(546e) Multi-Objective Optimization of International Economies Via Multi-Regional Input-Output Analysis: Application to the US Economy

 
Multi-objective optimization of international
economies via multi-regional input-output analysis: Application to the US
economy

J. Pascual-González^a, G.
Guillén-Gosálbez^a[*] and L. Jiménez^a

^aDepartament d'Enginyeria Química, Universitat
Rovira i Virgili, Av. Països Catalans 26, Tarragona
43007, Spain

Abstract

In recent years, new environmental policies have been
developed to reduce the environmental impact of human activities. Designing these
policies in an effective manner is challenging because it requires a detailed
knowledge of the whole economic and environmental system and the way in which
they interact with each other.

In terms of economics, input-output analysis (IO) is
widely used to predict changes in an entire economy according to changes in the
demand of a single (or several) sectors. This method studies the effects that
different sectors have on the economy as a whole. Purely economic IO tables can
be modified so as to include environmental aspects, giving rise to
environmentally extended input-output tables (EEIO). These tables contain
information on the environmental assessment of the economic transactions taking
place in a region, but provide no guidelines on how to reduce such an impact.

We present in this work a systematic approach to reduce
the environmental impact of a whole economy. Our strategy combines
multi-objective optimization and multi-regional input-output models within a
single unified framework that allows identifying the activities whose control
and regulation can lead to larger reductions of impact at a minimum decrease in
gross domestic product (GDP).

We have applied our tool to the economy of the United States
in order to identify the best policies to be implemented in practice for
optimizing simultaneously the economic and environmental performance. We have employed
in the calculations the World Input-Output Database (WIOD), which was
originally developed to analyze the effects of globalization on trade patterns,
environmental pressures, and socio-economic development across a wide set of
countries. WIOD describes the economic inputs and outputs in monetary terms of
35 manufacturing sectors covering 27 EU countries and 13 other major countries in the world for the period
1995 to 2009.

Our approach provides valuable insight into how to
reduce the impact globally. By adopting this birds' eye view of a whole
economy, it is possible to determine how the final demand (and the total
production) of every sector in an economy should be modified so as to improve
simultaneously the economic and environmental performance of an economy.

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