The Handbook for Economics Lecturers

7. Software resources – used as a teaching and assessment tool

LowGrow is a computer simulation of a macroeconomic model for Canada developed by Victor (2008). The model is an aggregate demand-aggregate supply framework – marrying a typical Keynesian expenditure function with a conventional production function. However, the model has several novel features that make it useful for teaching sustainability. The model has outcomes for conventional macroeconomic variables such as unemployment and growth but in addition tracks greenhouse gas emissions, forestry and poverty. This last element addresses the aspect of sustainability concerned with equity. A further central feature is that, as the name LowGrow suggests, the model examines low growth scenarios.

Students can interact with the computer model by changing key policy variables and witnessing the outcomes. Furthermore the model has several pedagogically advantageous features. The majority of its variables and policy tools are pretty conventional, so students familiar with typical macroeconomics syllabuses can easily adapt to the model. Further, Victor (2008: ch. 10), in conjunction with Victor and Rosenbuth (2007), explains the model in detail. He shows how the model can be represented graphically and in equation form. Victor also discusses the econometric work underlying the calibration of the simulation model. LowGrow therefore has a number of aspects that make it excellent for teaching, at a number of levels.

CBA Builder (Wheatley, 2010) is an Excel-based program designed to allow the user to conduct a cost benefit analysis, together with a sensitivity analysis. The software has several features that make it a useful resource for teaching. It is quite user-friendly and has an accompanying manual containing information on the calculations it performs. Hence it can be used as a tool for reinforcing concepts such as discount rate, net present value and more general concepts such as short and long-run costs. It can therefore be used as an investment appraisal tool. However, by adding in data on externalities CBA Builder can be used for environmental analysis. The sensitivity analysis allows students to understand contingency, which in turn fosters their ability to use judgement and caution in policy decisions. The other benefit for students is in terms of employability: Excel is regarded as a highly useful tool and CBA Builder allows them to develop further their competence in it. CBA Builder has received positive feedback from users.

The Resources and Energy Analysis Programme (REAP) software, developed by the Stockholm Environmental Institute at the University of York, enables students to engage with a number of sustainability issues relating to lifestyle. The current consumption patterns across the UK based on MOSAIC data are used to derive area sustainability profiles in terms of ecological footprint in global hectares, carbon footprint in tonnes and footprints of a range of other pollutants. Geographical areas down to district level can be accessed or new study areas created by aggregating districts. REAP is conceived as a policy instrument whereby local authorities can try out different policy scenarios covering areas such as transport, housing and population growth, and gauge the footprint impact.

A workshop that engages students can be based on their own home district. Overseas students can choose an area they have visited. Initially, students can be asked to find a series of footprints relating to their areas. These can be compared in group discussion and some reasons for differentials suggested. As a second stage, students can enter the scenario mode of the software and try policies which might reduce footprints in their areas. It is a sobering exercise for students to try and evolve policies that bring the ecological footprint down to the sustainable level of 1.8gha.

Experience with using the software suggests that it is best to start with an introductory group session in a PC lab, defining the metrics and investigating home area profiles. The scenario capability of REAP should be introduced and then students set the footprint reduction exercise to be completed in their own time.

REAP licences for teaching are free and can be obtained through contacts on the website.

The online scenario tool DECC Energy calculator tool is useful to investigate the implications of energy policies. Experience shows that it works best as a seminar exercise where the class as a whole can vote on the various policy decisions. The various implications of strategies can be discussed and the wide range of questions that arise answered. The calculator can be accessed online.

Research

The University of York reports REAP is used to great effect at undergraduate and postgraduate levels (based on an interview with Anne Owen, Research Associate specialising in Sustainable Consumption and Production, Stockholm Environment Institute, University of York). REAP is a highly sophisticated model that helps policy makers to understand and measure the environmental pressures associated with human consumption. It is aimed at policy makers and can be used at the local, regional and national levels. It generates indicators on:

  • Carbon dioxide and greenhouse gas emissions measured in tonnes per capita.
  • The ecological footprint required to sustain an area in global hectares per capita.
  • The material flows of products and services through an area measured in thousands of tonnes.

REAP has applications in a wide range of policy areas including transport, housing and planning. The program’s powerful scenario tool models the impacts of policy changes and facilitates working with alternative futures based on different trends or assumptions.

At York, REAP has been used in teaching on both the BSc and MSc/Diploma Environmental Economics and Environmental Management. At the undergraduate level, it is used to support multi-criteria analysis of sustainable lifestyles while at Masters level, it facilitates the analysis of the impact of lifestyle changes such as reducing food waste and healthy eating. It is important to use a problem-based approach to introducing REAP. Just taking the students through a ‘what REAP can do’ demonstration does not engage them to the same extent.

There are other versions of REAP available: REAP Petite, which is designed for simulations at the community level; and at the opposite extreme, EUREAPA allows comparative analysis of sustainability indicators at the EU national and regional levels.