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Parameter Uncertainty in CGE Modeling of the Environmental Impacts of Economic Policies

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  • David Abler

  • Adrián Rodríguez
  • James Shortle

Abstract

This study explores the role of parameter uncertainty in CGE modeling of the environmental impacts of macroeconomic and sectoral policies, using Costa Rica as a case for study. A CGE model is constructed which includes eight environmental indicators covering deforestation, pesticides, overfishing, hazardous wastes, inorganic wastes, organic wastes, greenhouse gases, and air pollution. The parameters are treated as random variables drawn from prespecified distributions. Evaluation of each policy option consists of a Monte Carlo experiment. The impacts of the policy options on the environmental indicators are relatively robust to different parameter values, in spite of the wide range of parameter values employed. Copyright Kluwer Academic Publishers 1999

Suggested Citation

  • David Abler & Adrián Rodríguez & James Shortle, 1999. "Parameter Uncertainty in CGE Modeling of the Environmental Impacts of Economic Policies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(1), pages 75-94, July.
    • Handle: RePEc:kap:enreec:v:14:y:1999:i:1:p:75-94
    DOI: 10.1023/A:1008362712759
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