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

Ashish Rana (NIES, Japan)

The 8th AIM International Workshop 13-15 March 2003, Tsukuba

Coverage in this workshopCoverage in this workshop

•• Summary (This session)Summary (This session)For understanding AIM/Material modelFor understanding AIM/Material model–– What is AIM/Material model?What is AIM/Material model?–– Model formulationModel formulation–– Necessary data for simulationNecessary data for simulation–– Future scenarioFuture scenario

•• Training (Session 5)Training (Session 5)–– Operation of AIM/Material modelOperation of AIM/Material model

•• Application (Session 7)Application (Session 7)–– Application of AIM/Material model to India and JapanApplication of AIM/Material model to India and Japan

Part 1: Modified Structure

• Need for application to countries with limitations of dataset

• APEIS training workshop in Delhi

AIM/Material ModelAIM/Material ModelFeatures, model and necessary data

Toshihiko MASUI and Ashish RANAToshihiko MASUI and Ashish RANANational Institute for Environmental StudiesNational Institute for Environmental Studies

Session 4: Asia Pacific Integrated Model (AIM): Introduction to Component Models (Cont.)

APEIS Capacity Building Workshop onAPEIS Capacity Building Workshop onIntegrated Environment Assessment in the Asia Pacific RegionIntegrated Environment Assessment in the Asia Pacific Region

October 24October 24--26, 200226, 2002Hotel Grand InterHotel Grand Inter--Continental, New Delhi, IndiaContinental, New Delhi, India

Structure of AIM/Material Model

production sector

household

capital labor

government

abroad

market

import export

produced commodity

energy intermediate

CO2

energy final demand

CO2

pollution waste

pollution management

energy intermediate

CO2

env. capital labor

environmental Industry/investment

recycle

-What is AIM/Material Model?-

pollution waste

Modifications

• Waste management sector is unified • Import matrix not used

• Possible to include natural resources

sectors – Presentation of Dr. Masui in next session

Formulation of AIM/Material

-Model formulation-

Production sector Investment

Se

ctor 1

Secto

r 2

Secto

r 3

Fina

l Co

nsum

ptio

n

Secto

r 1

Secto

r 2

Secto

r 3

Supply

Price

Endo

wm

ent

Commodity 1 X11 X12 X13 C1 I11 I12 I13 Y11+Y21+Y31 P1

Commodity 2 X21 X22 X23 C2 I21 I22 I23 Y12+Y22+Y32 P2

Inter

med

iate

inpu

ts

Commodity 3 X31 X32 X33 C3 Y33 P3 Capital K1 K2 K3 PK K*

Labor L1 L2 L3 PL L*

Inpu

t

Final disposal W3 PW W*

Commodity 1 Y11 Y21 Y31 P1 Commodity 2 Y12 Y22 Y32 P2

Out

put

Commodity 3 Y33 P3

Formulation of AIM/Material • Market equilibrium

– Produced commodity

– production factor (capital, labor, ...)

{ }3 3 3

1 1 1( ) 0i ji ij i ijj j j

P Y X C I= = =

− + + =∑ ∑ ∑0iP ≥

3 3 3

1 1 1( ) 0ji ij i ijj j j

Y X C I= = =

− + + ≥∑ ∑ ∑

{ }3 3* *1 1

0, 0, and 0K j K jj jP K K P K K

= =− = ≥ − ≥∑ ∑

{ }3 3* *1 1

0, 0, and 0L j L jj jP L L P L L

= =− = ≥ − ≥∑ ∑

{ }3 3* *1 1

0, 0, and 0W j W jj jP W W P W W

= =− = ≥ − ≥∑ ∑

-Model formulation-

Formulation of AIM/Material • Balance of production sector

• Balance of final demand sector

• Capital stock and investment – for dynamics

3 3 3

1 1 1K j L j W jj j jH P K P L P W

= = == + +∑ ∑ ∑

3 3

1 1( )i i iji j

H P C I= =

= +∑ ∑

3, 1 , 1

(1 )j t j j t ijiK K Iδ+ =

= − +∑

3 3

1 1i ij K j L j W j i iji iP X P K P L P W PY

= =+ + + =∑ ∑

-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

-Model formulation-

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

- Necessary data for simulation-

Input-Output table

commodity 1 ... commodity i final demand total output

commodity 1

:

commodity i

value added

total output In order to produce commodity, what kind of inputs and how much of them are necessary.

Distribution of produced commodity to production of commodity and final demand is presented.

household consumption, government consumption, investment, export

IO/U/V/investment/ pollution/reuse

- Necessary data for simulation-

U matrix (Use matrix)

sector 1 ... sector j final demand total output

commodity 1

:

commodity i

value added

total output What kind and how much of input for production activity are necessary in sector.

Distribution of produced commodity to sectors and final demand is presented.

IO/U/V/investment/ pollution/reuse

- Necessary data for simulation-

original U matrix

sector j

production management of pollution a

...

management of pollution p total

commodity 1

:

commodity i

value added

total output

Revised U matrix (disaggregate production and pollution management)

Data of original U matrix are disaggregate into production and pollution management.

IO/U/V/investment/ pollution/reuse

- Necessary data for simulation-

commodity 1 ... commodity i total output

sector 1

:

sector j

total output How much of commodity i produced by sector j is represented.

V matrix (Make matrix)

IO/U/V/investment/ pollution/reuse

- Necessary data for simulation-

commodity 1 ... commodity i total investment

sector 1

:

sector j

total output

Investment by sector

How much of commodity invested to sector j.

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, ...

IO/U/V/investment/ pollution/reuse

- Necessary data for simulation-

Pollution flow by sector

sector j

pollution generation

discharge into env.

self treatment

other treatment

reduction

recycle

discharge into env.

IO/U/V/investment/ pollution/reuse

sector j

pollution a ... pollution p generation

discharge into environment

without treatment

self treatment discharge into environment

after treatment reduction

recycle

other treatment direct other treatment

- Necessary data for simulation-

Supply and demand of reused material

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.

IO/U/V/investment/ pollution/reuse

- Necessary data for simulation-

Supply and demand of reused material

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.

IO/U/V/investment/ pollution/reuse

- 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

- Necessary data for simulation-

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, ...

- Future scenario -

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

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

Baseline trends

0

200

400

600

800

1000

1200

1400

1600

1800

2000 2005 2010 2015 2020 2025 2030

Bill

ion

Rs

(Con

stan

t 200

0)

Baseline trends

0

0.5

1

1.5

2

2.5

3

2000

2005

2010

2015

2020

2025

2030

CO2WastewaterSolid wasteSOX

Scenarios GDP Change over baseline

-18000-16000-14000-12000-10000

-8000-6000-4000-2000

0

2005

2010

2015

2020

2025

2030

Milli

on R

upee

s (C

onst

ant 2

000)

s_w constraint environment innovation

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