Work Package 3: Enhancing the Macroeconomic Model PANTA RHEI and Simulation of Climate Change Impacts and Adaptation Strategies
The task of this work package was threefold: firstly (3.1), we extended the model’s horizon to 2050 – and possibly beyond; secondly (3.2) we included impacts of selected climate change scenarios and thirdly (3.3) we were modeling adaption processes beyond the mere technological (such as dam/levee construction) level.
To meet these tasks, we put most behavioral equations of the model to the test. The specification of the econometric founded simulation and forecasting model PANTA RHEI is a time consuming multistage process and might be better known from the efforts in more econometrically founded CGE-models. The simulation of long-term developments required extensions and alterations to this procedure. Behavioral equations deviated from past observed behavior, institutional settings were altered and structural economic change took place. Established refinancing schemes and property rights had to be rethought. However, model extensions depended on the results of the work packages 1, 2 and 4.
Depending on the inputs from WP 2, for example, it was possible to implement results of the empirically based analysis of institutional economic linkages between the different actors who are responsible for the implementation of adaption strategies. These findings did not serve as direct data inputs into the model. They rather induced changes in the model, such as behavioral breaks, new monetary flows, or different institutional/administrative responsibilities. Due to the fact that within the framework of PANTA RHEI the relevant industries and economic sectors (e.g. water resources management, construction industry, insurance industry, public administration, and private households) are explicitly modeled, it was possible to endogenize the expected changes between the different actors of climate change adaptation strategies.
With the thus empowered PANTA RHEI model simulations were run on scenarios for climate change adaptation strategies.