Co-authors: Francesco Bosello, Jacopo Zotti, Fabio Eboli

The DYNAMIX project aimed at identifying dynamic and robust policy mixes with concrete potential to bring the EU on a path leading to absolute decoupling of resource use and economic growth by 2050, for a selected group of key resources. The DYNAMIX team identified a number of promising policies, grouped in three distinct policy mixes (an overarching policy mix, a policy mix for land use and a policy mix for metals and other materials). There is no ex-ante guarantee, however that these policies will have the intended effects in the real world. For this reason, passing the policy mixes through a rigorous ex-ante assessment process can help identifying issues, which may hinder the implementation and the success of certain policies. This assessment takes a multi-disciplinary approach, which allows for both a qualitative and a quantitative analysis of a wide array of distinct dimensions covering  environmental, economic, social, legal and public-acceptance issues. This  seminar illustrates on some results  related to the assessment carried out by means of quantitative economic modelling and qualitative economic analysis.

The economic quantitative assessment relied upon three macro-economic models, ICES, MEMO and MEWA, all belonging to the category of Computable General Equilibrium modelling. The strongest message from the analysis is that the cost of the policy crucially depends upon (a) the sensitivity of the production system to the dynamic incentive to dematerialize induced by the policy signal, i.e. ultimately upon the reaction (or availability) of technological progress and (b) the use of tax revenues, i.e. on the implementation of an appropriate revenue-recycling scheme.

The qualitative economic assessment shows that decoupling is a complex goal, which indeed calls for a mix of consistent and comprehensive policies. The design of such a policy mix  requires an accurate selection of the basic policy instruments and great care in their application. The risk of simply overshooting the target due to an excessive application of the same sort of policy lever on the same group of economic agents is a very serious one. We provide an example of a coordinated set of dematerialization policies, which aim at fostering the socially efficient use (and re-use) of virgin materials at firm level.

This seminar has been jointly organized by FEEM and IEFE, Bocconi University.