Rebound and disinvestment effects in oil consumption and supply resulting from an increase in energy efficiency in the Scottish commercial transport sector

In this paper we use an energy-economy-environment computable general equilibrium (CGE) model of the Scottish economy to examine the impacts of an exogenous increase in energy augmenting technological progress in the domestic commercial Transport sector on the supply and use of energy. We focus our analysis on oil, as the main type of energy input used in commercial transport activity. We find that a 5% increase in energy efficiency in the commercial Transport sector leads to rebound effects in the use of oil-based energy commodities in all time periods, in the target sector and at the economy-wide level. However, our results also suggest that such an efficiency improvement may cause a contraction in capacity in the Scottish oil supply sector. This ‘disinvestment effect’ acts as a constraint on the size of rebound effects. However, the magnitude of rebound effects and presence of the disinvestment effect in the simulations conducted here are sensitive to the specification of key elasticities of substitution in the nested production function for the target sector, particularly the substitutability of energy for non-energy intermediate inputs to production.

North Sea Oil and Genuine Saving in the Scottish Economy

The World Bank has published estimates of sustainability of consumption paths by adjusting saving rates to take account of the depletion of non-renewable resources. During the period of North Sea oil production Scotland has been in a fiscal union with the rest of the UK. The present paper adjusts the World Bank data to produce separate genuine saving estimates for Scotland and the rest of the UK for 1970-2009, based on a ‘derivation’ principle for oil revenues. The calculations indicate that Scotland has had a negative genuine saving rate for most of the period of exploitation of North Sea oil resources, with genuine saving being positive in the rest of the UK during this period.

North Sea Oil and Genuine Saving in the Scottish Economy

The World Bank has published estimates of sustainability of consumption paths by adjusting saving rates to take account of the depletion of non-renewable resources. During the period of North Sea oil production Scotland has been in a fiscal union with the rest of the UK. The present paper adjusts the World Bank data to produce separate genuine saving estimates for Scotland and the rest of the UK for 1970-2009, based on a ‘derivation’ principle for oil revenues. The calculations indicate that Scotland has had a negative genuine saving rate for most of the period of exploitation of North Sea oil resources, with genuine saving being positive in the rest of the UK during this period.

The Impacts of Temporary and Anticipated Tourism Spending.

Part of the local economic impact of a major sporting event comes from the associated temporary tourism expenditures. Typically demand-driven Input-Output (IO) methods are used to quantify the impacts of such expenditures. However, IO modelling has specific weaknesses when measuring temporary tourism impacts; particular problems lie in its treatment of factor supplies and its lack of dynamics. Recent work argues that Computable General Equilibrium (CGE) analysis is more appropriate and this has been widely applied. Neglected in this literature however is an understanding of the role that behavioural characteristics and factor supply assumptions play in determining the economic impact of tourist expenditures, particularly where expenditures are temporary (i.e. of limited duration) and anticipated (i.e. known in advance). This paper uses a CGE model for Scotland in which agents can have myopic- or forward-looking behaviours and shows how these alternative specifications affect the timing and scale of the economic impacts from anticipated and temporary tourism expenditure. The tourism shock analysed is of a scale expected for the Commonwealth Games to be held in Glasgow in 2014. The model shows how “pre-shock” and “legacy” effects – impacts before and after the shock – arise and their quantitative importance. Using the forward-looking model the paper calculates the optimal degree of pre-announcement.