INPUT-OUTPUT SIMULATIONS OF ENERGY, ENVIRONMENT, ECONOMY INTERACTIONS IN THE UK

This paper shows how a number of the complex interrelationships between energy, environment and economic welfare can be investigated with the aid of a 10-sector input-output (I-O) model of the UK, with pollution emission coefficients and a European sulphur deposition vector. The paper reviews relevant past applications of I-O analysis in the energy-environment area and describes the ENDAM program and its operation. It is used to simulate the effects of a variety of policies and possibilities, not only through changes in exogenous variables (find demand and income taxes and transfers) but also through changes in the structural matrices and their coefficients. In each case the full effects, direct, indirect and income induced, can be traced and the changes in comparative static equilibrium values discovered. In this way, policy issues connected with energy use and environmental impacts, employment and economic welfare have been investigated.