The added value from adopting a CGE approach to analyse changes in environmental trade balances

The application of multi-region environmental input-output (IO) analysis to the problem of accounting for emissions generation (and/or resource use) under different accounting principles has become increasingly common in the ecological and environmental economics literature in particular, with applications at the international and interregional subnational level. However, while environmental IO analysis is invaluable in accounting for pollution flows in the single time period that the accounts relate to, it is limited when the focus is on modelling the impacts of any marginal change in activity. This is because a conventional demand-driven IO model assumes an entirely passive supply-side in the economy (i.e. all supply is infinitely elastic) and is further restricted by the assumption of universal Leontief (fixed proportions) technology implied by the use of the A and multiplier matrices. Where analysis of marginal changes in activity is required, extension from an IO accounting framework to a more flexible interregional computable general equilibrium (CGE) approach, where behavioural relationships can be modelled in a more realistic and theory-consistent manner, is appropriate. Our argument is illustrated by comparing the results of introducing a positive demand stimulus in the UK economy using IO and CGE interregional models of Scotland and the rest of the UK. In the case of the latter, we demonstrate how more theory consistent modelling of both demand and supply side behaviour at the regional and national levels effect model results, including the impact on the interregional CO2 ‘trade balance’.

An interregional input-output analysis of the pollution content of trade flows and environmental trade balances between five states in the US Mid-West

In this paper we attempt an empirical application of the multi-region input-output (MRIO) method in order to enumerate the pollution content of interregional trade flows between five Mid-West regions/states in the US –Illinois, Indiana, Iowa, Michigan and Wisconsin – and the rest of the US. This allows us to analyse some very important issues in terms of the nature and significance of interregional environmental spillovers within the US Mid-West and the existence of pollution ‘trade balances’ between states. Our results raise questions in terms of the extent to which authorities at State level can control local emissions where they are limited in the way some emissions can be controlled, particularly with respect to changes in demand elsewhere in the Mid-West and US. This implies a need for policy co-ordination between national and state level authorities in the US to meet emissions reductions targets. The existence of an environmental trade balances between states also raises issues in terms of net losses/gains in terms of pollutants as a result of interregional trade within the US and whether, if certain activities can be carried out using less polluting technology in one region relative to others, it is better for the US as a whole if this type of relationship exists.

Ecologic correlations of selected food groups with disease incidence and mortality in Switzerland.

Background: There is little information regarding the impact of diet on disease incidence and mortality in Switzerland. We assessed ecologic correlations between food availability and disease.Methods: In this ecologic study for the period 1970-2009, food availability was measured using the food balance sheets of the Food and Agriculture Organization of the United Nations. Standardized mortality rates (SMRs) were obtained from the Swiss Federal Office of Statistics. Cancer incidence data were obtained from the World Health Organization Health For All database and the Vaud Cancer Registry. Associations between food availability and mortality/incidence were assessed at lags 0, 5, 10, and 15 years by multivariate regression adjusted for total caloric intake.Results: Alcoholic beverages and fruit availability were positively associated, and fish availability was inversely associated, with SMRs for cardiovascular diseases. Animal products, meat, and animal fats were positively associated with the SMR for ischemic heart disease only. For cancer, the results of analysis using SMRs and incidence rates were contradictory. Alcoholic beverages and fruits were positively associated with SMRs for all cancer but inversely associated with all-cancer incidence rates. Similar findings were obtained for all other foods except vegetables, which were weakly inversely associated with SMRs and incidence rates. Use of a 15-year lag reversed the associations with animal and vegetal products, weakened the association with alcohol and fruits, and strengthened the association with fish.Conclusions: Ecologic associations between food availability and disease vary considerably on the basis of whether mortality or incidence rates are used in the analysis. Great care is thus necessary when interpreting our results.

A balance of questions: what can we ask of climate change economics?

The standard approach to the economics of climate change, which has its best known implementation in Nordhaus's DICE and RICE models (well described in Nordhaus's 2008 book, A Question of Balance) is not well equipped to deal with the possibility of catastrophe, since we are unable to evaluate a risk averse representative agent's expected utility when there is any signi cant probability of zero consumption. Whilst other authors attempt to develop new tools with which to address these problems, the simple solution proposed in this paper is to ask a question that the currently available tools of climate change economics are capable of answering. Rather than having agents optimally choosing a path (that differs from the recommendations of climate scientists) within models which cannot capture the essential features of the problem, I argue that economic models should be used to determine the savings and investment paths which implement climate targets that have been suggested in the physical science literature.