Uncertainty propagation and environmental input-output modelling : evidence from Russia

Abstract

Combustion of fossil fuels accounts for the large majority of the global greenhouse gas emissions. Russia is a major producer of fossil fuels and hence one of the leaders in anthropogenic greenhouse gas emissions. A significant body of literature incorporates Russia within a multi-regional framework, but no comprehensive study assessed its role in a single-region setting. The aim of this thesis is to study the production structure of the Russian economy, its embodied carbon emissions, and the drivers of the embodied emission changes over the course of 1980-2013. To accomplish this objective, input-output modeling methodology and the data from two different national sources are utilized. Due to concerns about the quality of national data, comprehensive sensitivity tests are carried out on derived input-output multipliers to stochastic perturbations using Monte Carlo simulation approach and norm theory. It is shown that the underlying input-output system is well-behaved. Multipliers are stable and converge to the long-run equilibrium similar to those derived from German data as well as the WIOD and Eora databases. Through the application of input-output modeling methodology we provide a comprehensive study of the underlying inter-industrial relations which characterize the flow structure and the technology state of the Russian economy. Thereafter, we employ an environmentally extended input-output modeling framework in the structural decomposition analysis to study the drivers of changes in energy-related CO2 emissions. The obtained results provide insights for the effective implementation of environmental policy.