Name: Environmental Impact and Sustainability Applied General Equilibrium (ENVISAGE)
Type: CGE
Institution: World Bank
Documentation: GTAP-HUB
Geographic coverage: Global
Description: ENVISAGE is a global recursive dynamic CGE model designed to assess the interactions between economies and the global environment. It revolves around nonlinear behavioral equations representing the consumption and production choices of key economic agents. The model relies on the Global Trade Analysis Project (GTAP) Data Base, which covers 160 regions (including 141 individual countries) and 76 sectors. Given numerical and algorithmic constraints, disaggregation is usually limited to 25–30 sectors and 20–25 regions.
Questions to be answered/variables considered: Variables considered include changes in welfare, GDP, output, producer and consumer prices, exports and imports, value-added by sector, energy balances, investment across sectors, tax revenue by type, greenhouse gas emissions, and carbon prices. The model contains a climate module determining the level of radiative forcing and temperature change, which in turn impacts economic variables such as agricultural yields and damages from sea level rise. It also supports global and regional collaborations scenarios, e.g., via regionally uniform CO2 prices or linked emissions trading systems. Questions the model can help answer consider baseline emissions under business-as-usual (BAU) versus mitigations scenarios; impacts of climate change on the economy (via damage functions); adaptation options; and economy-wide implications of greenhouse gas mitigation policies (e.g., taxes, cap-and-trade, border adjustment taxes) and industrial policies (e.g., subsidies to renewable generation, fossil fuel subsidies reform) and associated revenue-recycling options.
Strengths: The model provides a consistent representation of interdependencies between sectors, agents, and markets within and between economies.
Limitations:
- The model lacks the technological and/or spatial granularity available in sectoral models.
- Some IO tables in the GTAP Data Base are outdated, and inconsistencies with national trade or fiscal statistics can occur.
- Emissions data are not always based on country-specific data and may rely on technologies deployed in other countries.
Use: The model is suited to “what-if” analysis of the macroeconomic and sectoral implications of alternative climate policies. The model has been provided with input for World Bank publications on the Trade and Climate Change Nexus, Country Climate Development Reports (CCDRs), country publications in the context of CCDRs, and IMF publications.
Development/lessons/challenges: Current work includes incorporating marginal abatement cost curves for non-CO2 greenhouse gases, incorporating critical mineral value chains in the underlying database, incorporating additional technological details (e.g., hydrogen, carbon capture and storage), and adding detailed representation of abatement opportunities in the livestock sector and food loss and waste management practices.