Review of recent macro-economic scenarios

Hornblow B, Weidema B P (2007)

Publication info

Deliverable 5-1 of the FORWAST project

Executive Summary

This deliverable reviews existing macro-economic forecasting studies and models and based on this recommends how best to develop the three macro-economic scenarios for WP5 of the FORWAST project.

We recommend that the baseline scenario presented in the European Energy and Transport: Trends to 2030 be used as the basis from which the FORWAST baseline be generated. This scenario is similar both spatially and temporally, and the data are aggregated to a level of detail such that it can be readily integrated into an input/output table.

The commonly used IPAT equation was used as a starting point for identifying parameters that greatly affect the level of environmental impact associated with anthropogenic activity. From this it was identified that the level of affluence and development of eco-efficient technologies were the most relevant variables to reflect in the variant scenarios.

By comparing a number of global scenario studies, linkages were identified between some of these key indicators. From this, two hypotheses are presented. The first is that there exists a strong coupling between the level of international cooperation and the global GDP growth rate, and the second is that there exists a weak coupling between the level of eco-efficiency technology development and the total amount of global CO2 emissions. The second hypothesis was categorized as being weak on the basis that strength of a global economy also greatly contributes to global CO2 emissions.

By varying high and low combinations of the level of affluence and eco-efficient technology development, four future scenarios were suggested, based on the IPAT equation. These scenarios were then compared to the existing global scenarios, in order to develop a better understanding of what realistic macro-economic variations could occur over the time series of the FORWAST projections. Based on this approach, it was determined that the two most plausible variants would be characterized be a low affluent and low eco-efficient society and a high affluent and high eco- efficient society, respectively.

The recommended baseline scenario was ‘bench-marked’ against the Low Trust Globalization scenario produced by Shell International Ltd. The two recommended variant scenarios were also determined to be characteristically similar to the other two scenarios in the same Shell study – Flags and Open Doors. Based on these results, it was recommended that the Shell Global Scenarios to 2025 serve as a primary reference for creating realistic scenario variants for the FORWAST project.

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