Chile: Socio Economic Impacts from Climate Policies...S7 Transporte, comunicaciones y servicios de...
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Chile: Socio Economic Impacts from Climate Policies
ByPatricio Aroca, [email protected]
Research Director, Business School, UAI, Viña del Mar, CHILE, http://cepr.uai.cl
Latin America and Caribbean (LAC) awareness creation workshop to maximize the positive and minimize the negative impacts of
implementation of Climate Change response measures. May 22th to 24th, 2019, Santiago, Chile.
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Acknowledge
Project CONICYT - FAPESP 2018/08337-8
Agricola and Agroindustry Sustainability in Chile: Modeling the Climate Change and Natural Disasters Impacts in an Integrated System.
Supported by:
Developed by:
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Team
Project CONICYT - FAPESP 2018/08337-8
Eduardo Amaral Haddad (coordinator)
Ademir Antônio Moreira Rocha
Bruno Proença Pacheco Pimenta
Denise Leyi Li
Karina Simone Sass
Keyi Ando Ussami
Lucas Cardoso Correa Dias
Raphael Pinto Fernandes
Sofia Marques Arantes
Patricio Aroca (coordinator)
Pilar Jano
Juan Pedro Eberhard
Esteban López
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Acknowledge
Project CONICYT – BMBF 150061
Development of Sustainable Mining Strategies in Chile with a Regionalized National Model
Supported by:
Developed by:
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Acknowledge
Project CONICYT – BMBF 150061
Patricio Aroca (coordinator)
Pilar Jano
Juan Pedro Eberhard
Esteban López
Anke Mönnig (coordinator)Loreto BieritzFrank HohmannMarc Ingo WolterAnnet Groẞmann
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Project CONICYT – BMBF 150061
Development of Sustainable Mining Strategies in Chile with a Regionalized National Model
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Project CONICYT – BMBF
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Project CONICYT – BMBF► World model
Determines world trade
Tiny Chile model included
► National COFORCE model
Receives export demand and import prices from world model
Comprehensive economic model
► Regional models
Economic development of regional models determined by the national model (top-down)
Differences in regional growth determined by industry and population structure
Region 1
Region 2
Region 3
Region 4
Region x
National Level
World Level
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Applications
• Energy matrix change and copper production in Chile.
• Special tax to mining profits in Chile.
• Water consumptions in Chile.
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Project CONICYT - FAPESP 2018/08337-8
Agricola and Agroindustry Sustainability in Chile: Modeling the Climate Change and Natural Disasters Impacts in an Integrated System.
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Input-output flows
Primary Inputs
Final Demand
Domestic Goods
Output Capital Households Government
Imported
Goods
Are demanded from:
Are Supplied to:
Domestic
InputsLabor Capital
Imported
InputsLand
Exports
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Input-output table
Produtos domésticos
Produção
corrente
Produtos
importados
São demandantes de:
São ofertados para:
Insumos
domésticos
Insumos
importados
Insumos primários
Trabalho Capital Terra
Demanda Final
Formação
de capital
Consumo
das famílias
Governo e out.
demandasExportações
Demanda
Final
Final
Demand
Sales Taxes
Imports Imports
Value Added
Intermediate
ConsumptionTotal
Outp.
Total Output
The Input-Output Matrix
Sector jExports
Households
Government
Investments
Stocks
SellingBuying
Sales Taxes
Buyng Sectors
Selling
Sectors
Imports
Comp. Emp.
GOS
Sector i
Sector j
Sector i
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Interregional IO models
Buying Sectors
Region L
Selling sectors
Region LInterindustry Inputs
LL
Sales Taxes
Value Added
Total Output L
Imports from the World M
Buying Sectors
Region M
Sales Taxes
Value Added
Total Output M
Interindustry InputsLM
Interindustry InputsML
Interindustry InputsMM
Selling sectors
Region M
FDLL
FDML
FDLM
FDMM
TOL
TOM
M
T T
M
T
Imports from the World
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Industries and commodities
• 111 industries:– 12 industries - Agriculture and fishing
– 6 industries – Mining
– 45 industries – Manufacturing
– 6 industries – Public Utilities
– 42 industries – Services
• 179 products– 26 products - Agriculture and fishing
– 10 products – Mining
– 82 products – Manufacturing
– 6 products - Public Utilities
– 55 products - Services
3 - Cultivo de uva
7 - Uva vinífera y pisquera8 - Uva de mesa
13 - Extracción de carbón14 - Extracción de petróleo y gas natural15 - Minería del cobre16 - Minería del hierro17 - Minería de otros metalíferos no ferrosos …
27 - Carbón30 - Cobre32 – Hierro(…)
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Causation in short-run closure
Investment
Real Wage
Capital
StocksTech Change
Rate of
return on
capital
Trade
balance
Employment
GDP = +++
Endogenous
Exogenous
HH
Cons
GOV
Cons
Follows
factors income
Follows tax
revenue
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Causation in long-run closure
Tech Change
GDP = +++
Endogenous
Exogenous
HH
Cons
GOV
Cons
Follows
factors income
Follows tax
revenue
Employment
Real WageRate of return
on capital
Capital
Stocks
Sectoral
investment
follows
capital
InvestmentTrade
balance
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Interregional CGE Model for Chile
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Introduction
•Drought, which occurs in nearly all regions, has affected more people worldwide in the last 40 years than any other natural hazard. It is a complex natural phenomenon with varying levels of intensity, duration, spatial extent and impacts.
•Severe drought episodes have drastic socio-economic and environmental impacts, including, for example, massive famines and migration, natural resource degradation, and weak economic performance.
•Agriculture is the first sector affected when drought hits and also the most affected sector, absorbing up to 80 percent of all direct impacts, with multiple effects on agricultural production, food security and rural livelihoods.
source: http://www.fao.org/land-water/water/drought/en/ access on 11/22/2018
Systemic Resilience to Climate Shocks: Impacts of a Drought in Central Chile
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Chile has been frequently impacted by drought events of varying severity, intensity and duration
•The drought of the 1960s (1967-1969)
•The drought of the 1990s (1994, 1995, 1996, 1998)
•The “megadrought” (2010-2015)
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The megadrought
•Affected the Central Chile, that experienced a water deficit of around 30%.
•The most frequently mentioned impacts were those related to a decrease in the quality and the quantity of food production; loss of crops and animals; reduction of irrigated land; decrease in the size of agricultural products; the impossibility of seeding on traditional dates; and, hydric stress in crops (Aldunce et al, 2017).
•Affected labor market and cost of living, quality of life, and social conflicts (Aldunce et al, 2017).
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21Source: Perry-Castañeda Library Map Collection
Central Chile
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•The region has a Mediterranean-like climate with precipitation concentrated in winter: April to September and a marked seasonal cycle.
•Rainfall exhibits substantial interannual variability historically associated with El Niño-Southern Oscillation (Garreaud, 2017).
•Since the early 1980s, a precipitation decline has been evident along the coast and the Andes Cordillera (Garreaud, 2017).
Central Chile
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RegionRegion's proportion of
national GDP (%)
Region's proportion of agriculture, silviculture and
fishing output (%)
Agriculture, silviculture and fishing share of regional GDP (%)
XV 0.70 1.40 9.58
I 2.40 0.90 1.76
II 10.60 0.40 0.19
III 2.50 1.50 3.07
IV 2.90 5.10 8.58
V 9.40 8.30 4.31
RMS 44.20 9.20 1.02
VI 5.00 16.20 15.88
VII 3.60 10.40 14.14
VIII 8.90 12.60 6.92
IX 2.60 6.60 12.51
XIV 1.60 4.40 13.67
X 3.70 14.00 15.57
XI 0.80 7.70 49.03
XII 1.20 1.30 5.50
*2014 dataSource: Banco Central de Chile.
Central Chile
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List of sectors: List of regions:
S1 Agropecuario-silvícola y Pesca XV De Arica y Parinacota
S2 Minería I De Tarapacá
S3 Industria manufacturera II De Antofagasta
S4 Electricidad, gas, agua y gestión de desechos III De Atacama
S5 Construcción IV De Coquimbo
S6 Comercio, hoteles y restaurantes V De Valparaíso
S7 Transporte, comunicaciones y servicios de información RMS Región Metropolitana de Santiago
S8 Intermediación financiera VI Del Libertador General Bernardo O'Higgins
S9 Servicios inmobiliarios y de vivienda VII Del Maule
S10 Servicios empresariales VIII Del Biobío
S11 Servicios personales IX De La Araucanía
S12 Administración pública XIV De Los Ríos
X De Los Lagos
XI Aysén del General Carlos Ibáñez del Campo
XII De Magallanes y de la Antártica Chilena
Sectors and regions in the B-MARIA CHILE
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Nested structure of production
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How do we implement S1 productivity decline?
shock a1("S1","IV") = 10;
shock a1("S1","V") = 10;
shock a1("S1","RMS") = 10;
shock a1("S1","VI") = 10;
shock a1("S1","VII") = 10;
shock a1("S1","VIII") = 10;
shock a1("S1","IX") = 10;
Productivity of inputs to production
Which industries are affected?
10% more inputs needed to produce the same level of output
Which regions are affected?
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Causation in short-run closure
Investment
Real Wage
Capital
StocksTech Change
Rate of
return on
capital
Trade
balance
Employment
GDP = +++
Endogenous
Exogenous
HH
Cons
GOV
Cons
Follows
factors income
Follows tax
revenue
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Aggregate results (in percentage change)
IV V RMS VI VII VIII IX
Aggregates
Real GDP from expenditure side -0.808 -0.061 -0.099 -0.106 -0.188 -0.125 -0.148 -0.08
Aggregate employment, wage bill weights -0.512 -0.040 -0.063 -0.065 -0.116 -0.081 -0.094 -0.053
Economy-wide terms of trade 0.281 0.017 0.033 0.043 0.075 0.038 0.054 0.02
GDP price index, expenditure side 0.101 0.002 0.01 0.025 0.045 0.005 0.018 -0.004
GDP components
Real household consumption -0.505 -0.046 -0.065 -0.056 -0.098 -0.088 -0.089 -0.064
Aggregate real regional government demand -0.132 -0.022 -0.016 0.026 0.018 -0.043 -0.051 -0.044
Aggregate real federal government demand -0.217 -0.019 -0.027 -0.028 -0.05 -0.034 -0.037 -0.022
Export volume -1.207 -0.084 -0.145 -0.169 -0.298 -0.178 -0.225 -0.108
Import volume 0.232 0.009 0.025 0.043 0.079 0.024 0.045 0.007
Activity level
Agropecuario-silvícola y Pesca -5.346 -0.397 -0.647 -0.721 -1.270 -0.817 -0.980 -0.515
Minería -0.039 -0.003 -0.005 -0.007 -0.012 -0.005 -0.007 -0.002
Industria manufacturera -1.058 -0.072 -0.129 -0.146 -0.257 -0.158 -0.200 -0.096
Electricidad, gas, agua y gestión de desechos -0.273 -0.022 -0.034 -0.034 -0.059 -0.044 -0.050 -0.030
Construcción -0.019 -0.002 -0.002 -0.002 -0.004 -0.003 -0.003 -0.002
Comercio, hoteles y restaurantes -0.141 -0.011 -0.017 -0.019 -0.035 -0.021 -0.025 -0.013
Transporte, comunicaciones y servicios de información -0.209 -0.017 -0.025 -0.026 -0.048 -0.033 -0.038 -0.022
Intermediación financiera -0.243 -0.021 -0.031 -0.028 -0.05 -0.041 -0.043 -0.029
Servicios inmobiliarios y de vivienda -0.036 -0.003 -0.005 -0.004 -0.007 -0.006 -0.006 -0.004
Servicios empresariales -0.156 -0.011 -0.019 -0.021 -0.039 -0.023 -0.029 -0.014
Servicios personales -0.403 -0.037 -0.051 -0.043 -0.077 -0.071 -0.073 -0.051
Administración pública -0.276 -0.025 -0.035 -0.028 -0.054 -0.048 -0.051 -0.034
Share in total output (%) 76.60 2.88 9.44 44.21 4.99 3.61 8.89 2.58
Share in agriculture output (%) 68.36 5.05 8.32 9.18 16.20 10.45 12.57 6.59
SubtotalTotal
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Spatial results - percentage change in gross regional product
IV V RMS VI VII VIII IX
XV 0.176 0.015 0.022 0.025 0.041 0.026 0.031 0.016
I -0.062 -0.007 -0.006 -0.009 -0.014 -0.008 -0.012 -0.007
II -0.102 -0.012 -0.010 -0.014 -0.022 -0.014 -0.019 -0.010
III 0.016 0.001 0.003 0.002 0.004 0.003 0.002 0.001
IV -1.519 -1.753 0.035 0.036 0.066 0.038 0.040 0.021
V -1.223 -0.017 -1.058 -0.056 -0.035 -0.023 -0.022 -0.012
RMS -0.493 -0.021 -0.039 -0.251 -0.080 -0.043 -0.039 -0.021
VI -3.112 0.036 0.072 0.050 -3.451 0.068 0.074 0.039
VII -2.941 0.032 0.062 0.060 0.112 -3.310 0.069 0.034
VIII -1.847 0.000 0.009 0.002 0.010 -0.014 -1.833 -0.022
IX -2.381 0.027 0.048 0.053 0.095 0.059 0.074 -2.737
XIV 0.421 0.030 0.053 0.057 0.102 0.066 0.082 0.031
X 0.726 0.052 0.089 0.096 0.171 0.112 0.140 0.065
XI 1.767 0.135 0.212 0.235 0.411 0.269 0.331 0.174
XII 0.003 0.000 0.002 0.000 0.002 0.001 0.000 -0.002
TotalSubtotal
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Sensitivity analysis
•Qualitative sensitive analysis to look at the potential range of the total impacts under different degrees of spatial resilience.
•Altering the regional and international substitution elasticities allows the modeling of the economy under different (unknown) scenarios of adjustment after a drought period.
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
GD
P (
% c
han
ge)
International trade elasticity
National GDP
Regional trade elasticityRegional trade elasticity
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
XV
Regional trade elasticityRegional trade elasticity
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
I
Regional trade elasticityRegional trade elasticity
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
II
Regional trade elasticityRegional trade elasticity
34
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
III
Regional trade elasticityRegional trade elasticity
35
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
IV
Regional trade elasticityRegional trade elasticity
36
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
V
Regional trade elasticityRegional trade elasticity
37
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
RMS
Regional trade elasticityRegional trade elasticity
38
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
VI
Regional trade elasticityRegional trade elasticity
39
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
VII
Regional trade elasticityRegional trade elasticity
40
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
VIII
Regional trade elasticityRegional trade elasticity
41
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
XI
Regional trade elasticityRegional trade elasticity
42
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
XIV
Regional trade elasticityRegional trade elasticity
43
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
X
Regional trade elasticityRegional trade elasticity
44
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
XI
Regional trade elasticityRegional trade elasticity
45
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Regional impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-2.00
-1.00
0.00
1.00
2.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
XII
Regional trade elasticityRegional trade elasticity
46
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Agropecuario - silvícola y pesca
Regional trade elasticityRegional trade elasticity
47
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Minería
Regional trade elasticityRegional trade elasticityRegional trade elasticityRegional trade elasticity
48
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Industria manufacturera
Regional trade elasticityRegional trade elasticity
49
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Electricidad, gas, agua y gestión de desechos
Regional trade elasticityRegional trade elasticity
50
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Construcción
Regional trade elasticityRegional trade elasticity
51
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Comercio, hoteles y restaurantes
Regional trade elasticityRegional trade elasticity
52
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Transporte, comunicaciones y servicios de información
Regional trade elasticityRegional trade elasticity
53
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Intermediación financiera
Regional trade elasticityRegional trade elasticity
54
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Servicios inmobiliarios y de vivienda
Regional trade elasticityRegional trade elasticity
55
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Servicios empresariales
Regional trade elasticityRegional trade elasticity
56
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Servicios personales
Regional trade elasticityRegional trade elasticity
57
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Sectoral impacts under different assumptions of regional resilience
0.50
1.00
1.50
2.00
2.50
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
0.501.00
1.502.00
2.50
Agg
rega
te o
utp
ut
(% c
han
ge)
International trade elasticity
Administración pública
Regional trade elasticityRegional trade elasticity
58
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59
• Small aggregate impact (GDP).
• Regional impacts show increasing disparities (Central Chile versus rest of the country) as regional trade elasticities increase.
• Higher interregional substitution with stronger imports penetration in the affected regions.
• Agricultural sector more affected with higher international
trade elasticities (foreign imports penetration).
• Impacts on tradables decrease with higher resilience.
• Performance of non-tradable sectors not heavily
influenced.
Conclusions
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Conclusions and Challenges
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Chile: Socio Economic Impacts from Climate Policies
ByPatricio Aroca, [email protected]
Research Director, Business School, UAI, Viña del Mar, CHILE, http://cepr.uai.cl
Latin America and Caribbean (LAC) awareness creation workshop to maximize the positive and minimize the negative impacts of
implementation of Climate Change response measures. May 22th to 24th, 2019, Santiago, Chile.