Developing an Environmentally-extended Social Accounting Matrix for India 2019-20
Reading Time: 2 minutesAbstract
DOWNLOADS
This study provides the methods and materials for constructing a Social Accounting Matrix (SAM) 2019-20 for India. SAMs are a valuable tool for understanding the effects of various fiscal policies on equity and the economy. They serve as a comprehensive economic database, detailing transactions among economic agents like producers, households, and the government. SAMs are essential inputs for enhancing economic analysis through Computable General Equilibrium (CGE) models and calculating various economic multipliers, making them valuable tools for examining the consequences of government policies on different economic variables.
The standard SAM framework has been expanded with an Environmentally-extended SAM (ESAM) that integrates data on emissions, thus enabling us to assess climate policy interventions. The ESAM includes three pollution types: air emissions, wastewater generation, and land degradation. The ESAM constructed in this paper includes 45 production sectors, 318 categories of labour, 80 household categories, and 3 environmental pollution categories. The labour factor of production is further disaggregated by region, social group, occupation, education, and gender. Households are disaggregated based on regions, social groups, and annual consumption expenditures. The ESAM is used to compute output, labour income, and employment multipliers, while the environmental extension provides emissions multipliers.
This study tackles the existing research and data gaps regarding pollution generation by incorporating sector-specific data from India’s greenhouse gas inventory. It attempts to introduce a novel approach to categorise labour in this ESAM, which can be used to investigate the questions of income inequality across regions, social groups, educational attainment, and gender, amongst others.
Q&A with the authors
- What is the core message conveyed in your paper?
This paper provides the materials and methods for constructing an Environmentally-extended Social Accounting Matrix (ESAM) 2019-20 for India. This comprehensive economic database details the monetary transactions between various agents (such as industries, households, government, and the rest of the world). Also, it provides information on air, water, and land pollution generated by them. The ESAM can be used for Leontief input-output modelling of the impacts of policy changes on the economy and emissions and can further be incorporated into Computable General Equilibrium (CGE) models for enhanced economic analyses.
- What presents the biggest opportunity?
The ESAM includes 45 production sectors, including the energy- and emissions-intensive sectors (such as coal, combustible petroleum products, steel manufacturing, coal-powered electricity, and renewable electricity). This structure allows database users to analyse the impacts of policies on energy security and emissions. Additionally, the ESAM has disaggregated labour and household types into 318 and 80 categories, respectively, based on region, gender, social groups, education, and expenditure deciles. With this database, distributional aspects of policies may be assessed.
- What is the biggest challenge?
ESAM-based analyses should primarily be interpreted as indicative quantification of policy impacts. More robust results can be obtained using the ESAM alongside other modelling techniques, such as CGE models. While both the ESAM and CGE models benefit from a whole-economy approach to understanding the impacts of policy changes, this may need to be complemented with sector-specific analysis.
Find on this page
The Centre for Social and Economic Progress (CSEP) is an independent, public policy think tank with a mandate to conduct research and analysis on critical issues facing India and the world and help shape policies that advance sustainable growth and development.