SUSTRUS: TML tasks Christophe Heyndrickx christophe@tmleuven.be

1. SUSTRUS: TML tasksChristophe Heyndrickx christophe@tmleuven.be SUSTRUS Kick-off meeting

2. Outline • Introduction to TML • TML in the SUSTRUS project • Experience in model construction • Policy indicators • Linking the three dimensions of sustainability SUSTRUS Kick-off meeting

3. Outline • Introduction to TML • Experience in model construction • Policy indicators • Linking the three dimensions of sustainability SUSTRUS Kick-off meeting

4. Introduction to TML • Transport and Mobility Leuven • ° 14th February 2002 • Multidisciplinary Team (13 employees): • Civil Engineers • Economists • Environmentalists • Computer Scientists • Urban Planners • General Manager: Griet De Ceuster • 50 % of shares University of Leuven, other 50 % are held by TNO SUSTRUS Kick-off meeting

5. Introduction to TML • Quantitative modelling • Supporting Government Policy (European commission, national and regional governments, lobby groups) • Domains of Expertise • Transport Economics • Traffic Engineering • Transport Analysis • Environment • Logistics • Spatial Economics SUSTRUS Kick-off meeting

6. TML in SUSTRUS • Preparation of the proposal • WP3: model methodology, model callibration and construction • WP4: determining valuable economic indicators, implementation of policy assessment framework • WP6: construction of the international module • WP8: integration of the international module, the social module and the environmental module into the general structure SUSTRUS Kick-off meeting

7. Outline • Introduction to TML • Experience in model construction • Policy indicators • Linking the three dimensions of sustainability SUSTRUS Kick-off meeting

8. Model construction Models developed and used by TML Transport economic models -TREMOVE: Road transport and emissions (partial equilibrium model) General equilibrium models -EDIP: general equilibrium model for 31 European countries, modeling road transport, emissions, social policies and inequality in detail Regional general equilibrium models -RAEM: regional equilibrium model for the Netherlands -ISEEM : regional equilibrium model for Belgium (similar to RAEM) SUSTRUS Kick-off meeting

9. RAEM model • 15 commodities and 15 production sectors (1 sector, 1 product) • 17 production factors (commodities + labour + capital) • Leontief in value added and intermediate inputs • Capital and labour are mobile among sectors • Small-open economy assumption (Armington) • Government sector with Federal and Local levels, collects different taxes and makes transfers (Cobb-Douglas utility function) • Migration between regions according to generation distribution function • Trips (business, shopping, other, education) according to generation distribution function • Commuting trips according to attraction function (based on work of Mark Thissen on RAEM 2.0) SUSTRUS Kick-off meeting

10. ISEEM model • Similar to RAEM, but extended with new elements • 26 sectors and 26 commodities (dropped 1 sector-1 product assumption) • 30 production factors: capital, labour, land and buildings • Wage bargaining on labor market (national level), combined with Pissarides approach • Emissions per sector in different industries, services sectors and residential sector • Welfare of households associated with emissions and pollution • Energy inputs are explicitly modelled: difference between fossile fuels (coal, oil and gas) and other energy inputs • Construction sector and land use • Innovation and R&D SUSTRUS Kick-off meeting

11. EDIP model • 31 European countries (EU27 + NO + HR + SE + TR) • 60 sectors and related commodities • 62 production factors (commodities + land + capital) • Detailed modeling of the transport sector and energy sector • Emissions by sector and by energy type (coal/oil/gas) • Detailed labour market modelling: different household types, with different occupations and educations. But, not a regional model ! SUSTRUS Kick-off meeting

12. Model methodology and construction • Some basis can be provided by ISEEM, RAEM and EDIP models, applied to Russian datasets and the literature review worked out in WP1 • RAEM/ISEEM : regional equilibrium modelling + EDIP: more attention to social policies and environment • Amount of sectors remains to be specified, sufficient detail will be necessary for sustainability issues. • In the Russian context we will have to put more attention to land use and natural resources • Modelling of the labour market, commuting, transport trips should be simplified • More attention to dynamic part of the model SUSTRUS Kick-off meeting

13. SUSTRUS Kick-off meeting

14. Model construction • Detail depends on collected data, should at least have the necessary detail to be able to have different energy inputs and model natural resources • First build a simple model, based on earlier work for Russia and the modelling experience of the partners • Add the newly constructed environmental, social and international modules on the way • Focus on aspects that are specific on the chosen regional level • Sufficient focus on the exogeneous parameters, to balance trade flows, production and consumption, migration, etc… SUSTRUS Kick-off meeting

15. Outline • Introduction to TML • Experience in model construction • Policy indicators • Linking the three dimensions of sustainability SUSTRUS Kick-off meeting

16. Sustainability indicators The concepts of sustainability indicators • Toolkits to guide policy makers. • Foundation for improved information and data collection • Comparative analysis on national and regional state of and progress towards sustainable development Characteristics of an effective indicator • Quantitative or qualitative measure derived from a series of observed facts • Point out the directions of change across different units and through time • Identify trends and draw attention to particular issues. • Helpful in setting policy priorities and in benchmarking or monitoring performance SUSTRUS Kick-off meeting

17. Sustainability indicators • Scientific: • Measurable and quantifiable: they should adequately reflect the phenomenon intended to be measured • Meaningful: appropriate to the needs of the user • Clear in value: positive or negative • Clear in content: measure in understandable units • Functional: • Relevant: for all stakeholders involved • Possible to influence: Indicators must measure parameters that may be modified • Comprehensive: the indicator set should sufficiently describe all essential aspects under study • Pragmatic: • Feasible: measurable at reasonable effort and cost SUSTRUS Kick-off meeting

18. Sustainability : economic indicators Basic indicators • GDP: country, region, sector • Unemployment: country, region, household type • Consumption: per capita, by region, by specific class of good, by household type • Inflation: changes in price level Other important indicators • Openness of trade: (exports + imports) / GDP • Trade balance: (exports - imports)/(exports + imports) • FDI: as share of total investments, as share of GDP • Government revenues : on national, regional level + by government SUSTRUS Kick-off meeting

19. Sustainability : enviromental indicators • Emissions and waste: in tonnes (by emission type), monetary value (damages), as share of GDP, by sector, per capita, • Resources - Land use: change in land types, land as input to production - Stocks of oil and gas available: in tonnes, monetary value, share of GDP, etc.. - Other resources: forest, minerals, water, etc.. • Other environmental/sustainability indicators: Ecological footprint (CO2 emissions, compared to available land for sequestration) Environmental pressure index Barometer of sustainability SUSTRUS Kick-off meeting

20. Sustainability : social indicators • Welfare: - Equivalent variation: based on utility of the different consumers, household types • Income inequality - Gini coefficient: broad indicator for inequality - Atkinson index: set degree of inequality aversion - Theil index or related: easily decomposable in subgroups, on regional level, by household, etc.. • Poverty - Monetary poverty: always based on a pre-defined poverty line (for example 60% of mean income, or 50% of median income) - 3 I’s of poverty (Incidence, Intensity and Inequality) • Progressivity of tax scheme Kakwani’s index (or variant) SUSTRUS Kick-off meeting

21. Outline • Introduction to TML • Experience in model construction • Policy indicators • Linking the three dimensions of sustainability SUSTRUS Kick-off meeting

22. Linking sustainability indicators • Should we derive a composite indicator for sustainability? • Experience shows that this is really hard • Different approaches: ISEW, Genuine Progress, HDI, etc.. • Very difficult to weight different indicators (different results for different weights) • Often not all variables can be calculated from the model • Calculate basic indicators that are easy to interpret and can be easily compared to eachother SUSTRUS Kick-off meeting

23. Linking sustainability indicators • Which indicators should we certainly use • GDP • Unemployment • Government budget/revenues • International/interregional trade (openness of trade, trade balance) • Welfare of households (equivalent variation or extended index, more relevant to sustainability) • Environmental indicator or set of indicators, focusing on (health) damages from pollution • Related to land use (change in land types, land based production/employment) Will always be in interest of policy makers Literature review SUSTRUS Kick-off meeting

24. Thank you Большое спасибо ! SUSTRUS Kick-off meeting