Parameter uncertainty in CGE modeling of the environmental impacts of economic policies

This study explores the role of parameter uncertainty in CGE modeling of th e environmental impacts of macroeconomic and sectoral policies, using Costa Rica as a case for study. A CGE model is constructed which includes eight environmental indicators covering deforestation, pesticides, overfishing, h azardous wastes, inorganic wastes, organic wastes, greenhouse gases, and ai r pollution. The parameters are treated as random variables drawn from pres pecified distributions. Evaluation of each policy option consists of a Mont e Carlo experiment. The impacts of the policy options on the environmental indicators are relatively robust to different parameter values, in spite of the wide range of parameter values employed.