The SEEA-Based Integrated Economic-Environmental Modelling Framework: An Illustration with Guatemala’s Forest and Fuelwood Sector

Computable General Equilibrium (CGE) Models are powerful tools that provide insights on policy impacts on standard economic indicators. With the recent publication of the first international standard for environmental statistics, the System of Environmental-Economic Accounts (SEEA), the power of this approach is amplified. This paper develops a CGE modelling framework that integrates the SEEA, enabling for the first time the analysis of policy impacts on the economy and the environment in a quantitative, comprehensive and consistent framework. Previous integrated modelling efforts have generally focused on the interaction between the economy and one environmental resource in isolation, requiring significant data reconciliation. Integration of SEEA into a CGE circumvents this resource intense process, enhancing analytical power, obviating the need for strong assumptions, reducing start-up costs, and increasing the timeliness of evidence-based policy advice. In this paper, the IEEM framework is developed and piloted based on data from Guatemala, which is the country with the most comprehensive data compiled under the SEEA framework in the Latin American and Caribbean region. To illustrate the analytical capabilities of IEEM, the framework is applied to explore the economic, environmental and social impacts of implementation of Guatemala’s fuelwood strategy. In addition to this being a critical policy issue for the Guatemalan government, this issue was chosen for exploration due to its multi-dimensional nature with regard to economic-environmental interactions.