Linking INDCs and Agenda A sustainability analysis

Transcription

1 Linking INDCs and Agenda. A sustainability analysis Francesco Bosello *, Lorenza Campagnolo * Euro-Mediterranean Center on Climate Change, * Fondazione Eni Enrico Mattei *University of Milan Workshop Paving the Way for NDC Implementation: Analyzing Policy Options and Modeling Carbon Pricing S. Jose, 6-8 December 2016

2 Outline The scope of the exercise The methodology Results 1

3 Main purpose of the exercise 2 APPS (Assessment, Projection and Policy of Sustainable Development Goals) framework aims at offering a comprehensive assessment of current and future sustainability based upon indicators related to the 17 Sustainable Development Goals. Ability to assess ex-ante the sustainability implications of different scenarios (here SSP2) and policies (here INDCs) Using a consistent and controlled framework modelling integrating the connections of the different sustainability dimensions

4 APPS process ICES CGE Macroeconomic Model Ex post assessment of current wellbeing at country level 3 Ex ante assessment of future sustainability up to under baseline and policy scenarios by goal, by sustainability pillar (economic, environmental social), aggregate

5 Indicator selection criteria Covering the UN SDGs Data availability for most countries in the world (last available year considered) Empirical evidence that allows to link the selected indicator to macroeconomic variables in the modelling tool used to enable the ex ante analysis. IN THE END 4 28 indicators selected: 20 indicators are among the ICES model variables; 8 indicators pertaining to the social pillar are the result of off sample estimations that combine the coefficients from panel regressions on historical data and the ICES model projected variables 139 countries considered

6 Indicator selection UN SDG APPS Indicator UN SDG APPS Indicator UN SDG APPS Indicator Poverty headcount ratio at $1.25 a day (PPP2005) (% of population) Prevalence of undernourishment (% of population) Physician density (per 1,000 people) Healthy Life Expectancy (HALE) at birth (years) Youth literacy rate (% of population years) GDP per capita annual growth (%) GDP per person employed ($PPP2011) Employment-to-population ratio (%) Manufacturing value added (% of GDP) Total energy and industry-related GHG emissions over sectoral value added (t of CO2e / 1000 $PPP2011) Net GHG emissions from agriculture, forestry and other land use (AFOLU) sectors per square metre of forest and agricultural land (t of CO2e / sq. m) Compliance to Conditional INDCs* Gap from equitable and sustainable GHG emissions per capita in (t CO2eq) ** Marine protected areas (% of territorial waters) Terrestrial protected areas (% of total land area) n/a Palma ratio Forest area (% of land area) Annual freshwater withdrawals, total (% of internal renewable water) PM2.5 pollution, mean annual exposure (micrograms per cubic meter) Endangered and vulnerable (animals and plants) species (% of total species) 5 Access to electricity (% of total population) Renewable electricity (% in total electricity output) Primary energy intensity (J / $PPP2011) CO2 intensity of residential and transport sectors (t of CO2 / t of oil equivalent energy use) Material productivity ($PPP2011/ kg) Corruption Perception Index Central government gross debt (% of GDP) Research and Development (R&D) expenditure (% of GDP)

7 Benchmarking and normalization In order to compare counties performance in different SDG indicators and to compute some aggregate measures, it is necessary to bring all indicators to a common measurement unit The normalization procedure converts all indicator values into the interval [0,1] using a step function Benchmarking normalization: SDG targets or best practices are used as benchmarks 6

8 APPS benchmarks Indicator ECONOMY GDP per capita growth a 0 7 GDP per person employed (PPP) a Public debt as share of GDP b Employment-to-population ratio, percentage a Manufacturing value added (MVA) as percent of GDP a 5 15 Gross domestic expenditure on R&D as share of GDP a Direct Material Consumption over GDP a SOCIETY Population below $1.25 (PPP) per day, percentage b 40 0 Population undernourished, percentage b 20 0 Physician density (per 1000 population) a 2 3 Healthy Life Expectancy (HALE) at birth (years) a Literacy rate of years old, percentage a Access to electricity (% of total population) a Palma ratio b Corruption Perception Index a 3 8 ENVIRONMENT Proportion of total water resources used b 30 5 Share of electricity from renewables b 5 60 Rate of primary energy intensity b 2 1 Total energy and industry-related GHG emissions over value added b 2 1 Mean urban air pollution of particulate matter (PM2.5) b 25 5 CO 2 intensity of residential and transport sectors over energy volumes b 3 0 Net GHG emissions in the AFOLU sector over total surface b 1 0 Gap from equitable and sustainable GHG emissions per capita b 15 0 Proportion of terrestrial and marine protected areas a 5 20 Forest area (% of land area) a Share of endangered and vulnerable (animals & plants) species (% of total species) b 20 5 Type

9 Aggregation procedure SDG indices are the average value of indicator characterizing each goal Indices by pillar are the average of SDG indices pertaining to each sustainability pillar The APPS index is the average of scores in each SDG APPS Index Economy Society Environment 8

10 9 APPS Index in 2012

11 ICES model description The ICES model is a recursive-dynamic General Equilibrium model for the world economic system (simulation present 2050) There are many countries and many sectors (45 & 22 this exercise) Representative agents are rational (optimizing behavior by firms and households is assumed) Markets are perfectly competitive and in equilibrium (demand matches supply). All markets are also interdependent => intra and international trade is explicitly modelled. When excess demand or supply materialize ( because of some economic shocks ) factor of production goods and services re-locate inter-nationally/sectorally responding to price signals to re-store the equilibrium Like all CGE models ICES is calibrated : demand and supply functions are parameterized in order to replicate observed market exchanges in a given reference year (SAM 2007 GTAP database) 10

12 ICES (and CGEs) strengths and weaknesses Pros: Market interdependence allows the description of policy transmission mechanisms across sectors and countries i.e. policy effects on the macroeconomic context and rebounds of this. Trade effects, competitiveness effects, sectoral effects, leakages Highly flexible, they can assess the implication of everything once it has been translated into changes into demand or supply Cons: Difficult to be developed into fully dynamic computational difficulty due number of countries and markets => stylized dynamics with myopic agents problems to study transitions, endogenize technological progress, better for policy evaluation (cost effectiveness) than for policy optimization (cost benefit) being calibrated good for short, mid-term analyses they are equilibrium model, market imperfections only with ad hoc modelization data intensive 11

13 Reference scenario description Shared Socioeconomic Pathways (SSPs), 2 Middle of the road scenario: similar trends of recent decades, but some progresses towards achieving development goals medium population growth per-capita income levels grow at a medium pace on the global average; slow income convergence; some improvements in the intra-regional income distributions reductions in resource and energy intensity, and slowly decreasing fossil fuel dependency 12

14 APPS Index ranking in vs Ranking Country APPS Index Δ ranking 2012 APPS Index Ranking Country APPS Index Δ ranking 2012APPS Index 1 Sweden SouthKorea Finland RoW Germany Greece RoEU Chile France Peru RoEurope Turkey UK Mexico NewZealand RoMENA Canada Bolivia Australia Egypt Benelux RoAsia Czech_Rep China Italy South Africa Japan Ghana Venezuela India Poland Bangladesh USA Uganda Brazil RoAfrica Spain Mozambique Russia Nigeria Argentina Ethiopia RoLACA Kenya Indonesia

15 Mitigation policy description Mitigation scenario considers the conditional INDCs as binding targets: EU28 achieves its target through an Emission Trading Scheme (EU- ETS) The other countries impose a carbon tax Part of the carbon tax revenues flow to a international Climate Fund which reaches 100 billion $ in 2020 The Climate Fund is allocated to developing countries in Asia, North Africa and Sub-Saharan Africa The allocation share is inversely proportional to GDP per capita of the country The receiving countries recycle the Climate Fund through subsidies to clean electricity, R&D and public service sector 14

16 APPS Index ranking in : mitigation vs. reference scenario Ranking Country mitigation Δ ranking reference Ranking Country mitigation Δ ranking reference 1 Sweden Greece Finland SouthKorea RoEurope RoLACA Germany Mexico RoEU Chile Australia Peru Canada Turkey UK RoMENA France RoAsia NewZealand Egypt Czech_Rep Bolivia Benelux China USA Ghana Poland South Africa Italy India Brazil Bangladesh Japan Mozambique Venezuela Uganda Indonesia RoAfrica Spain Ethiopia RoW Nigeria Argentina Kenya Russia

17 mitigation vs. reference scenario (pp) Sustainability change in the mitigation scenario SDG1 SDG2 SDG3 SDG4 SDG6 SDG7 SDG8 SDG9 SDG10 SDG11 SDG12 SDG13 SDG14 SDG15 SDG16 SDG17 APPSIndex

18 Conclusions APPS framework offers a measure of current well-being and future sustainability based upon country performances in achieving SDGs Linking empirically SDGs indicators to a CGE model allows assessing future trend of these indicators under different scenarios and policy interventions The designed policy determines a consistent increase of sustainability, but are not sufficient to achieve SDGs in APPS framework is extremely flexible, and more and more realistic policies can be designed in order to find the most effective channels that can close the gap to SDGs achievement in 17

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20 Climate policy: INDCs Climate policy scenarios consider the INDCs as binding targets 19

21 20 Country dynamics by SDG Canada Brazil Ethiopia Indonesia APPSIndex SDG1 SDG2 SDG3 SDG4 SDG6 SDG7 SDG8 SDG9 SDG10 SDG11 SDG12 SDG13 SDG14 SDG15 SDG16 SDG APPSIndex SDG1 SDG2 SDG3 SDG4 SDG6 SDG7 SDG8 SDG9 SDG10 SDG11 SDG12 SDG13 SDG14 SDG15 SDG16 SDG APPSIndex SDG1 SDG2 SDG3 SDG4 SDG6 SDG7 SDG8 SDG9 SDG10 SDG11 SDG12 SDG13 SDG14 SDG15 SDG16 SDG APPSIndex SDG1 SDG2 SDG3 SDG4 SDG6 SDG7 SDG8 SDG9 SDG10 SDG11 SDG12 SDG13 SDG14 SDG15 SDG16 SDG