1. AIM/Material Model AIM/Material Model Features, model and necessary data Toshihiko MASUI and Ashish RANA National Institute for Environmental Studies Session 4: Asia-Pacific Integrated Model (AIM): Introduction to Component Models (Cont.) APEIS Capacity Building Workshop on Integrated Environment Assessment in the Asia Pacific Region October 24-26, 2002 Hotel Grand Inter-Continental, New Delhi, India

2. Coverage in this workshop Summary (This session)Summary (This session) For understanding AIM/Material model –What is AIM/Material model? –Model formulation –Necessary data for simulation –Future scenario Training (Session 5)Training (Session 5) –Operation of AIM/Material model Application (Session 7)Application (Session 7) –Application of AIM/Material model to India and Japan

3. Features of AIM/Material Model Top-down modelTop-down model Domestic modelDomestic model Computable General Equilibrium modelComputable General Equilibrium model Recursive dynamicsRecursive dynamics Treatment of pollution generation, management and dischargeTreatment of pollution generation, management and discharge Activity of environmental industry and environmental investmentActivity of environmental industry and environmental investment Consistent material balanceConsistent material balance Link with technology model such as AIM/Emission model for technology progressLink with technology model such as AIM/Emission model for technology progress - -What is AIM/Material Model?- We have been developing AIM/Material for both CO2 and other environmental problems.

4. Structure of AIM/Material Model Production sectorProduction sector –Input: capital, labor, energy, other intermediate input, pollution (inputs for pollution management) –Output: commodity HouseholdHousehold –Endowment: capital, labor –Demand: household final consumption, investment GovernmentGovernment –Revenue: tax including environmental tax –Demand: government final consumption, government investment - -What is AIM/Material Model?-

5. Structure of AIM/Material Model production sector household capital labor government abroad market import export produced commodity energy intermediate CO2 energy final demand CO2 pollution management energy intermediate CO2 env. capital labor environmental Industry/investment recycle - -What is AIM/Material Model?-

6. Procedure of model analysis 1.Formulation of model 2.Preparation of dataset in initial year, and calibration 3.Preparation of future scenarios 4.Simulation i.Reference case ii.Policy case - -What is AIM/Material Model?-

7. Social account matrix for AIM/Material - -Model formulation-

8. Formulation of AIM/Material Market equilibriumMarket equilibrium –Produced commodity –production factor (capital, labor,...) - -Model formulation-

9. Formulation of AIM/Material Balance of production sectorBalance of production sector Balance of final demand sectorBalance of final demand sector Capital stock and investmentCapital stock and investment –for dynamics - -Model formulation-

10. Formulation of AIM/Material Relationship between input and output –Production function –Demand function CES, Leontief, Cobb-Douglas, Linear,... Household: Maximize utility Production sector: Maximize profit  Find equilibrium solution - -Model formulation-

11. Dataset for AIM/Material Model IO table (commodity x commodity)IO table (commodity x commodity) U matrix (commodity x sector)U matrix (commodity x sector) –Disaggregate pollution management V matrix (sector x commodity)V matrix (sector x commodity) Investment by sectorInvestment by sector –Disaggregate pollution management Pollution flow by sectorPollution flow by sector –Generation, treatment, discharge, recycle,... Supply and demand of reused materialSupply and demand of reused material - - Necessary data for simulation-

12. Input-Output table commodity 1...commodity ifinal demandtotal output commodity 1 : commodity i value added total output In order to produce commodity, what kind of inputs and how much of them are necessary. Distribution of produced commodity to production of commodity and final demand is presented. household consumption, government consumption, investment, export IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

13. U matrix (Use matrix) sector 1...sector jfinal demandtotal output commodity 1 : commodity i value added total output What kind and how much of input for production activity are necessary in sector. Distribution of produced commodity to sectors and final demand is presented. IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

14. original U matrix sector j production management of pollution a...management of pollution p total commodity 1 : commodity i value added total output Revised U matrix (disaggregate production and pollution management) Data of original U matrix are disaggregate into production and pollution management. IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

15. commodity 1...commodity itotal output sector 1 : sector j total output How much of commodity i produced by sector j is represented. V matrix (Make matrix) IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

16. commodity 1...commodity i total investment sector 1 : sector j total output Investment by sector How much of commodity invested to sector j is represented. IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

17. Pollution flow by sector Pollution type Air pollution: SOx, NOx, CO2,...Air pollution: SOx, NOx, CO2,... Water pollution: BOD load, COD load,...Water pollution: BOD load, COD load,... Solid waste: sludge, scrap metal, slag,...Solid waste: sludge, scrap metal, slag,... –In the case of Japan, the number of the most detailed classification is almost 70. Other:Other: –Toxic waste: Pb, dioxin,... IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

18. Pollution flow by sector sector j pollution generation discharge into env. self treatment other treatment reduction recycle discharge into env. IO/U/V/investment/ pollution/reuse sector j pollution a...pollution p generation discharge into environment without treatment self treatment discharge into environment after treatment reduction recycle other treatment direct other treatment - - Necessary data for simulation-

19. Supply and demand of reused material commodity 1...commodity i total generation of reused pollution pollution a : pollution p total supply of reused commodity How much of pollution p can be supplied as commodity i. IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

20. Supply and demand of reused material sector 1...sector j total supply of reused pollution commodity 1 : commodity i total demand of reused commodity How much of recycled commodity i can be demanded in sector j. IO/U/V/investment/ pollution/reuse - - Necessary data for simulation-

21. Optional Data for AIM/Material Model Energy balance tableEnergy balance table –Link physical data from energy balance table and monetary data from U matrix Other physical material dataOther physical material data –Raw materials such as wood, paper, steel,... –Link these physical data and monetary data Not yet completed - - Necessary data for simulation-

22. Scenarios for AIM/Material Model Technology changeTechnology change –Energy efficiency, pollution generation, pollution management, recycled material input, and so on for new equipment (investment) Labor forceLabor force Export and importExport and import Preference changePreference change –Final consumption, investment,... - - Future scenario -

23. Application of AIM/Material Model Economic impacts due to environmental preservationEconomic impacts due to environmental preservation –CO2 reduction (Kyoto target), waste reduction, waste water treatment,... Mitigation by countermeasuresMitigation by countermeasures –Environmental investment, preference change, new technology, tax reform, CDM,... Link with bottom up model such as AIM/EmissionLink with bottom up model such as AIM/Emission  Detailed results will be represented in session 7.