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

Abstract

This paper develops and operationalizes the integrated economic-environmental modelling (IEEM) platform which integrates environmental data organized under the first international system of environmental economic accounting with a powerful dynamic economy-wide modelling approach. IEEM enables the ex-ante economic analysis of policies on the economy and the environment in a quantitative, comprehensive and consistent framework. IEEM elucidates the two-way interrelationships between the economy and environment, considering how economic activities depend on the environment as a source of inputs and as a sink for their outputs. In addition to standard economic impact indicators such as gross domestic product, income and employment, IEEM generates indicators that describe policy impacts on the use of environmental resources, wealth and environmental quality which together determine prospects for future economic growth and well-being. To illustrate the analytical capabilities of IEEM, the model is calibrated with Guatemala’s SEEA and applied to analysis of its forest and fuelwood sector where negative health and environmental impacts arise from inefficient fuelwood use.

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Notes

  1. See Banerjee et al. (2016a, b) for a review of the literature on previous efforts to integrate environmental data into an economy-wide framework, and the advantages of SEEA for economy-wide modelling.

  2. The concept of ecosystem services is relevant for IEEM since while the IEEM Platform operationalized here integrates data on provisioning ecosystem services, one of the goals of the IEEM project is to move beyond provisioning services to represent regulating and maintenance services such as climate regulation and erosion mitigation, as well as cultural ecosystem services. This frontier area is discussed in the concluding remarks section.

  3. In other contexts, this treatment can also be applied to land used in managed forests.

  4. In its full version, IEEM can include various water categories. In the case of Guatemala, registered and non-registered water is distinguished, while non-registered water could be further split between agriculture and non-agriculture uses.

  5. See for example: http://www.appropedia.org/Patsari_Cookstove.

  6. One type of publically available ecosystem service modelling modules is the InVEST modelling suite developed through the Natural Capital Project (Sharp et al. 2016). Ecosystem service modules for specific ecosystem services can be calibrated for a country and used for generating ecosystem accounts and scenario analysis.

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Acknowledgements

This work was funded by the BIO Program of the Inter-American Development Bank.

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Correspondence to Onil Banerjee.

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Banerjee, O., Cicowiez, M., Vargas, R. et al. The SEEA-Based Integrated Economic-Environmental Modelling Framework: An Illustration with Guatemala’s Forest and Fuelwood Sector. Environ Resource Econ 72, 539–558 (2019). https://doi.org/10.1007/s10640-017-0205-9

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Keywords

  • Ex-ante economic impact evaluation
  • Evidence-based policy design
  • System of environmental-economic accounting
  • Dynamic computable general equilibrium model
  • System of national accounting
  • Economic and environmental indicators
  • Wealth
  • Natural capital
  • Ecosystem services