The WITCH Model: Structure, Baseline, Solutions

Abstract

The WITCH Model. Structure, Baseline, Solutions Summary WITCH -World Induced Technical Change Hybrid -is a regionally disaggregated hard-link hybrid global model with a neoclassical optimal growth structure (top-down) and a detailed energy input component (bottom-up). The model endogenously accounts for technological change, both through learning curves that affect the prices of new vintages of capital and through R&D investments. The model features the main economic and environmental policies in each world region as the outcome of a dynamic game. WITCH belongs to the class of Integrated Assessment Models as it possesses a climate module that feeds climate changes back into the economy. Although the model's main features are discussed elsewhere (Bosetti et al., 2006), here we provide a more thorough discussion of the model's structure and baseline projections, to describe the model in greater detail. We report detailed information on the evolution of energy demand, technology and CO2 emissions. We also explain the procedure used to calibrate the model parameters. This report is therefore meant to provide effective support to those who intending to use the WITCH model or interpret its results.

The Optimal Energy Mix in Power Generation and the Contribution from Natural Gas in Reducing Carbon Emissions to 2030 and Beyond

“…The CES function allows for contemporaneous investments in different technologies which are consistent with base-year calibrated factor shares and the given elasticity of substitution framework. Hence the base year installed power generation capacity is calibrated for the year 2005 and this calibration influences the speed with which these technologies can be substituted with each other -refer to Bosetti, Massetti et al (2007) for further details.…”

“…This is combined with a bottom-up compact modeling of the energy sector, which details energy production and provides the energy input for the economic module and the resulting emission input for the climate module. Further information about the model is available at the website www.witchmodel.org or can be sourced from Bosetti, Massetti et al (2007), as well as in Bosetti, Carraro et al (2006) and Bosetti, De Cian et al (2009).…”

The Optimal Climate Policy Portfolio When Knowledge Spills Across Sectors

“…WITCH (World Induced Technical Change Hybrid) is a regional integrated assessment model structured to provide normative information on the optimal responses of world economies to climate damages (Bosetti et al 2006(Bosetti et al , 2009bBosetti, Massetti and Tavoni, 2007).…”

“…The energy input ( ) t n EN , , is produced in the energy sector of the economy, and we refer to Bosetti, Massetti and Tavoni (2007) for a more detailed description. It basically consists of a series of nested CES functions that describe energy supply and demand at different levels of aggregation.…”

“…For a full description of the model please refer to Bosetti, Massetti and Tavoni (2007). The list of variables is reported at the end.…”