Ulf Johansen (p)

Masato Yamazaki

Applying a regional computable general equilibrium model on eight regions in Norway, we investigate the potential for double or even higher-level dividends arising from a climate and energy tax reform (CETR). Such dividends indicate if government revenues raised from energy-related environmental taxes and recycled back to households or industries through decreasing (regional) social security contribution will yield welfare gains larger than gross cost. We build on existing analyses on double dividends by including a regional labour tax as a recycling instrument and investigate if even more dividends are achievable from a climate and energy tax reform. For Norway, our results indicate conflicting sub-national policy goals for a CETR: At most three out of the five potential dividends are positive and coincide with Norwegian regional and national public policy goals. Income equality appears particularly difficult to constrict. Even though transfer recycling showed a positive impact, factor price changes were in favour of high-income households, which is the most important aspect explaining increased income inequality.

James Lennox (p), Janine Dixon

Ulf Johansen

‘VU Cities–Sydney’ is a spatial computable general equilibrium (SCGE) model of the Sydney–Newcastle–Wollongong region, which encompasses Australia’s largest city and is home to around 5 million people. The model is intended to be used to simulate the impacts of policies, planning and public investments in the urban and transport sectors. We demonstrate its potential with an analysis of the spatial impacts of transport policies that simultaneously reduce travel times by rail and increase private vehicle operating costs. We show how these policies increase the centralisation of employment in central Sydney and increase residential densities along train lines at the expense of outer areas that are highly car-dependent.

VU Cities–Sydney has a detailed spatial structure with 273 employment and residential zones. Households make discrete choices of their places of work, residence and industry of employment. They make continuous choices over the consumption of tradable and non-tradable goods and services. The model allows for localised spillovers of productivity and amenity. It is calibrated using census, land use and transport datasets.

Kazunori Nakajima (p), Naoki Sakamoto, Eiji Onho, Masafumi Morisugi, Ryuta Mori

James Lennox

In order to measure economic impacts of changes in environmental quality due to climate change in Japan, by using a computable general equilibrium model (CGE) that integrates a utility function that has environmental quality factors as an independent variable derived from a recreation demand function in a travel cost method (TCM), we aim to estimate damage cost of beach erosion in each prefecture and in Japan and to evaluate economic effectiveness of hypothetical adaptation measure to restore sandy beach. We use the future projections of beach erosion rates calculated by 2 periods (2031-2050 and 2081-2100), 3 RCPs (RCP2.6, RCP4.5 and RCP8.5) and 3 climate models (MIROC5, MRI-CGCM3 and HadGEM2-ES), respectively. Also, we assume the average adaptation cost per unit area to be 215.96 USD per square meter. The main findings in our study are shown as follows. 1) In the RCP8.5, damage costs of beach erosion were estimated to be from 174 million USD per year to 252 million USD per year in 2031-2050 and from 615 million USD per year to 644 million USD per year in 2081-2100, respectively. 2) In all periods, all RCPs and all climate models, four prefectures that the cost benefit ratio exceeds 1.0 were Kanagawa, Osaka, Saga and Kumamoto.

Masato Yamazaki (p)

Kazunori Nakajima

As economic losses brought about by natural disasters mount, assessing the economic impact of a possible future natural disaster is becoming increasingly important. A computable general equilibrium (CGE) model and an input-output (I-O) model are strong candidates for performing such an assessment. Even though a CGE model is more comprehensive and flexible than an I-O model, the CGE approach is often subject to criticism because key parameters are often not appropriately estimated. The purpose of this study is to calibrate two sets of key substitution parameters: the elasticity of substitution between labor and capital services and the elasticity of substitution among like goods of different origins, using a monthly, recursive, dynamic CGE model. For the calibration, this study employs a heuristic method, in which the model's substitution parameters are adjusted to reproduce actual production losses from the 2011 Great East Japan Earthquake. In addition, we test whether the CGE model can reproduce the actual economic recovery from this earthquake. Overall, we find that our model does reproduce the disaster's economic dynamics of recovery, as well as its short-term economic impact.