Climate change and climate action impact analysis - using computable general equilibrium models

Countries in the Global South are particularly vulnerable to the physical impacts of climate change and negative economic consequences. These countries at the same time are faced with high levels of inequality and poverty. The development of appropriate climate action responses, both mitigation and adaptation, thus must be designed to meet objectives on the climate front whilst promoting sustainable economic development and improved livelihoods.

In this webinar, ACEIR researcher, Faaiqa Hartley, provided a brief introduction to computable general equilibrium (CGE) models, how they work, and how they can be applied to climate change and climate action impact analysis. 

She explained CGE models combine economic theory with real economic data to computationally derive the impacts of policies or shocks in the economy and the actors involved. These types of models have become a useful tool for policymakers and analysts to estimate how changes in policies, technology and other external factors might affect the economy.

The webinar helped the TSITICA research team and other participants to gain an insight into how climate actions can have different economy wide distributional impacts depending on the actions taken, how these are implemented, and the actors affected by the actions. It formed part of the necessary dialogues on climate change, climate action and how Global South countries can improve their response towards these current and future challenges.

Faaiqa Hartley is an economist based at the Southern Africa Labour and Development Research, University of Cape Town. Her research to date has centred on developmental issues in Africa, primarily South Africa, and she was part of the small team that developed the suite of computable CGE models (including the South African General Equilibrium, SAGE, model) at the National Treasury of South Africa. 

The webinar took place on 18 March 2021 and can be viewed online.