Macro-economic modelling

Policy decisions often involve choices that will not necessarily benefit all actors in the economy and may have unintended environmental consequences. Policy makers and stakeholders need to balance trade-offs and promote synergies arising from the delivery of policy objectives. By using empirical economic models, we offer the possibility for an evidence-based policy making, as we are able to formulate policy options and quantify the economic impacts associated with them.

We develop and use single-country and global computable general equilibrium models (CGE) to assess the direct, indirect and induced impacts of potential policy interventions and exogenous shocks (e.g., climate change, Covid-19). We offer policy makers and stakeholders the possibility to assess and compare ex-ante the expected impacts of alternative policies and adaptation options across households, sectors and countries.   
 

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Research areas

We develop and use empirical economic models based on economic theory to address resource interlinkages at the global, regional and country level. Our Environmental Global Applied General Equilibrium (ENGAGE) model is based on up-to-date global economic data and has detailed modules on food, water, minerals, and energy. The UCL ENGAGE model focuses on global trade and supply chains and it is used to evaluate the international repercussion of domestic policies and shocks. We use detailed single-country General Equilibrium models (e.g. InvestCGE) to evaluate tailored policy options and assess their impact on the distribution of income across households. We are currently developing a UK multi-regional CGE model to assess policy impacts across 12 geographical and economic regions. 

Sustainability at the water-food-land nexus

We assess the impacts of climate change and land degradation on global food production, focusing on the direct impact of climate change to crop production and the indirect impact that climate change causes to regional comparative advantages in food production. We developed a new modelling framework that simulates the Nile River System and Egypt’s macroeconomy, with dynamic feedbacks between the river system and the macroeconomy. Moreover, we assessed the benefits of cooperative adaptive management of the Nile to cope with deep uncertainties associated to climate change.

Energy systems transitions to achieve net-zero

We assess the economy-wide impacts of low-carbon transitions, focusing on the short, medium, and long-run impacts. By linking the UCL-ENGAGE model to the TIMES Integrated Assessment Model (TIAM) UCL model, we explore the economic impacts of decarbonisation across the entire economy for specific emission and energy systems pathways. We also assess the avoided climate change damages in terms of reduced crop failures and heat stress under those decarbonisation pathways. We combine the work on this area with our expertise on circular economy to evaluate synergies and trade-offs between climate and circular economy policies in the steel industry.

Financing the low carbon transition

We developed a CGE model (InvestCGE) that includes modelling capabilities specific to the implementation of government-backed infrastructure projects. These features are introduced across the construction, financing, and operation phases of the project. This model allows us the assessment of the economic impacts related to the construction and financing of infrastructure projects, widely neglected in this type of assessments. The model has been applied to the construction of the Bui Dam in Ghana.

Improving energy access and resource use in the developing world

We developed a framework that combines CGE modelling with artificial intelligence-driven multi-objective, multi-SDG policy search and machine learning to support multi-sector, multi-actor policy deliberation to screen efficient policy portfolios. We demonstrate the utility of the framework for a case study of Egypt by identifying policy portfolios that achieve efficient mixes of poverty and inequality reduction, economic growth, and climate change mitigation.

Sustainable resource-efficient economies and societies

We developed the first global CGE model that represents the circular economy in the steel sector. It models the whole steel supply chain, from iron ore mining to scrap treatment and recycling, distinguishing between primary and secondary steel production technologies. We are currently expanding this work by adding advanced technologies in steel manufacturing. In addition, we are developing a modelling framework to assess circular economy policies in the global aluminium industry, considering the physical and monetary flows of materials. We are expanding our modelling assets to assess at the regional and household level the impacts of circular economy policies in the UK construction sector.

Recent projects

Our portfolio is spread over several national and international research projects. The UCL Environmental Global Applied General Equilibrium model, developed by the macro-economic modelling team at UCL Institute for Sustainable Resources, is one of the main tools supporting the analysis of climate, environmental, resource, energy and economic policies. While the multi-sector, multi-region nature of the UCL ENGAGE model allows the evaluation of policies across sectors and across regions, ISR’s macro-economic modelling team also uses detailed single-country CGE models to assess the impacts across different socio-economic groups and regions within the country.

• CircularMetal - Learn more about the project on the CircularMetal website
• Interdisciplinary Circular Economy Centre for Mineral-Based Construction Materials - Learn more about the project by Interdisciplinary Circular Economy Centre for Mineral-Based Construction Materials website
• Climate services for a Net Zero resilient world (CS-N0W). Learn more about the project on the UK Government website
• Climate Diamond. Learn more about the project on the Diamond website

Macro-economic modelling in teaching

Economic modelling is an integral part of our Master’s programmes. We cover from simple resource economic models to more sophisticated economy-wide models.

People