Trade and Environment Modeling with GTAP and AI M/ CGE The 10 th AI M I nternational Workshop 10-12, March, 2005 Sang I n Kang sikang@kei.re.kr
I . I ntroduction � Trade and Environment Change in MEA W TO-DDA( m ultilateral) Specialization ( Multilateral Structure Environm ental and Agreem ent) Environm ental I m pact Trade Environmental Liberalization Protection Environm ental National Policy Measures Environm ental and Regional, bilateral FTA Market Access Policy I nternational Consensus on Mutual Supportiveness = W in-W in Strategy Sustainable Developm ent
I . I ntroduction � Trade, Economy and Environment Environmental end-of-pipe pollution EPEA Policy Intervention cleaner EPEA control production promotion · Water Material Flow Outflow Environmental ·Air PIOT Pollution PIOT ·Soil Natural & Environmental Inflow Degradation Depletion Con. I-O Table Exported Inv. Natural & Imported Int’l Trade Environmental Labor, Capital Resources EAA EAA System of Econom ic and Environm ental Accounts
I I . Application of GTAP � Global Trade Analysis Project ? • GTAP is a global network of researchers and policy makers conducting quantitative analysis of international policy issues • provide quantitative analysis tools within an economy-wide framework including 87 regions and 57 sectors • current version(GTAP 6) is based on updated database corresponds to the global economy in 2001 and IEA-based energy use data • multi-regional computable general equilibrium model provided in comparative static and dynamic framework • possibility of quantitative analysis of global climate change issues in multi-regional CGE(GTAP-E) - energy used as input and carbon dioxide emission inventory • difficult to deal with local environmental issues as the DB does not include inventories of other pollutants � national model…
I I . Application of GTAP � Production structure of GTAP-E output ( QO ) − ( ) Leontief C D ( QVA Composite ) ( QM ) Composite CES CES (Land) ( CA ) ( Labor Domestic ) ( QFD Imported ) ( QFM ) energy energy CES CO2 emission CO2 emission Region1 ( QXS ) ……………… .Region n ( ) QXS 1 n Standard GTAP model
I I . Application of GTAP � Scheme of analysis for EI A on Korea-Japan FTA Sectoral Outflow of · Sox Emission Material Account ·Nox air pollutants Factor ·PM10 per Output Energy Inflow FTA Simulation based on GTAP Sectoral Structural change in Output · trade flow Unit disposal cost Unit disposal cost KR-JP FTA Change · output KR-JP FTA · input Disposal Air Costs Pollution Con. I-O Table Exported Inv. Change Health Imported Int’l Trade Impacts Labor, Capital Dose-Response function Dose-Response function Schem e of Analysis
I I . Application of GTAP � Model and Data sources o Comparative study based on Korea - Japan FTA simulation with GTAP and on National emission factors in KR & JP for 1995, 2000(Korea only) Consider Bilateral trade flow change, Industrial output change, Air pollution and disposal cost change o Model: comparative static standard multi-regional CGE o Simulation: removal of import tax between KR and JP (equivalent to tariff and NTBs) o Data sources: • GTAP DB version5 – 1995 based, GTAP DB 6Beta, 2000 based. • Industry structure: I-O Table 1995, 2000(Korea, Japan) • Bilateral trade data: the office of custom administration for Korea, Ministry of Finance for Japan, 1990~ 2002 • Air pollution emission factors: – Korea -KEI(2003) for 1995, 2000 – Japan –NIES(2004) for 1995(93 sectors)
I I . Application of GTAP � Aggregation Regional Aggregation(1995, 2000) - 7 regions:Kor, Jpn, Chn, NAFTA, EU, Oth_ASIA, ROW from 87 regional disaggregation 26 Sectoral aggregation - based on Japanese and Korean I-O table, and sum-up to 6 Groups Sectoral emission factor aggregation - made by simple weighted average with output Environmental factors •Korea - Pollutant: SOx, NOx, TSP(1995), Nox, PM 10 (2000) - Emission Factor(ton/output in MUS$ for 26 sectors, 1995,2000) - Unit disposal cost (MUS$/ton, Fixed and Maintenance, 1995) •Japan - Pollutant: Sox, Nox, SPM(1995) - Emission Factor(ton/output in MUS$ for 26 sectors, 1995)
I I . Application of GTAP � Sectors Sectors A-Sectors GTAP code Sectors A-Sectors GTAP code Agri_Fi_For_Min AG_FI_FO 1-6, 8-14 Heavy OME 41 I ndustry Mining 15-18 ELE 40 Light I ndustry Food 19-26 MVH 38 TEX 7,27 OTN 39 WAP 28 OMF 42 LEA 29 Ely_GDT_Wtr ELY 43 LUM 30 GDT_WTR 44-45 Construction PPP 31 Cons 46 Heavy I ndustry P_C 32 Services TRD 47 CRP 33 OTP 48-50 NMM 34 CMN 51 I_S 35-36 OFI_ISR 52-53 FMP 37 Others 54-57
I I . Application of GTAP � KR and JP in I ndustrial structure 52.4% 60.0% 50.0% 36.0% 36.5% 40.0% • 2000 % weight 25.1% 30.0% 9.8% 20.0% 11.5% 1.8%9.4% 8.2% 4.2% 10.0% 2.8% 55.4% 1.9% 60.0% Jpn 0.0% 50.0% 41.1% y y R s g n 36.9% Kor r r e n T o t t c s s i W i n t u u i c v i _ d d u m r 40.0% n n T e r _ D t S i i s s _ _ % weight G n t y i h f o v _ _ g Y C i a r 24.5% i 30.0% e L g l H E a 7.1% aggregated industry sectors 20.0% 9.5% 8.0% 7.3% 2.3% 2.9% 10.0% 2.8% 1.6% 0.0% Jpn s g y y R n e n r r o T t t c i s s i W n t i u u c v i Kor d d _ r m u T e n n r _ D t S i i s s _ _ G n i t y f h _ o _ v g i Y C • 1995 a r i e L g l E H a aggregated industry sectors
I I . Application of GTAP � KR-JP Bilateral trade structure Korea’s Comparative advantage sector in export to Japan o • Agriculture_fishing_forest, light industry – textile, food, leather, Heavy industry – ELE(semiconductors, TV, office equipment) Japan’s Comparative advantage sector in export to Korea o • Heavy industry – semiconductors, steel, automotive parts, chemical products export 100% 90% import 80% 70% 60% 100% 50% 90% 40% 80% 30% 70% 20% 60% 10% 50% 0% 1996 1997 1998 1999 2000 40% 30% FOOD AND LIV E ANIMALS BEV ERAGES AND TOBACCO 20% CRUDE MATERIALS,INEDIBLE FUELS, LUBRICANTS, ETC. 10% ANIMAL,V EG. OILS,FATS,WAX CHEMICALS,RELTD. PROD. NES MANUFACTURED GOODS MACHINES,TRANSPORT EQUIP 0% 1996 1997 1998 1999 2000 MISC MANUFACTURED ARTCLS GOODS NOT CLASSD BY KIND
I I . Application of GTAP � Bilateral trade barriers(import tax rate in 1995) Birateral import tax rate by Sectors and Regions, 1995 50 45 40 Import tax(% 35 30 25 20 15 10 5 0 M A P M C P E E N F P X P M H O g P E M M M L M R T n W E A U P _ F V F E L P C O i T P F O O W L N N M _ n P _ I i F _ F M B S _ F _ G P I A Sectors From Jpn to Kor From Kor to Jan
I I . Application of GTAP � Bilateral trade barriers(import tax rate in 2000) Birateral import tax rate by Sectors and Regions, 2000 30 25 Import tax(% 20 15 10 5 0 M A M C P E E N F P P H P X P M O g M L E R M M M W E U P _ T n A F V F E L P i T P C O L N F O M O W N _ n P _ I i _ M F F B S _ F _ G P I A Sectors From Jpn to Kor From Kor to Jan
I I . Application of GTAP � Bilateral trade balance (X, M, BOP(X-M) for Korea) 40 30 20 US billion $ 10 0 -10 -20 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 year D=import from Japan B=export to Japan balance of payment
I I . Application of GTAP � KR and JP in Emission Factors(1995) Top five Sox and Nox intensive sectors of KR and JP Sox Nox UNI T= EMI SSI ON TON/ US MI LLI ON $ Korea Japan Korea Japan 19 ELY 22.75 23 OTP_WA 1.87 19 ELY 9.25 23 OTP_WA 4.38 9 P_C 9.52 19 ELY 1.84 12 I _S_NFM 4.69 11 NMN 1.84 23 OTP_WA 6.45 1 AG_FI _FO 1.17 11 NMM 2.99 19 ELY 1.54 12 I _S_NFM 5.74 9 P_C 1.13 23 OTP_WA 2.53 1 AG_FI _FO 1.45 20 GDT_WTR 2.22 9 P_C 0.53 11 NMM 4.50 4 PFB_TEX 0.98 Direct emission intensity vs. Embodied emission intensity o Pollution intensive sectors o • Heavy industry – transportation services, Non metallic products, Electricity
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