A GTAP-based model for analysing Resource Efficiency and the Circular Economy: Outline of the UCL ENGAGE- materials model

There have been a number of recent modelling attempts to analyse resource efficiency and the circular economy (Ellen MacArthur Foundation, 2015; CE and BioIS, 2015). However, modelling analysis in this area is relatively underdeveloped. In particular, those models which utilised pre-existing GTAP databases were able to say little given the aggregated sectoral coverage. A global CGE model with added detail will allow us to consider the economic and sectoral effects of policies and shocks which affect materials and resources, and also identify any leakage of resource use as well as understanding trade patterns and interdependencies. We outline the development of the GTAP9 database which is used to undertake global analysis of resource efficiency and circular economy impacts from different policies in the ENGAGE model. Firstly, we disaggregate the material extraction sector ‘Other mining’ (OMN - GTAP sector) in each region in order to capture the flows of different key materials throughout the world economy. Using shares from the EXIOBASE dataset (Tucker et al, 2014) as well as a variety of national accounts databases, and employing the SPLITCOM programme for GTAP, we split the single ‘Other mining’ sector into: (1) mining of iron ore, (2) non-ferrous mining and (3) other mining. Secondly, the production sector ‘Iron and Steel’ (I_M - GTAP sector) is further disaggregated to distinguish between primary and secondary production sectors. For secondary production we distinguish between the treatment of secondary steel (which utilises recycling) and reprocessing of iron and steel which produces the final output. Base year production levels of Oxygen Blast Furnace and Electric Arc Furnace from the World Steel Association are used for calibration of primary vs. secondary levels. We then implement a series of policy shocks regarding improvements in regional technological efficiency and increased recycling rates for secondary iron and steel.