USEPA / useeior

Estimating potential environmental impacts of goods and services in the US economy
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2R models: Consider removing export residual from consumption vector #298

Closed WesIngwersen closed 2 months ago

WesIngwersen commented 2 months ago

https://github.com/USEPA/useeior/blob/ae9d9694479d680084556323471eadfdb1def968/R/StateiorFunctions.R#L179-L195

The export residual is defined in Li et al 2022 as:

The exceptions are the industries in which all consumption was assumed to be local. In this case, since no interregional trade is assumed, the distribution of a discrepancy between supply and demand affecting other regions would necessarily result in a model with negative interregional imports, which is untenable from the economic point of view. In this case, the difference between supply and demand is included as a new component of final demand that is called the “export residual”. For commodities that have SoI2SoI ICF ratio equal to 1, their “export residual” equals their “interregional exports”.

This is a balancing term because it these are commodities not consumed locally and it creates an imbalance if they are assigned to RoUS consumption (and these are interregional and not international exports).

WesIngwersen commented 2 months ago

My recommendation would be to remove it from the consumption vector, but to keep it in the production vector

jvendries commented 2 months ago

@WesIngwersen I removed the export residual from the consumption vector, and created model objects and a script to check that this change did not have any major impacts. Nothing changes besides objects dependent on the final consumption vector itself (CbS and B_h), and the household final demand resulting from models with and without the export residual are equivalent, suggesting this change is OK. This should be fine to pull into develop.

WesIngwersen commented 2 months ago

@jvendries please create PR to pull into develop, thanks

jvendries commented 2 months ago

@jvendries please create PR to pull into develop, thanks

@WesIngwersen @bl-young I created a pull request for this issue. I also moved and tested the rmd script and model objects related to this issue to useeio_team to avoid pulling those into develop.