On the DYNAMIX project website you can get acquainted with the results of the report: “Economic Quantitative Ex – Ante Assessment of DYNAMIX Policy Mixes” that contains the results of the quantitative modeling of policy instruments for improving resource efficiency. One of the tools used was a general equilibrium model DSGE MEWA, developed by WiseEuropa experts.
This model is characterized by the extensive mapping of the sectoral structure of the economy, the behavior of individual entities as well as energy consumption and emissions. It takes into account the imperfections of the economy, including price rigidity and the unreliability of the labor market. It also allows to include technical progress contributing to the more efficient use of labor, energy and materials, together with reducing the emissivity of the economy.
Using the MEWA model developed, WISE experts evaluated a number of different instruments for improving resource efficiency and reducing the negative impact of the economy on the environment:
- Taxation of materials’ consumption,
- The internalization of external costs of production processes,
- The increase in spending on R & D with regard to resource efficiency,
- Tightening targets for reducing pesticide use in EU agriculture,
- The introduction of the standard VAT rate on meat,
- Taxation of extraction of raw materials,
- Allowing households to voluntarily reduce consumption in exchange for free time.
The key finding of the analysis is that the net cost of the implementation of the instrument depends on the ability of manufacturers to adapt processes to new stimuli that impose the dematerialization of the economy (i.e. on the potential of technological progress) as well as on the use of budgetary revenues generated by “green” taxes. The most beneficial for the economy is a combination of a green tax reform with the support for the development of resource-efficient innovation and reduction of taxes on labor. Such a combination creates the opportunity for a positive impact of environmental and resource policy on GDP, despite the reduced activity in resource-intensive and emissive sectors.
The report may be downloaded from the project website. We encourage you to read it!
DYNAMIX project, the aim of which was to propose recommendations on the implementation of public policies instruments in terms of separating increase in the use of resources and environmental pressures from economic development, is funded by the FP7 of the European Commission. Its implementation officially ended in March 2016.
