Towards a Dynamic Ecol-Econ CGE Model with Forest as Biomass Capital
Swedish University of Agricultural Sciences (SLU) - Department of Forest Economics
April 8, 2010
CERE Working Paper No. 2010:6
This study presents a Dynamic Computable General Equilibrium model that combines economic and ecological aspects of forest biomass. A framework is introduced for modeling the growth of a biomass stock which interacts with economic sectors. Harvest of and demand for forest products and forest amenities are determined endogenously in an inter-temporally consistent way. The idea is based on a Markovian growth model of the forest. The study demonstrates an approach for incorporating non-market values of forests, such as carbon sequestration, recreation and biodiversity, into a growth model. A simulation illustrates harvest behaviour when the economy is subjected to shocks.
Number of Pages in PDF File: 24
Keywords: Dynamic CGE, Markovian growth, Ecosystem modeling, Inter-temporal optimization, Infinite-horizon equilibria
JEL Classification: C68, D58, Q26
Date posted: April 12, 2010
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