A multicriteria model for analyzing the impact of EU GHG limiting policies on economic growth: The case of Poland

In this study, a macroeconomic model and the multicriteria approach are used to analyze the impact of the enforced greenhouse gas (GHG) emission limits on economic development and future consumption in a small open economy country, like Poland. The following questions are considered: how economic transformation, connected with adjustment of the national economy to the policy limiting GHG emission would proceed? what may be the consequences of the enforced emission limits for the economic development and future consumption? The model answers these questions by presenting time trajectories, describing the evolution of three sectors, which influence GHG emission, namely those producing intermediary inputs, consumer goods, and investment goods. The sectors interact via markets of the relevant goods. The model takes into account the inertial behavior of the large-scale dynamic system, as well as social and political resistance to changes. It also indicates technological changes in the form of time-varying shares of two technologies, namely the GHG emission intensive and the GHG emission avoiding ones. Two competing objectives are considered in the multicriteria analysis, i.e. maximization of consumption and minimization of GHG emission. The costs of pursuing the GHG limiting policy are assessed in terms of lost consumption. The multicriteria analysis is performed with the use of the derived representation of the Pareto optimal outcomes. Computational results are presented for the case of Poland. They show three phases in a transition period, early growth on the basis of existing assets in the initial years, a depression phase, where technological changes mainly occur, and a period of renewed growth. They are followed by a steady development under new emission conditions.