Environmental Engineering Reference
In-Depth Information
4 GTAP Model and Database Modifications
We made four significant changes in the original GTAP-E model and its
database. The first changes the representation of natural gas in the GTAP
database. The second restructures the GTAP-E intermediate demand struc-
ture for energy items and key parameters. The third restructures the de-
piction of natural resources in GTAP-E to better represent expansion in shale
oil and gas. The fourth changes the base assumption on unemployment to
reflect the current reality of unemployed labour in the US economy. Each of
these is described in turn below.
4.1 Natural Gas in the GTAP Database
The database used in this chapter is built on the most up-to-date version of
the GTAP database (version 8), which represents the global economy in 2007.
The original database divides the whole world into 57 sectors and 129 com-
modities. To concentrate on important regions and sectors we aggregated the
database into 19 regions and 14 sectors. The original GTAP database repre-
sents all economic activities related to gas and gas distribution into two
separate industries of ''gas'' and ''gdt''. The first industry extracts, refines, and
processes gas and sells it to some major industries, large-scale electricity
producers (big power plants), and the gas distribution network (or ''gdt''). The
second industry buys gas from the ''gas'' industry and distributes it among
end users: mainly small industries, farms, commercial sector and households.
In our aggregation process we kept these two industries separate as they ap-
pear in the original database to provide a better picture of the impacts of
expansion in shale gas on gas production and consumption. However, fol-
lowing careful examination of the GTAP database version 8, we determined
that it suffers from the following major deficiencies in representing monetary
values associated with the ''gas'' and ''gdt'' sectors:
The regional monetary values of production and consumption of gas are
underestimated.
The regional monetary values of gas sold by the ''gas'' industry to the
''gdt'' industry are ignored.
The regional distributions of monetary values of gas sold to industries
(including power plants) and household do not match independent
observations.
In addition to these general issues, we observed an outlier component in
the cost structure of the ''gdt'' sector in US input-output table. To fix these
issues we pooled the ''gas'' and ''gdt'' together, calculated missing items, re-
evaluated the production and consumption of gas, fixed the outlier item in
the US input-output table and redistributed monetary values of gas dis-
tributed among industries and households using the GTAPAdjust program.
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Finally, we reconstructed the ''gas'' and ''gdt'' sectors using the SplitCom
program.
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