Where does the environment fit in Cambridge Econometrics’ modelling?

Like the economy, E3ME is evolving

The model is currently being developed to incorporate further feedbacks, including the important links between local air pollution and human health, which will impact on the economy but also be important in their own right.  The land use tool currently being developed will introduce further feedbacks.  And recent results have shown the difficulty in limiting material consumption without reducing rates of economic growth, which could eventually point to a need to limit economic development.

To summarise, the main aim of the E3ME model is to provide a tool that can test policies that aim for economic, social and environmental sustainability – using the best information that we have available to work with.  Like all models E3ME has limitations, some theoretical but in this discussion mostly practical in the form of a lack of understanding in key linkages from environment to economy. Researchers and policy makers that interpret results from the model must always be aware of these limitations.

More generally, ecological economists are absolutely right to put pressure on all researchers to improve the available data and tools that are used to assess policy. E3ME is well ahead of most of the other models out there but here is still much to do.

If you’d like to discuss any of these points in further detail, please contact me or find me on Twitter.

Hector Pollitt
Director, Head of Modelling

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