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Improving land-use modelling within CGE to assess forest-based mitigation potential and costs

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  • Michetti, Melania
  • Parrado, Ramiro

Abstract

We present a computable general equilibrium model properly modified to analyse the potential role of the European forestry sector within climate mitigation. Improvements on database and modelling frameworks allow accounting for land heterogeneity across and within regions and for land transfers between agriculture, grazing, and forestry. The forestry sector has been modified to track carbon mitigation potential from both intensive and extensive forest margins, which have been calibrated according to a forest sectoral model. Two sets of climate policies are simulated. In a first scenario, Europe is assumed to commit unilaterally to reduce CO2 emissions of 20% and 30%, by 2020. In a second scenario, in addition to the emissions quotas, progressively higher forest-sequestration subsidies are paid to European firms to foster the implementation of forestry practices. Results show that including forest carbon in the compliance strategy decreases European policy costs and carbon price, although public spending is redirected towards the financing of the forest sequestration subsidy. Comparing public spending and savings in policy costs a net positive balance is reported for all the European regions. Significant reductions in carbon leakage or pressure on food security and deforestation outside Europe are not acknowledged.

Suggested Citation

  • Michetti, Melania & Parrado, Ramiro, 2012. "Improving land-use modelling within CGE to assess forest-based mitigation potential and costs," Congress Papers 124380, Italian Association of Agricultural and Applied Economics (AIEAA).
  • Handle: RePEc:ags:aieacp:124380
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    Cited by:

    1. Melania Michetti & Matteo Zampieri, 2014. "Climate–Human–Land Interactions: A Review of Major Modelling Approaches," Land, MDPI, Open Access Journal, vol. 3(3), pages 1-41, July.
    2. Francesco Bosello & Carlo Orecchia & David A. Raitzer, 2016. "Decarbonization Pathways in Southeast Asia: New Results for Indonesia, Malaysia, Philippines, Thailand and Viet Nam," Working Papers 2016.75, Fondazione Eni Enrico Mattei.
    3. Bosello, Francesco & Marangoni, Giacomo & Orecchia, Carlo & Raitzer, David A. & Tavoni, Massimo, 2016. "The Cost of Climate Stabilization in Southeast Asia, a Joint Assessment with Dynamic Optimization and CGE Models," MITP: Mitigation, Innovation,and Transformation Pathways 251810, Fondazione Eni Enrico Mattei (FEEM).

    More about this item

    Keywords

    Climate Change; Climate Mitigation; General Equilibrium Modelling; Forestry; Land Economics/Use; D58; Q23; Q54; Q58;

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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