EAPSI: New Approaches to Ground-Truthing Economic Models for Energy Policy Analysis

Springer Cecilia, Berkeley CA

Investigators

Abstract

Validating the accuracy of economic models is particularly difficult for complex policy questions, such as the question of how energy regulations affect the labor force of regulated firms. Economic impacts on the workforce are a concern for policymakers everywhere seeking to implement clean energy policies while preserving jobs. This project seeks to explore the performance of a type of economic model frequently used for policy to identify the environmental and economic impacts of a proposed energy consumption regulation in China, where clean energy and economic growth are top policy priorities. This research will validate the model results using novel social science methods to incorporate local knowledge and expertise. This project will be conducted at Tsinghua University in collaboration with Professor Teng Fei, a noted expert on climate-energy policy in China. The findings from this project will be useful for economists and policymakers seeking accurate models and well-designed energy policy. China's prioritization of clean and efficient energy includes a recent effort to establish an energy consumption trading system. Computable general equilibrium (CGE) models are frequently used to simulate economy-wide policy effects, including emissions and labor impacts. However, external validation of CGE model predictions is understudied. To estimate the distributional labor effects from China?s energy consumption trading scheme, this research will use a China-level version of the Trade Integrated Global Energy and Resources (TIGER) model, an existing global dynamic CGE model, to generate an initial set of results against which the model can be validated. These results will inform a novel expert elicitation process to generate subjective probability distributions for sensitivity analysis. They will also inform discussion of the mechanisms through which distributional impacts are predicted to occur and if these comport with the model?s structure, enhancing ongoing efforts to improve energy policy and modeling. This award, under the East Asia and Pacific Summer Institutes program, supports summer research by a U.S. graduate student and is jointly funded by NSF and the Chinese Ministry of Science and Technology.