Uncertainty Analysis of the UK-MRIO Model – Results from a Monte-Carlo Analysis of the UK Multi-Region Input-Output Model (Embedded Carbon Dioxide Emissions Indicator)

Abstract: “The work described in this report is an extension to the ‘Embedded Carbon Emissions Indicator’ project in which the first stage of a multi-region inputoutput (MRIO) model was developed with the aim to set the basis for multicountry analyses of environmental impacts associated with UK trade flows, including detailed accounts of emissions embedded in trade flows to and fromthe UK.

A time series of direct and indirect carbon dioxide emissions associated with UK economic activities, in particular emissions that are embedded in imports to and exports from the UK, was calculated with this UKMRIO model. One open question that had not been answered in this previous project was about the uncertainty of the results. The present work therefore set out toquantify the error margins associated with the results from the UK-MRIO model. The sensitivity of the model system with respect to parameteruncertainty was to be tested by performing a Monte-Carlo analysis. This allows for the results to be presented with error margins.

A sensitivity analysis of the whole model system was therefore carried out by – reviewing and justifying estimates for standard deviations of constraints,- estimating IO table uncertainties from constraint uncertainties,- estimating IO table uncertainties from matrix balancing,- estimating multiplier uncertainties using Monte-Carlo simulations and-calculating the error propagation for embedded emissions. The calculations were carried out by The Centre for Integrated Sustainability Analysis (ISA) at the University of Sydney, with the Stockholm Environment Institute at the University of York providing initial uncertainty estimates and coordinating the report.

Although Monte-Carlo type analyses to determine possible errors from uncertainties in underlying databases is well described in the literature, only few economic and environment-economic studies actually go to such a length. No other environmental MRIO study has thus far undertaken a similarly thorough uncertainty analysis.

Section 2 describes how the uncertainties for the underlying data were derived

Section 3 explains the methodology

– Section 4 present the results.

Section 5 discusses the validity of the assumptions and calculations and concludes.

For the definitions, general context and a detailed description of the UK-MRIO model and results we refer to the main report.2

Locality: Global
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