CIM-­‐EARTH Philosophy, Models, and Evalua3on Joshua Elliott, Ian Foster, Meredith Franklin, Kenneth Judd,
Sam Kortum, Elisabeth Moyer, Kenneth Judd, Todd Munson,
Fernando Pérez-Cervantes, and David Weisbach
CIM-­‐EARTH Framework Commi@ed to open-­‐source philosophy Open-­‐Source Philosophy •  What is open source? License allowing others to –  Read the code –  Modify the code –  Redistribute modified code •  Why do we open source? –
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Belief in the free exchange of ideas embodied in code Improve transparency and encourage experimenta3on Increase compe33on and innova3on in the field Ease cost of contribu3ons from a diverse community •  How do we plan achieve open source? –  Make code and data accessible –  Document the code to make it understandable –  SoOware engineering to make code extensible and modifiable State of CIM-­‐EARTH Framework •  Modeling –
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Myopic computable general equilibrium model Nested constant elas3city of subs3tu3on Support for homogenous commodi3es Ad valorem and excise taxes Export and import du3es Endogenous tax rates •  Implementa3on –
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AMPL specifica3on framework Preprocessing and calibra3on capabili3es Automa3c dynamic genera3on of instances Solu3on of instances using the PATH algorithm Output of detailed reports to files for further processing CIM-­‐EARTH Data and Trajectories •  GTAP Version 7 –  2004 base year –  Energy volume data –  Expenditure and revenue data •  Es3ma3on of labor dynamics –  2008 UN popula3on database –  2006 ILO economic ac3vity rate database –  2008 US Bureau of Labor Sta3s3cs produc3vity database •  Es3ma3on of land and natural resource dynamics –  2008 UN Food and Agriculture Organiza3on database –  2007 World Energy Council survey of energy resources Popula3on Size •  2008 UN popula3on database –  Historical informa3on 1950-­‐2008 –  Forecasts 2009-­‐2050 Labor Force Par3cipa3on •  2006 ILO economic ac3vity database –  Historical informa3on 1980-­‐2006 –  Forecasts 2007-­‐2020 –  Extrapola3on 2021-­‐2025 Labor Endowment •  Popula3on size 3mes ac3vity rate Labor Produc3vity •  US Bureau of Labor Sta3s3cs –  Historical informa3on 1950-­‐2008 –  Extrapola3on 2009-­‐2025 A Simple Study Importers and Transporta3on •  Three types of transport •  Each is a homogenous good •  Leon3ef nest for transport Carbon Accoun3ng Carbon Accoun3ng •  System has more variables than equa3ons –  Regions*(Sectors+Factors) variables –  Regions*Sectors equa3ons •  Ignore contribu3ons from factors •  Fix carbon amounts for energy sectors –  Use energy volume data –  Standard conversion factors •  Solve remaining system of equa3ons –  Compute known parameters –  Use fixed trajectories to obtain linear system –  Exploit structure to obtain approximate solu3on Carbon Accounts for 2004 Units are million tonnes CO2 Uncertainty in Emissions Emissions with varying elas3city of subs3tu3on Ensemble contains 5,000 realiza3ons Future Direc3ons •  Framework improvements –  Public and private learning –  Research and development –  Capital and product vintages –  Overlapping consumer genera3ons –  Household produc3on func3ons –  Nonseparable u3lity func3ons –  Heterogeneous beliefs •  Addi3onal types of models –  Fully-­‐dynamic computable general equilibrium –  Dynamic-­‐stochas3c computable general equilibrium Conclusion •  Leakage has a nontrivial impact on mi3ga3on policy –  ~20% of reduc3ons in Annex-­‐B cancelled by increases in others –  Border tax adjustments recoup the cancelled reduc3ons –  Results in increased domes3c produc3on •  Model es3mates carbon tax of $25-­‐30/tCO2 for 17% reduc3on •  These results, however, should be taken with a large grain of salt –
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Need rigorous parameter es3ma3on and valida3on using 3me-­‐series data Lack of 3me-­‐series data and the funding to generate it is a major problem Significant uncertain3es will s3ll exist and will need to be reported Studies of these uncertain3es with large ensembles are required Many more policy scenarios also need to be run •  Openness is essen3al for transparency –
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Leakage instances are available at www.cim-­‐earth.org Generators and preprocessing code available soon Documenta3on being wri@en as code is developed Framework is extensible and modifiable by others Outline •
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Overview of philosophy and framework Model details for the carbon leakage study Distribu3onal impacts on trade for scenarios Conclusion Labor Produc3vity Growth Rate •  US Bureau of Labor Sta3s3cs –  Historical informa3on 1950-­‐2008 –  Extrapola3on 2009-­‐2025 Business as Usual Scenario 2020 Units are million tonnes CO2 Carbon Tax Scenario •  Uniform carbon tax in Annex-­‐B countries –  Starts in 2012 and held constant –  Industries taxed on fossil inputs •  Coal •  Crude oil •  Natural gas –  Taxable amounts based on •  Energy volume data •  Standard conversion factors •  No carbon taxes elsewhere Emission Flows: Carbon Tax $28.5/tCO2 Units are million tonnes CO2 Trade Impacts: Carbon Tax $28.5/tCO2 Units are billion 2004 dollars Emissions: Carbon Tax $28.5/tCO2 Units are million tonnes CO2 Border Tax Adjustment Scenario •  Uniform carbon tax in Annex-­‐B countries –  Starts in 2012 and held constant –  Industries taxed on fossil inputs •  Border tax adjustments on imports to Annex-­‐B –  Starts in 2012 and held constant –  Carbon concentra3ons are •  Calculated from data for non-­‐BTA scenario •  By approximately solving system of equa3ons •  Accounts for fossil fuel usage across all inputs –  Only applied to imports from non Annex-­‐B countries •  No carbon taxes elsewhere Emission Flows: Carbon Tax $28.5/tCO2 with Border Tax Units are million tonnes CO2 Trade Impacts: Carbon Tax $28.5/tCO2 with Border Tax Units are billion 2004 dollars Emissions: Carbon Tax $28.5/tCO2 with Border Tax Units are million tonnes CO2 Percent Emission Reduc3on for U.S. Consumers Uncertainty in Regional GDP Rela3ve GDP with varying elas3city of subs3tu3on Ensemble contains 5,000 realiza3ons Future Direc3ons •  Study improvements –
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Improve region and sector details Incorporate revenue recycling policies Endogenous tax rates that differ by region Endogenous computa3on of carbon amounts Account for land, labor, and capital carbon Imperfect border tax adjustments Distribu3onal consumer impacts •  Framework improvements –
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Public and private learning Research and development Capital and product vintages Overlapping consumer genera3ons Household produc3on func3ons Nonseparable u3lity func3ons Heterogeneous beliefs