Climate Economic Modeling
EPA uses a variety of economic models and analytical tools when conducting climate economic analyses. Below is a list of the specific models used by EPA, categorized by model type: economy-wide models, mitigation models, integrated assessment models, and detailed sector models. Each model has certain strengths that, when used alongside other models and analytical tools, can produce thorough analyses of climate change mitigation programs.
- Economy-Wide Models
- Mitigation Models
- Integrated Assessment Model
- Detailed Electricity Sector Model
To see results of EPA's economic analyses of proposed climate legislation, please see the Legislative Analysis page.
Applied Dynamic Analysis of the Global Economy
The Applied Dynamic Analysis of the Global Economy model (ADAGE) is a dynamic computable general equilibrium (CGE) model capable of examining many types of economic, energy, environmental, climate change mitigation, and trade policies at the international, national, U.S. regional, and U.S. state levels. To investigate proposed policy effects, the CGE model combines a consistent theoretical structure with economic data covering all interactions among businesses and households.
ADAGE has three distinct modules: International, US Regional, and Single Country. Each module relies on different data sources and has a different geographic scope, but all have the same theoretical structure which allows for detailed regional and state-level results that incorporate international impacts of policies. The model is developed and run by RTI International for EPA. For more information please visit the ADAGE model Web page.
For information on a recent peer review of economy-wide models: ADAGE and IGEM Peer Review.
Intertemporal General Equilibrium Model
The Intertemporal General Equilibrium Model (IGEM) is a model of the U.S. economy with an emphasis on energy and the aspects of the environment. It is a detailed multi-sector model covering 35 industries. IGEM is a dynamic model that depicts growth of the economy due to capital accumulation, technical change, and population change. It also depicts changes in consumption patterns due to demographic changes, price, and income effects. The model is designed to simulate the effects of policy changes, external shocks, and demographic changes on the prices, production, and consumption of energy, and on the emissions of pollutants. The main driver of economic growth in this model is capital accumulation and technological change. It also includes official projections of the population, giving us activity levels in both level and per-capita terms.
IGEM is developed and run by Dale W. Associates for EPA. For more information please visit the IGEM Web page
For information on a recent peer review of economy-wide models: ADAGE and IGEM Peer Review
Non-CO2 Projections and Abatement Models
EPA develops and houses projections and economic analyses of emission abatement through the use of extensive bottom-up, spreadsheet models. These are engineering-economic models capturing the relevant cost and performance data on more than 15 sectors emitting the non-carbon dioxide (CO2) greenhouse gases.
Forestry and Agricultural Sector Optimization Model - Greenhouse Gas Version
The Forestry and Agricultural Sector Optimization Model - Greenhouse Gas Version (FASOM-GHG) simulates the allocation of land over time to competing activities in both the forest and agricultural sectors. In doing this it simulates the resultant consequences for the commodity markets supplied by these lands and the net greenhouse gas (GHG) emissions. The model was developed to evaluate the welfare and market impacts of public policies and environmental changes affecting agriculture and forestry. To date, FASOM-GHG and its predecessor models, the Forest and Agricultural Sector Optimization Model and the Agricultural Sector Model, have been used to examine the effects of greenhouse gas mitigation policy, climate change impacts, public timber harvest policy, federal farm program policy, bioenergy prospects, and pulpwood production among other policies and environmental changes.
The principal model developers are Dr. Bruce McCarl, Department of Agricultural Economics, Texas A&M University and collaborators at Oregon State, Research Triangle Institute, Electric Power Research Institute, US EPA, USDA and USDA-Forest Service. For more information please visit the FASOMGHG model webpages: Texas A&M University and Oregon State University
More information on a peer review of FASOM-GHG
Global Timber Model
The Global Timber Model (GTM) is an economic model capable of examining global forestry land-use, management, and trade responses to policies. In responding to a policy, the model captures afforestation, forest management, and avoided deforestation behavior. The model estimates harvests in industrial forests and inaccessible forests, timberland management intensity, and plantation establishment, all important components of both future timber supply and carbon flux. The model also captures global market interactions.
The model has been used to explore a variety of climate change mitigation policies, including carbon prices, stabilization, and optimal mitigation policies.
The principal model developer is Brent Sohngen, Department of Agricultural, Environmental, and Development Economics, Ohio State University. Other key developers and collaborators over the life of the model include Robert Mendelsohn, Roger Sedjo, and Kenneth Lyon.
Global Change Assessment Model
The Global Change Assessment Model (GCAM) is an integrated assessment model that links the world's energy, agriculture and land use systems with a climate model. The model is designed to assess various climate change policies and technology strategies for the globe over long time scales. GCAM runs in 5-year time steps from 1990 to 2095 and includes 14 geographic regions. The model tracks emissions and atmospheric concentrations of greenhouse gases (CO2 and non-CO2), carbonaceous aerosols, sulfur dioxide, and reactive gases and provides estimates of the associated climate impacts, such as global mean temperature rise and sea level rise.
GCAM has been updated many times since the early eighties to include additional technology options and more detailed information about agriculture and land use systems. GCAM can incorporate carbon taxes and carbon constraints in conjunction with the numerous technology options including carbon capture and sequestration. The model has been exercised extensively to explore the effect of technology and policy on climate change and/or the cost of mitigating climate change. More recent applications of the model have begun to explore the role of terrestrial system and its interactions with the energy and climate systems.
GCAM is a community model developed and run at the Joint Global Change Research Institute, University of Maryland. For more information please visit the GCAM Web page.
Integrated Planning Model
The Integrated Planning Model (IPM) is a multi-regional model of the U.S. electric power sector. EPA uses IPM to analyze the projected impact of environmental policies on the electric power sector in the 48 contiguous states and the District of Columbia. IPM can be used to evaluate the cost and emissions impacts of proposed policies to limit emissions of sulfur dioxide, nitrogen oxides, CO2, and mercury from the electric power sector.
For more information about IPM, please visit the IPM model Web page.