The world-markal model and its application to cost-effectiveness, permit sharing, and cost-benefit analyses

Abstract

In this article, we present the new multiregional global MARKAL-TIMES model and on several recent applications to global energy-environment issues. The development of the model was motivated by the need to analyze international energy and environmental issues such as climate change, using a detailed, technology rich modeling framework. We then present three different types of application. First, the model is applied to conduct the cost-effectiveness analysis of Greenhouse Gas (GHG) emission abatement, whereby constraints on CO2 emissions are added to the base case formulation. The model then computes the cost-efficient response of the energy system to these emission targets. Second, we address the issue of "who pays" for emission reductions (whereas the cost-effictiveness analysis addressed the "who acts" issue). More precisely, we use the model to devise and evaluate certain allocation rules for attributing initial emission rights to regions in a cap-and-trade system. Third, we use World MARKAL in a cost-benefit mode, i.e. we augment the model with damage costs resulting from climate change, and run the integrated model without any pre-set targets on emissions or concentration. We then analyse cooperative and non-cooperative decisions by regions when confronted to the threat of damages. This last application makes systematic use of game theoretic concepts. © 2005 Springer Science+Business Media, Inc.