17 July 2017
Economic and Welfare Implications of Shocks and Policies Affecting the Provision of Environmental Goods and Services: A Modeling Approach
Understanding the complex relationships between the environment and society, including the consequences of damages or depletion of natural capital on the economy and welfare, remains at the heart of the international development policy agenda, most prominently in United Nations’ Sustainable Development Goals. Efforts in economic research and empirical methods, including the development of models of the economy and its relations with the environment for analyzing alternative scenarios and policy options, have correspondingly increased. Empirical approaches are influenced by a diverse set of circumstances, including, of course, the main policy questions that motivates research, but also the availability of information and researchers’ priors regarding the best approaches for connecting natural phenomena and the socio-economy, including the way the latter is organized and how it responds to stimuli. This research proposes an empirical approach for connecting trends in Natural Capital and the resulting changes in the provision of environmental goods and services, to a representation of the macro-economy, which is, in turn, connected to household structures for welfare analysis. Two examples are presented: A Model for analyzing macro and distributional impacts of policies for sustainability of fisheries in the Philippines, and a Macro-Micro representation for analysis of policies and shocks in Ethiopia.
Last edited: 19 July 2017
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