Report about integrated scenario interpretation GINFORS / LPJmL results

Meyer et al. examine a combined policy consisting in resource use and CO2 emissions reduction targets using the GINFORS model. Specifically, they analyze different ways of achieving environmental targets, which relate to CO2 emissions, cropland footprint, raw material consumption and water exploitation index. In the first case (“Global cooperation”), the authors assume that all countries in the world share the environmental targets and a global policy mix is adopted, which includes measures to reduce climate impacts and to enhance biotic and abiotic material efficiency. In the second scenario (“EU goes ahead”), the EU takes steps to achieve its targets (mostly economic instruments slightly modified compared to the previous case), whereas the remaining countries implement climate policy mix only to some extent. In the last case (“Civil Society Leads”), most of the regulations are the same as in the “EU goes ahead” case (with some exceptions), while further progress towards environmental targets takes place due to a behavioral change of the European civil society (e.g. reduction of consumption or of food waste). From the economic perspective, both “Global cooperation” and “EU goes ahead” scenarios exhibit positive development. In the medium-term (up to mid-2030s), the former case is more beneficial, with the global GDP reaching around 6.5% deviation from the reference. In the long term, the other scenario brings about even more benefits – the world GDP and the EU GDP are expected to deviate from the baseline by around 8.5% and 12.3% respectively. In both cases, similar economic mechanisms are at work. The authors explain positive impacts on the GDP with additional investments in new technologies and with reduced costs of manufacturing caused for example by lower material intensity. On the other hand, negative effects are driven by capital stocks rising in longer term leading to higher prices and by reduced demand for products of the mining and quarrying sectors, as well as further sectors in the value chain. Importantly, the magnitude of these mechanisms and the end effect depends on the structure of the economy. Thus, the countries, in which mining and quarrying are not of a big importance, will be relative ‘winners’ of the changes. On the EU-scale, in both scenarios, the shift from material-intensive to more labor-intensive production brings about a positive employment effect, which again is more pronounced in the “EU goes ahead” scenario. While the environmental impacts are generally optimistic in both scenarios, (not surprisingly) their scale is expected to be larger in the case of globally coordinated policies. For example, the model estimates that in 2050 global CO2 emissions will amount to around 45 Gt in the baseline scenario, around 33 Gt in the EU takes the lead and less than 20 Gt if countries cooperate. A very different picture appears in the “Civil society leads” scenario, where the targets are mostly achieved through bottom-up instruments and society’s intrinsic motivations. While on the EU scale, the scenario performs better than the other two in terms of environmental impacts, it appears to affect negatively the European economy. A sharp decrease in consumption causes a fall in the GDP, which in 2050 is approximately 19.5% lower than in the baseline. The effect would be even stronger if it was not for the exports level, which remain relatively stable. On the contrary, employment is expected to boom by 2050 with some 17 million new jobs available. This happens due to the reduction of working hours and a lower real wage.