WP6

WP6. Modelling socio-economic impacts for EU islands in Blue Economy sectors, over the longer term 2030 -2100

This WP focuses on the assessment of the socioeconomic impacts of climate impacts and climate mitigation policies on islands. The methodological toolkit to be employed includes contrasted modelling tools that will be used in a complementary way in order to provide a holistic assessment. A global multi-sectoral macro-econometric impacts assessment model (GINFORS) will be used in parallel to the latest version of GEM-E3, a global large scale CGE model to study the impacts of Climate Change and mitigation policies on the economic, energy and environmental sectors of islands. The macro econometric model with its high degree of realism and behavioural features will complement the analysis of the hybrid CGE model that includes endogenous technical progress, infrastructure and an explicit representation of the financial sector. This provides a rigorous and consistent framework to study the interrelationships of all economic agents of a system. The models represent in detail the key relevant sectors regarding the economic system of islands: i) Coastal and maritime tourism ii) Fisheries iii) Maritime Transport and iv) Marine Energy.

This work package will provide an evidence-based framework for policy decision making, allowing to assess the risks and costs of Climate Change. The analysis will be based on the results of already established models that have been extensively used in the past to assess Climate Change policies. The combined used of two strands of macro-economic modelling, which have been only applied individually so far, will allow to use them in a complementary way (focus on the advantages of each approach) so as to effectively evaluate the socioeconomic impacts of alternative climate scenarios.

The socio-economic modelling will simulate direct CC impacts in four key Blue Economy sectors (Coastal and Maritime Tourism, Fisheries, Maritime Transport and Marine Energy) along with the subsequent impact in the whole sectoral value chain. In particular the sectors covered by the GEM-E3 and GINFORS models are listed in the table below:

No GEM-E3 GINFORS

1. Agriculture (other than wheat, cereal grains, etc. and oil seeds)
2. Wheat, cereal grains, sugar cane, sugar beet
3. Oil seeds
4. Coal
5. Crude oil
6. Oil refinery
7. Gas
8. Power Supply
9. Electricity generation
10. Ferrous metals
11. Non-ferrous metals
12. Chemical products
13. Paper and pulp
14. Non-metallic minerals
15. Electric goods
16. Car manufacturing
17. Other Transport equipment
18. Other equipment goods and fabricated metals
19. Food, beverages and tobacco
20. Textile and Leather products
21. Mining and quarrying
22. Other industries
23. Construction
24. Transport Services
25. Accomodation
26. Information & Communication
27. Financial and insurance activities
28. Real estate activities
29. Other market services

The models will provide detailed sectoral results for a number of indicators including value added, employment and trade. The models also include the representation of global linkage of capital markets and sectorial investments in an endogenous manner and hence will report the sectorial adjustment to alternative financial and investment plans.

The GEM-E3 model explicitly includes the financial sector and a detailed accounting of the financial position of the different economic agents. In this study it is suggested to combine the national version of the model (global coverage with separate EU28 MS representation) with the regional version of the model where islands will be identified. The national version will provide the boundary conditions to the regional version regarding financial and capital constraints, therefore clearly taking into account impacts from financial market fluctuations are not well considered. Two model versions will be used: A global national economy version where all EU28 MS are separately identified and a regional version focusing on islands, these two versions allowing to transfer climate change impacts on islands to all coastal areas in Europe.