This paper presents an incentive-compatible approach to engaging oil-exporting countries in climate policy by aligning mitigation with their own economic interests. It quantifies how alternative fiscal and industrial policies affect economic diversification and emissions in Nigeria, Africa's largest oil producer, and analyzes how domestic reforms interact with climate and energy policies implemented by trading partners. Using a global economic model, the study simulates non-cooperative scenarios in which the rest of the world forms hypothetical climate clubs that adopt ambitious climate policies. Nigeria either aligns its fiscal reforms with these clubs or maintains business-as-usual policies. The reforms evaluated include removal of the petrol subsidy, broadening the VAT base, raising the VAT rate to 15%, and introducing a carbon tax. The resulting expansion of the fiscal space is directed either to households or to investments supporting productivity-driven diversification. Findings show that traditional diversification without green and efficiency-boosting fiscal reforms risks locking Nigeria into a structure reliant on domestic services and energy-intensive, low-productivity downstream industries vulnerable to external policy shocks. Fiscal reforms combined with innovation-focused investments boost economic growth-raising GDP by over 6% above baseline by 2050-while reducing emissions by up to 36% and promoting broader diversification. However, long-term GDP gains entail short-term welfare losses. Results-based climate finance linked to verified emissions reductions could compensate, providing up to $10.1 billion over 25 years at $10 per ton of CO2 abated, offering climate clubs a powerful tool to encourage cooperative climate action-even among oil exporters.

This paper evaluates the economic impacts of the European Union (EU) and United Kingdom (UK) Carbon Border Adjustment Mechanism (CBAM) on Mozambique and South Africa—two countries with high exposure due to carbon intensive exports. Using the Global Trade Analysis Project Circular Economy (GTAP-CE) Data Base and the dynamic computable general equilibrium (CGE) model ENVISAGE, we develop a baseline to 2035 and simulate the proposed CBAM. Results show modest macroeconomic effects but significant sectoral adjustments. Mozambique faces sharp declines in aluminium output and exports, while South Africa experiences smaller reductions in iron and steel and aluminium. Fiscal impacts are limited, though CBAM generates substantial revenue for the EU and UK. The findings underscore the importance of strengthening domestic Measurement, Reporting, and Verification (MRV) systems and aligning climate policies to mitigate competitiveness and distributional risks.

Food systems are a major contributor to exceeding planetary boundaries1-3 and poor quality diets are a key mortality risk globally4. Projected population and income growth could exacerbate these challenges5. In response, there are calls for transformation towards healthy and sustainable food systems6-8. However, the scale and distribution of the impacts of this transformation on agriculture are underexplored. Here we show that, by 2050, the transformation of food systems towards healthy diets (adoption of the EAT-Lancet reference diet), improved productivity and halving of food waste results in a fundamental restructuring of global agriculture, aspects of which break with historical trends. Scenario simulations using a multimodel ensemble of ten global economic models show a 6% median decrease in agricultural land (+1% to -26%) compared with 2020 levels. By 2050, agricultural production would be 17% lower than business-as-usual projections (-2% to -32%) and, economically, the value of this production is US$1.6 trillion (26%) lower (+8% to -58%). Within this, the value of livestock production would be substantially lower than current 2050 projections (-49% to -83%), while vegetable, fruit, nut and legume production value would increase by 23% (-33% to +106%). Results are dependent on the assumed policies to achieve the transformation scenario. We highlight a more active role for food policy to consider the benefits of such a transformation (improved population health and reduced environmental pressures) and navigate the political economy of its impacts.

This paper provides a comprehensive assessment of forward-looking circular economy (CE) transition policies in Europe by coupling a novel global CE database with a dynamic computable general equilibrium model. We investigate how climate policies within the EU Green Deal interact with the circularity agenda, and how various CE interventions, including supply-and demand-side interventions, can be used to complement existing mitigation goals. While climate policies have a relatively minor impact on material use patterns, CE policies could help achieve mitigation goals, highlighting the complementarity of both policies. To be effective, CE policies should include both supply-and demand-side interventions, which would achieve absolute decoupling. While the overall economic cost of the combined CE policies does not exceed 1 % of GDP in 2030, a rising wage gap could be a concern. Using the revenues created by CE fiscal policies to reduce labor taxes eliminates GDP losses and lowers negative labor effects.

We use general-equilibrium modelling methods to estimate the "economic footprint" of the operations of a major international development agency on the national and regional economies in which it operates. We find that each dollar spent by the United Nations World Food Program (WFP) Regional Bureau of Nairobi (RBN) operations increases the total value of production in the East African region by as much as $2.30 and regional real (inflation-adjusted) gross domestic product (GDP) by up to $1.42. There are large variations across countries. For example, real-income effects range from $3.68 in Uganda to-$2.38 in Eritrea. WFP-RBN spending adds up to 20,047 yearround equivalent jobs for skilled workers and 365,606 jobs for unskilled workers in East Africa. Though not a focus of this study, we show that WFP RBN cash-based transfers to households add to these impacts. To our knowledge, this is the first effort to rigorously document the economy-wide impacts of the operations of a major development actor.

This paper uses a combination of the global energy system model KINESYS and global computable general equilibrium (CGE) model ENVISAGE to analyze the impact of future climate mitigation policies. Results are subsequently linked to an atmospheric source-receptor model. Principal findings are as follows: (i) Holding global temperatures below 2oC requires significant policy effort. A uniformly applied tax of nearly $400 (2014 USD) per tonne of CO2eq is required. (ii) Ignoring benefits and co-benefits of mitigation policy, the cost to the global economy is relatively small. Holding global temperature rise below 2oC implies a loss of about 1.1% of global GDP. Using the revenue from carbon taxation to offset distorting taxes, as opposed to transferring carbon revenues in a lump sum manner to households, further reduces or reverses economic losses. (iii) However, benefits and co-benefits are significant. Benefits relate to reduced climate-related damages, such as lower frequency/intensity of extreme weather events. The co-benefit in focus relates to reduced air pollution. The monetized co-benefits of reduced air pollution substantially exceed the costs of mitigation alone by 2050 in most scenarios. Low-income countries experience a higher benefit-to-cost ratio compared to high-income economies. (iv) As mitigation effort increases, global trade-to-GDP ratios decline. Mitigation substitutes strongly traded fossil fuels for mostly domestically generated electricity. This downdraft on trade volume is a major and robust result. (v) The composition of trade shifts in logical ways, with production/trade in energy-intensive products tending to decline more and production/trade in less energy-intensive products tending to decline less.

BACKGROUND:Current food systems leave one in ten individuals at risk of hunger while driving unsustainable environmental impacts. Inaction risks further exacerbating negative impacts on both human and planetary health. These challenges emerge from complex system interactions, requiring approaches that engage with this complexity and consider how transformation measures interact across food systems. We aimed to quantify the magnitude and uncertainty of the impacts of key food systems transformation measures both individually and in a bundle using an ensemble of global economic models. METHODS:In this global multimodel assessment, we applied an ensemble of ten state-of-the-art global economic models to evaluate the potential of four key measures in transforming food systems: increasing agricultural productivity, halving food loss and waste, shifting towards healthier diets, and economy-wide climate mitigation policies aligned with limiting warming to 1·5°C. The scenarios used a middle-of-the-road shared socioeconomic pathway for population and gross domestic product growth, climate impact data from Jägermeyr and colleagues, Thornton and colleagues, and Nelson and colleagues, and dietary targets based on the EAT-Lancet healthy reference diet, with model simulations conducted from 2020 to 2050. We then assessed the effect of these measures in isolation and in combination in a bundled scenario. To further understand the interactions between these measures, we conducted a decomposition analysis that distinguishes between the individual effects of a measure (effect when implemented alone), total effects (its contribution within the bundle), and interaction effects (the difference between total and individual effects). This approach aimed to show complementarities and trade-offs that emerge when multiple measures are implemented simultaneously. FINDINGS:Our analysis showed that individual measures in isolation are insufficient to achieve high-level environmental objectives and might generate unintended consequences. In contrast, bundling measures produces co-benefits: avoiding 50% of projected agricultural greenhouse gas emissions by 2050 and almost 20% of anticipated land conversion, while moderating food price increases associated with ambitious climate change mitigation policies. Our decomposition analysis further shows that measures can have varying effects across different dimensions. Although dietary shifts and climate mitigation policies are the largest drivers of environmental benefits (each contributing to a median decline of >10 percentage points in non-CO2 emissions and 5 percentage points in agricultural land use globally), productivity improvements and reducing food loss and waste play essential roles in moderating price increases (each contributing to a median decline of >5 percentage points in average prices). INTERPRETATION:This study highlights the importance of implementing coordinated approaches to food system transformation and climate change mitigation rather than relying on isolated interventions. Comprehensive transformation requires understanding how supply-side and demand-side changes can interact with climate mitigation policies, enabling policy makers to design intervention packages that maximise benefits while minimising trade-offs across environmental, economic, and social dimensions. FUNDING:Bill & Melinda Gates Foundation; Cornell Atkinson Center for Sustainability; Environment Research and Technology Development Fund; the Asahi Glass Foundation; CGIAR Initiative on Foresight; the CGIAR Science Program on Policy Innovations; US Department of Agriculture, Economic Research Service; and the ClimateWorks Foundation, European Union.

The U.S.-China trade war, COVID-19 pandemic and Russian invasion of Ukraine contributed to calls for greater economic self-sufficiency by exposing gaps in international collaboration and the uncertainty of global supply chains. In this study, we apply a comprehensive global modeling framework to enhance understanding of the potential impacts of fragmentation of global value chains. Supporting the general argument toward economic benefits from open markets our analysis contributes to the policy debate in two important dimensions of this phenomenon—distributional impacts and economic resiliency. We find that tariff liberalization and trade facilitation measures implemented by developing countries could not only reduce between-country inequality but also result in progressive within-country income distribution primarily through lowering food prices, as well as increasing unskilled wages. In addition, using a case study of disruption to Thailand’s electronics industry, we find higher resiliency of developing countries to external shocks in the globalized (as opposed to a localized) world.

Food systems exert significant stress on planetary boundaries1–3 while healthy diets are currently unaffordable for billions worldwide4. These challenges are expected to continue under global population trends, projected to reach 9.6 billion by mid-century5. Food systems must therefore transform in pursuit of health and sustainability goals6–8. However, the scale and distribution of this transformation on agriculture is underexplored. Here we show that, by 2050, an EAT-Lancet style food systems transformation results in a fundamental restructuring of global agriculture, aspects of which break with historical trends. Scenario simulations using a multi-model ensemble of 10 global economic models show a 6% median decrease in agricultural land of 274Mha (+1 to -26%, +48 to -1257Mha) compared to 2020 levels. By 2050, agricultural production would be 2 to 32% (-0.2x109 to -3.7x109 tonnes) lower than business-as-usual projections, and economically, the value of this production shows a 26% median relative decline of $1.6tn in USD2020 (+8% to -58%, +$0.5tn to -$2.9tn USD2020) Within this, the value of livestock production would fall substantially (-$1tn to -$2.2tn, -49% to -83%). These results reinforce the need for a more active role for food policy and stakeholder dialogue to catalyse such a transformation and navigate the political economic consequences of its impacts.

As economies around the world are increasing their mitigation ambitions, Azerbaijan's lingering dependency on fossil fuel exports threatens its medium - and long-term economic development prospects. Global decarbonization is expected to directly impact the country's resource rents through lower fossil fuel demand and prices. In this regard, it is crucial to understand the potential implications of the global mitigation efforts on the economy of Azerbaijan and evaluate the domestic mitigation policies. To address this gap in the literature, we use a global dynamic computable general equilibrium model and explore a set of forward-looking climate policy scenarios till 2060. Our results suggest that while being adversely impacted by decarbonization efforts in countries around the world, it is in Azerbaijan's self-interest to implement domestic mitigation policies. With proper sequencing and design of such policies, including a combination of fossil-fuel subsidies reform, the introduction of carbon prices post-2030 and recycling of the additionally collected revenue via reduced factor taxes, the country could achieve NDC targets, boost economic growth and increase economic diversification. More ambitious mitigation efforts, consistent with reaching net-zero emissions by 2060 would result in substantial health co-benefits from improved air quality, which could almost fully outweigh the direct economic costs of such mitigation. While being exposed to the declining global fossil fuel demand and prices that accompany decarbonization efforts in countries around the world, it is in Azerbaijan's self-interest to implement domestic mitigation policies.Achievement of the Nationally Determined Contributions (NDC) via the elimination of fossil fuel subsidies, the introduction of carbon prices post-2030 and recycling of the additionally collected revenue via reduced factor taxes is the most economically attractive option for Azerbaijan.Reduced levels of air pollution that accompany low-carbon transition result in substantial health-related co-benefits increasing the net welfare gains under NDC scenarios and compensating between 60% and 80% of the mitigation costs under the net-zero mitigation case in Azerbaijan.

AbstractThis study contributes to a better understanding of synergies and trade-offs between climate mitigation and sustainable development goals, covering 17 indicators across various SDGs. Our assessment employs a multi-model framework, which includes a global computable general equilibrium model (ENVISAGE), an energy system model (KINESYS) and an atmospheric source-receptor model (TM5-FASST). This combination of modeling tools allows us to provide a detailed representation of the energy-related SDG indicators while accounting for their interactions with climate mitigation and socio-economic dimensions. We find that out of 17 analyzed SDG indicators, seven experience co-benefits from implementing mitigation efforts (including improved environmental footprints, energy efficiency and clean energy), six SDG indicators are subject to trade-offs (energy and food affordability, economic growth and labor participation), while the remaining four SDG indicators show mixed trends (distributional aspects and energy diversity). The identified trade-offs could be substantially reduced through specific policy solutions. We find that if the revenue collected from carbon pricing is recycled via reductions in factor taxes in selected low-carbon activities, as opposed to lump-sum payments to households, 11 out of 13 SDG dimensions analyzed in this regard would improve—reducing energy prices, increasing the share of renewable energy, improving distributional outcomes and decreasing welfare losses. In addition, we showcase the need for properly capturing interactions across various SDG dimensions by monetizing the co-benefits from improved air quality. We find that such co-benefits outweigh mitigation costs by more than a factor of two, thus changing trade-offs earlier identified for the case of economic growth into synergies. A higher ratio of air quality co-benefits relative to mitigation costs observed for developing countries could also lead to reductions in between-country inequality.

This paper describes the use of a utility that creates a Latin Hypercube Sample (LHS). The LHS approach to sampling has had wide applicability as it represents a Monte Carlo strategy that limits sample size and therefore computer time to study the outcomes of simulations under uncertainty. Other approaches to deal with the ’size’ problem include Gaussian Quadrature (GQ) (Arndt, 1996), often used in the context of large models such as computable general equilibrium models. However, the GQ approach is most suitable for focusing on a small set of uncertain parameters as the number of model evaluations increases substantially with the number of uncertain parameters and/or the moments to track. The utility is a new version of the LHS utility that has been publicly available from Sandia National Labs since the early 2000s. Beyond the recoding from FORTRAN to C/C++, the new version of the utility has some additional features including new output options and additional statistical distributions. This paper demonstrates the use of the new utility by coupling it to an integrated assessment (IAM) model which is derived from the META 21 model developed by Dietz et al. (2021). The META 21 model has many components that can be readily integrated into global economic models that track greenhouse gas emissions—a simple climate module, economic impacts derived from sea-level and temperature rises and bio-physical tipping points such as the Amazon dieback. The IAM results suggest that the social cost of carbon increases by an average of around 26% when taking into account the tipping points and that the tipping points lead to an additional decline of 0-5% in per capita consumption in 2100 on top of the other damages related to climate change. The utility and the code to the IAM model are available as supplementary materials.

Climate change by its very nature epitomizes the necessity and usefulness of the global-to-local-to-global (GLG) paradigm. It is a global problem with the potential to affect local communities and ecosystems. Accumulation of local impacts and responses to climate change feeds back to regional and global systems creating feedback loops. Understanding these complex impacts and interactions is key to developing more resilient adaptation measures and designing more efficient mitigation policies. To this date, however, GLG interactions have not yet been an integrative part of the decision-support toolkit. The typical approach either traces the impacts of global action on the local level or estimates the implications of local policies at the global scale. The first approach misses cumulative feedback of local responses that can have regional, national or global impacts. In the second case, one undermines a global context of the local actions most likely misrepresenting the complexity of the local decision-making process. Potential interactions across scales are further complicated by the presence of cascading impacts, connected risks and tipping points. Capturing these dimensions is not always a straightforward task and often requires a departure from conventional modeling approaches. In this paper, we review the state-of-the-art approaches to modeling GLG interactions in the context of climate change. We further identify key limitations that drive the lack of GLG coupling cases and discuss what could be done to address these challenges.

This paper describes the construction of the Global Trade Analysis Project (GTAP) Data Base, version 11. The Data Base reconciles different data sources at a global scale for analytical use and provides time series data on value flows, volumes, and various tax instruments. GTAP 11 offers a time series of 5 reference years (2004, 2007, 2011, 2014, and 2017), distinguishes 65 sectors in each of 141 countries and 19 aggregate regions-with extensive individual countries accounting for 99.1% of world Gross Domestic Product (GDP) and 96.4% of world population. The exhaustive nature of GTAP's economic activity coverage facilitates its use in economy-wide studies of global economic issues.

A nuclear war using less than 1% of the current global nuclear arsenal, which would inject 5 Tg of soot into the stratosphere, could produce climate change unprecedented in recorded human history and significant impacts on agricultural productivity and the economy. These effects would be most severe for the first five years after the nuclear war and may last for more than a decade. This paper calculates how food availability would change by employing the Environmental Impact and Sustainability Applied General Equilibrium model. Under a robust world trading system, global food availability would drop by a few percentage points. If the war would destabilize trade, it would magnify by several times the negative ramifications of land productivity shocks on food availability. If exporting countries redirect production to domestic consumption at the expense of importing countries, it would lead to the destabilization of international trade. The analysis suggests that economic models aiming to inform policymakers require both economic behavior analysis and biophysical drivers. Policy lessons derived from a crop model can be significantly nuanced when coupled with economic feedback derived from economic models. Through the impact on yield, farmers could shift production among crops and reallocate land use to maximize profits, showing the importance of general equilibrium effects such as product and input substitution and international trade. Although the global impact on corn and soybean production would be significant when just considering crop production, it could be considerably smaller under the economic model. However, this would be at the expense of other sectors, including livestock. In addition, the costs borne from disruptions to climate would vary significantly across regions, with significant adverse effects in high latitude regions. The severity of the shocks in the high-latitude areas would marginalize the farmers’ product and input substitution ability.

In response to the invasion of Ukraine, most OECD countries have announced punishing sanctions against Russia. In addition to targeting financial markets and service sectors, some countries have begun to impose restrictions on exports of Russia’s fossil fuels. In this paper, we analyze a scenario whereby most OECD countries put major restrictions on Russia’s energy exports. Results suggest that the short-term implications are likely to be non-trivial for EU – Russia’s largest energy export destination. Households’ real income could drop by 0.7-1.7 percent (relative to the reference case) with energy prices growing by as much as 11 percent. But after the initial adjustment period, the cost of such restrictions for the EU is expected to be more modest over the longer run (0.04 percent slowdown in the annual growth rate of real income over the 2022-2030 period), even as they lead to substantial environmental co-benefits through reductions in CO2 (6.6 percent in 2030) and air pollutant emissions (2.8-5.9 percent in 2030). Such emission reductions would take the EU more than halfway to its Green Deal mitigation target, reducing the necessary carbon price by around 40 EUR per tCO2. Adverse impacts on the Russian economy would be overwhelming and, in relative terms, 10 time larger than that for EU. By 2030 the cumulative reduction in Russian real income would exceed 1.1 trillion USD, while lost revenue from fossil fuel exports would be almost 1.4 trillion USD. Key words: Russia; Fossil fuel export restrictions; Economic impacts; European Union; Climate mitigation; Environmental co-benefits; Computable general equilibrium. JEL codes: C68, O13, Q43, F17, F18

No AccessPolicy Research Working Papers21 Mar 2022Pandemic, Climate Mitigation, and Reshoring: Impacts of a Changing Global Economy on Trade, Incomes, and PovertyAuthors/Editors: Maksym Chepeliev, Maryla Maliszewska, Israel Osorio-Rodarte, Maria Filipa Seara E Pereira, Dominique Van Der MensbruggheMaksym Chepeliev, Maryla Maliszewska, Israel Osorio-Rodarte, Maria Filipa Seara E Pereira, Dominique Van Der Mensbrugghehttps://doi.org/10.1596/1813-9450-9955SectionsAboutView ChaptersPDF (2.6 MB) ToolsAdd to favoritesDownload CitationsTrack Citations ShareFacebookTwitterLinked In Abstract: The resilience of global value chains has been put to the test by the COVID-19 pandemic, extreme weather events, and trade tensions spurred by growing economic nationalism and protectionism. Shocks in production and trade can be transmitted from one country to another by global value chains, although they can also help to lessen the blow of a domestic shock, such as a lockdown, and drive economic recovery. What shocks to global value chains should be anticipated in the coming years Is it possible to design policies that can enhance resilience to trade shocks in developing countries without endangering growth This paper explores simulations from the ENVISAGE global computable general equilibrium model to enhance understanding of the potential longer-term impacts of COVID-19 and the policy responses it engenders in developing countries. The paper assesses the likely impacts of measures designed to reshore production and reduce reliance on imports. It also evaluates other key factors shaping the global economy, including stylized scenarios to capture the essential elements of policies to achieve carbon emission reductions that will have an impact on trade. Previous bookNext book FiguresreferencesRecommendeddetails View Published: March 2022 Copyright & Permissions KeywordsREAL INCOMEREGIONAL AND GLOBAL VALUE CHAINSBARRIER TO IMPORTEXTREME WEATHER EVENTCARBON EMISSION REDUCTION PDF DownloadLoading ...

As countries have started implementing their Nationally Determined Contributions (NDCs) in the context of their commitments to the 2015 Paris Agreement that aims to limit the global mean temperature rise to at most 2C and preferably to 1.5C, they are looking at a wide range of instruments to mitigate emissions of greenhouse gases. Much of the traditional focus is the taxing of carbon—mostly linked to combustion of fossil fuels. It has been postulated that cheaper options could be available that rely on other sources of greenhouse gas emissions such as methane in agriculture (rice production, livestock and dairy), resource extraction and waste management, and nitrous oxide emissions in agriculture, chemical production and waste management (Weyant et al., 2006).

In this study, we focus on four Eastern European Member States – Poland, Romania, Bulgaria and Croatia – to explore the policies toward circular economy transition in these countries (within a broader EU circular economy transition context). While most of the existing literature has global coverage, future progress in the area of circular economy transition would likely depend on a country level action. Thus assessment of the regional/local measures, including identifications of the potential economic implications and policy trade-offs of such transition is of a high importance for policy makers. This paper: > Introduces additional sectoral splits to the GTAP 10 Data Base. This includes explicit representation of the primary and secondary production activities for aluminum, copper, iron and steel, and other metals processing. Recycling activity and plastics are also disaggregated in the newly constructed database. Such splits are introduced for all 141 regions of the GTAP 10 Data Base. > Using the dynamic computable general equilibrium model ENVISAGE , develops the global baseline scenario of the material use accounts with the specific focus on four Eastern European Member States – Poland, Romania, Bulgaria and Croatia. Climate mitigation policy scenarios consistent with the Paris Agreement targets and the European Green Deal are further assessed in the context of their impacts on the material use patterns. > A set of the additional policy measures (e.g. environmental taxes, subsidies, etc.) geared toward a more ambitious circular economy transition targets (consistent with the EU circular economy action plan) is modeled and explored in the paper.

The objectives of this work are to apply, in the context of a computable general equilibrium (CGE) model, advances in export supply and import demand elasticities estimation and examine the implications of heterogeneity for a CGE model mechanisms and outcomes. The analysis is based on the extension of the GTAP model, called GTAP-HS. The GTAP-HS model allows for the incorporation of detailed trade data and analysis of trade policies at the level of the Harmonized System’s (HS) “tariff line”. Importer-exporter-good specific export supply and import-good specific import demand elasticities are estimated using Soderbery (2018) method. The GTAP-HS model is then modified to incorporate the heterogeneous export supply and calibrated to the estimated trade elasticities. The model is applied to evaluate the impacts of retaliatory tariffs imposed on U.S. vegetables, fruits, and nuts sectors and explore how uncertainties in the trade elasticities contribute to uncertainty in policy outcomes.