output : commodity i value added total output Distribution of produced commodity to sectors and final demand is presented. What kind and how much of input for production activity are necessary in sector.

12 IO/U/V/investment/ pollution/reuse Revised U matrix (disaggregate production and pollution management) sector j - Necessary data for simulation- production management of pollution a... management of pollution p total commodity 1 : commodity i Data of original U matrix are disaggregate into production and pollution management. original U matrix value added total output

13 IO/U/V/investment/ pollution/reuse - Necessary data for simulation- V matrix (Make matrix) commodity 1... commodity i total output sector 1 : sector j total output How much of commodity i produced by sector j is represented.

14 IO/U/V/investment/ pollution/reuse - Necessary data for simulation- Investment by sector commodity 1... commodity i total investment sector 1 : sector j total output How much of commodity invested to sector j.

15 IO/U/V/investment/ pollution/reuse - Necessary data for simulation- Pollution flow by sector Pollution type Air pollution: SOx, NOx, CO2,... Water pollution: BOD load, COD load,... Solid waste: sludge, scrap metal, slag,... Other: Toxic waste: Pb, dioxin,...

16 IO/U/V/investment/ pollution/reuse Pollution flow by sector generation discharge into environment without treatment self treatment discharge into environment after treatment reduction sector j pollution a... pollution p - Necessary data for simulation- discharge into env. recycle reduction discharge into env. self treatment other treatment recycle other treatment direct other treatment sector j pollution generation

17 IO/U/V/investment/ pollution/reuse Supply and demand of reused material - Necessary data for simulation- commodity 1 commodity i total generation of reused pollution pollution a pollution p total supply of reused commodity How much of pollution/waste can be supplied as commodity i.

18 IO/U/V/investment/ pollution/reuse Supply and demand of reused material - Necessary data for simulation- sector 1 sector j total supply of reused pollution commodity 1 commodity i total demand of reused commodity How much of recycled commodity i can be demanded in sector j.

19 - Necessary data for simulation- Optional Data for AIM/Material Model Energy balance table Link physical data from energy balance table and monetary data from U matrix Other physical material data Raw materials such as wood, paper, steel,... Link these physical data and monetary data Not yet completed

20 - Future scenario - Scenarios for AIM/Material Model Technology change Energy efficiency, pollution generation, pollution management, recycled material input, and so on for new equipment (investment) Labor force Export and export Preference change Final consumption, investment,...

21 Application of AIM/Material Model Economic impacts due to environmental preservation CO2 reduction (Kyoto target), waste reduction, waste water treatment,... Mitigation by countermeasures Environmental investment, preference change, new technology, tax reform, CDM,... Link with bottom up model such as AIM/Emission

22 Part 2: Application to India Sectors From 26 commodities, 24 sectors To 40 commodities, 33 sectors Electricity sector Disaggregated Pollutants Wastewater Sox CO2 Solid waste Time period till 2030

23 Baseline trends Billion Rs (Constant 2000)

24 Baseline trends CO2 Wastewater Solid waste SOX

25 Scenarios GDP Change over baseline Million Rupees (Constant 2000) s_w constraint environment innovation

26 Future works of AIM/Material Part 1: Modification Application to other countries Part 2: Application to India New scenarios of environmental innovation CDM scenarios Link to bottom-up model

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