Name: IGEM (Integrated Green Economy Modelling) framework
Type: Modeling framework
Institutions: PAGE (Partnership for Action on Green Economy), with UNEP, UNDP, ILO, UNIDO, and UNITAR
Documentation: PAGE technical document
Geographic coverage: Single country (global)
Description: IGEM provides a methodology to integrate system dynamics (SD), CGE models, and input-output accounting matrices (IO-SAMs). It integrates economic forecasts from the CGE model and sector-specific insights from the IO-SAM with social and environmental projections derived from system dynamics, to capture economic, social, and environmental dimensions. The framework is designed to be adaptable, allowing different models to be emphasized depending on the focus of the analysis. IGEM also accommodates target-driven and investmentdriven scenario simulations.
Questions to be answered/variables considered: The CGE model provides insights on economic effects, e.g., how green tax reforms impact economic growth, sectoral outputs, consumption, income distribution, employment, and trade. The SD model adds depth to the assessment of long-term environmental and social impacts. The IO-SAM reveals sector-specific responses to economic change. Hence, IGEM can be used to estimate the impact of green policies on GDP, employment, investment, and government revenue and help understand the trade-offs between economic growth and sustainability.
More specific questions include how green subsidy reforms will likely impact productivity in green economy sectors, how tax reforms and removing fossil fuel subsidies mobilize domestic revenues for green investment, what labor market interventions deliver high quality green jobs, and how interventions can improve access for the un- and underemployed. It can also be used to compare scenarios incorporating green economy principles with business as usual (BAU), which helps identify investment and expenditure strategies that enhance economic resilience to external shocks.
Strengths:
- The integrated approach can inform fiscal strategies, guide budget allocations, and support long-term economic planning.
- Detailed sectoral analysis helps target interventions and optimize resource allocation.
- SD models contribute nonlinear, dynamic interactions and feedback loops, which are often absent in traditional CGE models, leading to more realistic policy simulations.
Limitations:
- Traditional model assumptions such as perfect information, rational decision-making, product homogeneity within sectors, and instantaneous market clearing may not fully capture real-world dynamics, leading to potential prediction inaccuracies. Integrating SD with CGE models mitigates this somewhat.
- Full integration between the CGE and SD components is difficult. Currently, they are not fully harmonized and only have a soft link (i.e., the output of one model is sequentially fed into the next).
- The approach is data intensive and may require substantial adaptation and recalibration when applying it to different countries.
Uses:
- The IGEM framework can be tailored to country-specific contexts by Ministries of Finance. Reports and resources are available via PAGE, and MoFs can contact the PAGE secretariat for additional information or support. MoFs can also access online and in-person training.
- IGEM has been used to model a carbon tax on fossil fuels in Mexico: specifically, the impact of different rates on emissions and the consequences for GDP, investment, and consumer welfare. Two revenue-recycling options— support of renewables and rebates to customers—were analyzed. The SD model highlighted social benefits, especially health improvements from lower levels of pollution, which increased productivity.
Development: The aim is for deeper integration beyond the soft-linking approach, and integration of additional tools such as biophysical models or Geographic Information System (GIS)–based systems.