This paper develops and operationalises the Integrated Economic-Environmental Modelling (IEEM) platform, which integrates environmental data organised under the first international standard for environmental-economic accounting with a powerful economy-wide modelling approach.
IEEM enables the ex-ante economic analysis of public policies and investment on the economy and the environment in a quantitative, comprehensive, and consistent framework. IEEM elucidates the two-way interrelationships between the economy and environment, considering how economic activities depend on the environment as a source of inputs and as a sink for its outputs. In addition to the standard economic impact indicators such as Gross Domestic Product (GDP), income, and employment, IEEM generates indicators that describe policy impacts on the use of environmental resources, wealth, and environmental quality that, together, define prospects for future economic growth and well-being.
To illustrate the analytical capacity of IEEM, the model is calibrated with Guatemala's environmental-economic accounts and applied to the analysis of its forest and fuelwood sector, in which negative health and environmental impacts arise from inefficient household fuelwood use. For the first time in an ex-ante economic analytical framework, IEEM captures how depletion and degradation of the natural resources base and emissions affect national wealth and prospects for future economic growth.