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P.R. Shukla

Bridging the Modelling Gaps GHG Mitigation Analysis for Developing Countries and Transition Economies:. P.R. Shukla. UNDERSTANDING “DEVELOPMENT”. What Distinguishes DC’s from IC’s Technological Backwardness? Institutional Deficiencies? Or something different?

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P.R. Shukla

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  1. Bridging the Modelling GapsGHG Mitigation Analysis for Developing Countries and Transition Economies: P.R. Shukla

  2. UNDERSTANDING “DEVELOPMENT” • What Distinguishes DC’s from IC’s • Technological Backwardness? • Institutional Deficiencies? • Or something different? • Development: A ‘Chicken and Egg’ Enigma • Is Market Development and ‘Development’ identical? • Will development PRECEDE efficiency (market) or Vice a versa? • Are we asking the right questions? • Cost Estimation • Why Estimate Costs? • What are we estimating? • The ‘No Regret’ Paradox • Plethora of Energy ‘Inefficient’ Technologies! • Paradox of Existence: Do ‘No Regret’ Options Exist? • Explanations: Barriers TO MARKET Multiple Discount Rates etc.

  3. SOCIO-ECONOMIC DYNAMICS OF DEVELOPING COUNTRIES • Dual Economy and Transition Process  • Informal Activities  • Land Relations and Land Use  • Market Performance and Disequillibrium  • Non-commercial Fuels  • Non-economic Concerns  • Policy Distortions

  4. SIZE OF INFORMAL ECONOMY Some Examples • Latin America Share of urban labor force - 30 to 57% (employed 30 million persons in the late 1980’s)  • Kenya • Urban informal - 30%, Rural Non - Farm - 13% (of all employment outside Agriculture)  • Informal Credit (as fraction of total credit) • Bangladesh: 1/3 to 2/3 • India: 2/5 • Nepal, Pakistan, Thailand: over 2/3  • Interest Rates (per year) • India (30 - 200%) • Malawi (5000%) • Can risk and transaction cost explain this?

  5. ISSUES IN ESTIMATING IMPACTS COSTS • Development and Adaptation Successful adaptation to climate change impact ‘depends upon technological advances, institutional arrangements, availability of financing and information exchange’ • Valuation of Non- Market Impacts Sustainability with Money Measurability • Low Value of Life or ‘ No Regret’ Situations? Bangladesh Cyclone (1991): 200, 000 deaths (SAR, WG II) Recent Bangladesh Cyclone (1997): Relatively Low Damage Successive Cyclones : Late 1996 (South Indian Coast) Many lives saved at little expense in Second Cyclone Should this imply low value of life? or ‘No regret’ Situation • Macro - Economic Costs of Damage High aggregation Miss non market costs • Dual Bias Low Damages in Developing Countries High Cost of Mitigation Measures in Industrialized Countries

  6. COST ESTIMATES FOR DEVELOPMENT COUNTRY: AGENDA Refining Model Structure And Assumptions Come closer to DC Reality Transparency Diversity Database Issues Unavailability Disparity Inconsistency Incompatibility Unsuitability Diversity

  7. COST ESTIMATES (Continued…) Multiple Baselines Technological Progress Path Dependence Leapfrogging Technology transfer National Priorities and Policies  Transaction Costs Non-market Cost Multiple criteria for assessment (Comprehensive Index of Welfare: e.g. HDI) Secondary Benefits e.g. Air quality/ Food security

  8. Extent Models Adequately Reflect Socio-Economic Structures in Developing Countries I)Market Based, Efficiency Oriented, Equilibrium Model Versus Developing Nations’ Actual Socioeconomic Structures II)Business As Usual (BAU) Scenarios Versus Developing Countries’ Structural Changes III)Market Based, Efficiency Oriented, Equilibrium Model Versus Developing Nations’ Actual Socioeconomic Structures

  9. Assessment of Same Policy Instruments for Developed and Developing Nations I)Developed Countries’ Policy Instruments Versus Developing Countries’ Instruments II)Climate Policy In Developed Countries  Versus Developing Countries’ Policy Linkages

  10. Extent Regional Characteristics are Represented within IAMs I)Developed Countries’ Damage Functions Versus Developing Countries Damage Systems II)Assessment Of Western Lifestyles  Versus Developing Nations’ Social Parameters

  11. Accuracy of Climate Change Impacts Assessment in Developing Countries I)Assessment In Developed Countries  Versus Assessment In Developing Countries II)Policy Responses In Developed Countries  Versus Policy Responses In Developing Countries III)Very Ambitious Models  Versus Limited Data In Developing Countries

  12. Extent IAMs Produce Policy Options Acceptable for Developing and Developed Countries I)Dynamic Optimization  Versus South-North Equity II) Uncertainty  Versus Developing Countries’ Benefit/ Cost III) Developed Countries’ Optimal Paths  Versus Developing Countries’ Incentives to be in the Game

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