Global Impact of Energy Use in Middle East Oil Economies: A Modeling Framework for Analyzing Technology-Energy-Environment-Economy Chain

To explore choices of improving energy efficiency in energy-rich countries of the Middle East, this study lays out an integrated modeling framework for analyzing the technology-energy-environment-economy chain for the case of an energy exporting country. This framework consists of an input output process-flow model (IOPM) and a computable general equilibrium (CGE) model. The former investigates the micro-level production processes and sectoral interdependencies to show how alternative technologies affect the energy intensity of the economy (Lin, Polenske 1998 and Polenske, McMichael 2002). The latter belongs to the optimal depletion category of CGE models that analyzes energy economy interaction; it is an optimization model that solves the inter-temporal resource depletion problem subject to the workings of a multi-sector market economy, where relative prices play a crucial role (Ghadimi 1995, 2006). Such a formulation provides a systematic framework for analyzing the technology-energy-environment-economy chain in resource-rich developing countries. The main focus of this paper is to describe the theoretical structure of the class of CGE model proposed for this modeling framework.