Glyn Wittwer

• B.A., B.Ec, (Hons), Ph.D., University of Adelaide
• Professor at Victoria University

This study uses a multicountry, dynamic quarterly CGE model, GlobeTERM, to estimate the economic impacts of a hypothetical foot and mouth disease outbreak in Australia. The national welfare losses arising from the outbreak depend mostly on the duration of trade sanctions by importers of Australian animal products. If an outbreak is contained within...

We examine the regional economic consequences of the Chinese central government’s proposal to limit China’s peak carbon emissions before 2030 and to achieve carbon neutrality by 2060. This is done in two stages. First, we draw on detailed simulations at the national level of the economic consequences of China’s net zero transition plan. These simul...

A proposal to reform the United Kingdom's excise duty on alcohol is under consideration during 2022. The proposal would change the tax base from volume of product to volume of alcohol, which would see a fall in the tax on sparkling wine (by about one-fifth), a rise in the tax on fortified wines of 18% alcohol by volume (ABV) (by about one-sixth), a...

The study analyses the impacts of selected regional universities on regional economies within Australia using a multi-regional CGE model, VU-TERM. Universities enhance a community’s knowledge base through teaching and research, raising productivity within the region. To depict the regional economic contribution of universities, we simulate a hypoth...

Australia is a food-surplus country with much of its landmass located in arid or semi-arid areas subject to extreme variation in both precipitation and summer temperatures. The possible economic effects of climate change on water in relation to Australian agriculture are analysed by region and sector, including its possible impacts in Australia’s ‘...

This paper provides an empirical case study of impacts of COVID‐19 on Australia’s wine sector. Wine exports were subject to disruptions and, like domestic wine sales, were adversely affected not only by temporary declines in consumers’ expected incomes but also by the social distancing measures and self‐isolation that led to closure of restaurants,...

Much of New South Wales and southern Queensland suffered from extreme drought from 2017 to 2019. This study models drought and bushfires impacts using VU‐TERM, a multi‐regional, dynamic CGE model. Prolonged drought pushed national real GDP to 0.7 per cent or more below base in 2018–2019 and 2019–2020. NSW’s real GDP fell relative to forecast by 1.1...

This article provides an empirical case study of the impacts of the COVID-19 pandemic on global beverage markets, particularly the wine sector. Both international trade and domestic sales have been adversely affected by temporary shifts away from on-premise sales by social distancing measures and self-isolation that led to the closure of restaurant...

This article describes a new empirical model of the world's markets for alcoholic beverages and, to illustrate its usefulness, reports results from projections of those markets from 2016–2018 to 2025 under various scenarios. It not only revises and updates a model of the world's wine markets (Wittwer, Berger, and Anderson, 2003), but also adds beer...

The Department of Homeland Security (DHS) considers the effects of hypothetical terrorism scenarios distinguished by many dimensions including: perpetrator; target; location; weapon; and delivery method. For each scenario, DHS requires a computationally rapid, in-house (secure) tool for translating impact effects or “driving variables” (e.g. capita...

Rapid economic growth in previously less developed nations and prolonged droughts in many nations are stressing existing water resources. Diminishing water resources are being diverted increasingly to meet burgeoning urban demands. Economics has a role to play in providing guidelines to enhance the sustainability of water resources. Water pricing i...

In the early years of implementation of Australia’s 2007 Water Act, analysis with TERM-H2O put water policy into perspective. Drought resulted in economic hardship, whereas legislated water buybacks provided farmers with an adjustment option. TERM-H2O predicted with reasonable accuracy the impact of abnormally dry or wet years on irrigation water p...

This book deals with the economic modelling of water at the global, national and sub-national levels. It presents a multi-faceted analysis and, while it outlines the theories behind various models, its main purpose is to analyse policy issues and present insights arising from modelling, including a chapter analysing the macroeconomic implications o...

We create an applied general equilibrium database that represents 162 sectors in 365 prefectural regions of the Chinese economy. Our approach requires relatively modest data requirements to create a multi-region, sub-national database and extends methods used in The Enormous Regional Model (TERM). We call the new database ‘SinoTERM365’. Where the d...

Since Britain accounts for a major share of the world’s wine imports, and EU member countries include the world’s major wine exporters, Brexit and subsequent UK and EU‐27 bilateral free‐trade agreements (FTAs) have the potential to disrupt wine markets globally. We use a model of the world’s national wine markets, projected to 2025, to examine pote...

Australia is planning to take action to tackle climate change via improvements in light vehicle fuel efficiency. The proposed light vehicle emissions standards are expected to reduce petroleum use as well as greenhouse gas emissions from passenger vehicles, sports utility vehicles and light commercial vehicles. Consumers of light vehicles, includin...

The United Kingdom has accounted for a major share of the world's wine imports for centuries, and wine accounts for more than one-third of U.K. alcohol consumption. It is therefore not surprising that suppliers of those imports and U.K. wine consumers, producers, traders, distributors, and retailers are focusing on what the United Kingdom's planned...

Introduction This chapter is an introduction to computable general equilibrium (CGE) modeling and its application to the analysis of terrorism and other disruptive events. CGE belongs to the economy-wide class of models, that is, those that provide industry disaggregation in a quantitative description of the whole economy. Economy-wide models empha...

The objective of this study is to assess the suitability of Commodity Flow Survey (CFS) data released by the US Census Bureau as a check on the estimates of inter-regional trade generated in creating the USAGE-TERM master database. A close inspection of the Census Bureau's CFS data indicate that they record movements to and from transport nodes. In...

Services account for most economic activity in a developed economy. Health and education are two of the largest expenditure items in private and public consumption. This chapter discusses data sources and data issues concerning these sectors. Regional household consumption data are not available from state-level national accounts data, thereby requ...

Electricity and economic development moved together in much of the twentieth century. The development of electricity grids raised standards of living in regional U.S. Energy Security and greenhouse gas emissions are among the competing tensions in government policy. Electricity projects historically have been among major infrastructure projects spo...

The TERM implementation of a multi-regional model enables users to run with more sectors and regions than earlier multi-regional CGE models. But a trait of multi-regional modeling is that there is always interest in regions smaller than those captured by the model. In addition, in policy debates, political regions are of interest. A top-down repres...

Politicians and analysts are concerned with the economic health of regions. Sub-national economic modeling has relied heavily on input–output models. The absence of resource constraints in such models implies that they miss much of regional adjustment story in response to economic shocks. The Horridge approach enables the practitioner to represent...

The drought of 2012–2015 in California imposed severe stress on the state’s water resources. USAGE-TERM is a multi-regional CGE model that represents 12 key irrigation counties in California as separate economies. Water trading between irrigators would help California cope with drought. In particular, sales of water from producers of annual crops t...

This chapter describes the preparation of a multi-regional database for aggregated dynamic simulations with USAGE-TERM, a multi-regional model of the U.S. economy. The need for aggregation arises because the master database is far too large for the model ever to be run with full dimensions, necessitating aggregation for every model application.

The ongoing decline in manufactures in the United States over several generations has had marked regional impacts. The nation was far ahead of the rest of the world in economic terms after World War II. Gradually, the forces of globalization, with consequent technology transfers, have altered the manufacturing landscape. The rise of Asian nations i...

The multi-regional and dynamic attributes of USAGE-TERM enhance the modelling of the impacts of a hypothetical nuclear attack. In the regional dimension in this example, the congressional district of the attack is represented separately from the rest of LA, the rest of California and rest of USA. In the period of the attack, there are immediate dea...

Tourism is a relatively labor-intensive sector. Official input-output tables rarely depict tourism in detail. The national USAGE model includes new industries to depict domestic tourism, tourism exports and foreign holidays. In addition, both air transport and water transport are split into two so as to improve representation of these activities in...

Agricultural sectors in USAGE-TERM are represented on a commodity basis. This requires converting available input–output tables from a farm-type basis. Agriculture’s share of the national economy has declined with population growth and technological change. Farm lobbyists historically have wielded considerable influence in congress, so that for man...

This book details the preparation of USAGE-TERM, a computable general equilibrium model that provides regional economic detail in the USA. The model can represent either congressional district or state level economic activity. The latter may include a top-down representation of county activity. Interest in USAGE-TERM is growing among government dep...

This paper overviews the current structure and dynamics of international trade in wine with an emphasis on its intra-industry features. Using network analytic methods, we illustrate developments in the world's wine markets since the mid-1960s around a relatively stable core of countries. Those developments include both evolving demands for wine and...

Over the past decade Hong Kong and China have become far more important to the world’s wine markets, while Southeast Asia’s imports of fine wine continue to grow steadily. This paper reviews recent developments in the light of comparative advantage theory before drawing on a model of global wine markets to project developments in Asia and elsewhere...

This study examines a switch towards higher fixed charges and lower volumetric charges for mains water supplied by SA Water. The study uses dynamic VU-TERM, a multi-regional model that represents sub-state regions in South Australia. http://www.escosa.sa.gov.au/library/140711-WaterInquiry-ModellingEconomicImpactsChangingPricing-VicUni-ConsultantRe...

This study uses a dynamic multi-regional Computable General Equilibrium model of the Australian economy to examine the impacts of developing irrigated agriculture in remote North West Queensland. A potential investment and operational scenario is implemented using three alternative forecast baselines. In the first run using a business-as-usual base...

In this paper, we use a revised, expanded, and updated version of a global model first developed by Wittwer et al. (2003) to project the wine markets of its 44 countries plus seven residual country groups to 2018. Because real exchange rate (RER) changes have played a key role in the fortunes of wine market participants in some countries in recent...

Policy instruments designed to increase environmental flows in the Murray–Darling Basin are compared using TERM‐H2O, a detailed, dynamic regional CGE model. Voluntary and fully compensated buybacks are much less costly than infrastructure upgrades as a means of obtaining a target volume of environmental water, even during drought, when highly secur...

Demand for water is inelastic. As a consequence of this, the prospective returns to supply augmentation of urban water may vary widely with seasonal conditions, population growth and water savings over time. Prolonged drought conditions in the first decade of the new millennium placed urban water supplies under stress. Substantial investments follo...

Infrastructure upgrades appear superficially to be a politically acceptable way of increasing environmental flows in the Murray-Darling Basin. From an economic perspective, their costs and benefits should be compared with other policy instruments. We do so using TERM-H2O, a dynamic regional CGE model with considerable basin detail. Voluntary and fu...

This paper explores the impact of increased population and water demand and reduced water supply on sectoral and regional output and employment in Australia utilising a multi-regional computable general equilibrium model. The results indicate that the increase in water demand will significantly increase the shadow price (or opportunity cost) of wat...

TERM entails a more detailed representation of regional economies than any previous multi-regional national CGE model. This has broadened the array of policy topics covered using a CGE model. In this book, we concentrate on applications of TERM to rural and urban water issues.

The massive master database of TERM needs to be aggregated before it can be used for any simulation. There is demand for moving to dynamic TERM simula-tions, and rewards from doing so due to additional insights that arise from the in-fluence that a dynamic baseline may have on a policy simulation. This chapter covers a number of issues concerning d...

TERM-H2O is a dynamic variant of TERM with agricultural detail adapted to in-clude regional water accounts. This chapter describes: (a) the technology assumptions in TERM-H2O for farm industries; (b) the creation of an input-output data-base for farm industries including inputs of water (c); the derivation of input demand functions for farm industr...

We use TERM-H20 in analyzing the effects of the Australian Government buying back water from irrigators in the Southern Murray-Darling basin (SMDB) and thereby increasing river flows. Results are explained using data from the model and simplified theory. We refer to this as the ‘back-of-the-envelope’ approach. Back-of-the-envelope calculations and...

The Australian Government’s water buyback program started in earnest during a prolonged drought. TERM-H2O modelling indicates that in the short term, drought-induced job losses amount to around 6,000 jobs. Despite a recovery to average seasons, depressed investment during drought lowers levels of farm capital in the long run. In turn, long-run empl...

South-east Queensland suffered a record drought for several years after 2005 while accounting for almost one quarter of Australia’s entire population growth. This resulted in an urban water supply crisis. The state government’s response was to plan new dams, construct pipelines to create a water grid, and build a massive recycling plant and a desal...

Dynamic CGE modeling has been useful in analyzing water policy issues within Australia. This chapter explores the possibility of applying a version of TERM-H2O to other countries.

As anthropogenic climate change accelerates, leading both to weather unpredictability and extremes, the issue of water use and extraction has never had a higher profile. There are few places where the problems of water management are more urgent than Australia, where drought, overextraction and salinisation have become major policy concerns, and wh...

Water buybacks in the Murray–Darling Basin entail compensation at market prices for water sold by farmers to the Commonwealth. Despite this, the Murray Darling Basin Authority met with hostility at public meetings in basin communities late in 2010. This reflects hardship arising from three consecutive years of drought rather than the consequences o...

We provide economy-wide modelling results of the national and regional implications of two current challenges facing the Australian wine industry: a decline in export demand, and a possible change in the tax on domestic wine sales following the Henry Review of Taxation. The demand shock causes regional GDP to fall in the cool and warm wine regions,...

The prolonged drought from 2006–07 to 2008–09 in south‐eastern Australia presented severe difficulties for dry‐land and irrigation farmers in the southern Murray‐Darling basin. A dynamic multi‐regional computable general equilibrium model (TERM‐H2O) is used to estimate the economy‐wide small region impacts during and after drought. Drought reduces...

We use TERM-HO in analysing the effects of the Government buying back water from irrigators in the Southern Murray-Darling Basin (SMDB) and thereby increasing river flows. TERM-HO is a dynamic multiregional computable general equilibrium model containing water accounts. Controversially, our results suggest that buyback would increase economic activ...

Murray-Darling Basin communities have suffered recurring and prolonged droughts over the past decade. Now that the rains have returned, these communities see the Sustainable Diversion Limits (SDLs) planned by the Commonwealth as a new threat. Modelling with TERM-H2O assumes that since the SDL process is voluntary, Commonwealth purchases will procee...

TERM-H2O, a dynamic, multi-regional model has become a useful tool for analysing water policy issues in the Murray-Darling basin. Available data indicate that farm factor mobility has been an important avenue of adjustment to sharply reduced water availability during drought. The regional impacts of water buybacks in the basin are much smaller than...

The number of regions and sectors in most regional CGE models is small, due to data and computing limitations. The uses of such models will broaden if they have larger CGE databases. The TERM model combines a massive database with a variable aggregation facility and techniques to economize on computing capacity. This paper goes further, by outlinin...

We provide economy-wide modeling results of the national and regional implications of two current challenges facing the Australian wine industry: a decline in export demand for premium wines, and a possible change in the tax on domestic wine sales following the Henry Review of Taxation. The demand shock causes regional GDP to fall in the cool and w...

The aim of this paper is to analyse the regional economic impacts of a prolonged period of recurrent droughts. The model used for analysis is TERM-H2O, a dynamic successor to the bottom-up, comparative static TERM (The Enormous Regional Model). We concentrate on the regions of the southern Murray-Darling basin. Large change simulations are a challe...

Purpose The purpose of this paper is to outline a version of SinoTERM, a multi‐regional computable general equilibrium (CGE) model of China that has been updated and disaggregated further to enhance the agricultural detail. A version of the model is publicly available and will be useful to CGE modelers studying Chinese agricultural issues ( www.mon...

The ongoing socioeconomic crisis enveloping Indonesia has dramatically reversed decades of rapid economic growth, steady progress in poverty reduction, and substantial improvements in food security. Before the crisis, Indonesia was frequently cited as one of the highest performing Asian economies with per capita GDP growth in the top 10 percent of...

The implications of national and global economic growth, of regional and multilateral trade liberalization initiatives, and of Indonesia's ongoing unilateral policy reforms were the initial focus of the study. However, with the onslaught of the financial crisis that began in the latter part of 1997, the project leaders added that issue to the resea...

"South-East Queensland has combined the most rapid population growth in Australia with rainfall that has persisted below average for many years. The Queensland Government has responded with a number of plans to supplement existing water supplies in the region. This paper uses a multiregional, dynamic CGE model to estimate the regional impacts of co...

We use a dynamic CGE model of China with a financial module and sectoral detail to examine the real and nominal impacts of a nominal exchange rate appreciation alone, fiscal policy alone and a combined fiscal and monetary package to redress China’s external imbalance. The exchange rate policy alone is ineffective in both the short run and long run...

TERM-H2O is a multi-regional model of the Australian economy adapted to include regional water accounts. Factors of production are mobile between sectors in farm industries. TERM-H2O is dynamic and also includes complementarity conditions that impose constraints on the volume of irrigation water traded between regions. The application detailed here...

The paper outlines the theory and database preparation of SinoTERM, a "bottom-up" computable general equilibrium model of the Chinese economy. The methodology by which we construct the multi-regional model allows us to present the economy of China in an unprecedented amount of detail. SinoTERM covers all 31 provinces and municipalities. The databas...

Large-scale multi-regional CGE models of Australia, such as MMRF and TERM, underlie most CoPS consulting work. The regional detail, modelled in bottom-up fashion, greatly interests policy makers and is often needed to answer questions like: how would less rainfall in southern Australia affect the economy? To support this work, we have devised a var...

Australia's 2007 vintage was smaller than the previous few vintages as a consequence of drought and frost in 2006. Then the worst happened in the following year with an unprecedented second year of drought that resulted in severe cuts to water allocations for irrigators in the southern Murray-Darling Basin. This paper examines the medium-term prosp...

The sharp increase in Australia's terms of trade since 2003-04 has dramatic regional and sectoral implications. Mining-intensive regions have gained from the jump in export prices. Import-competing sectors have faced greater competition both from falling import prices and due to rising demand for domestic factors from the mining sectors. The drough...

The share of global wine supplied by New World producers has increased dramatically since the late 1980s. Australia and Chile have emerged as major exporters of wine. USA has also increased production sharply though its sales have grown mainly in the domestic rather than export markets. This paper uses the World Wine Model to project the wine marke...

A dynamic computable general equilibrium model provides a tool for analysing the regional economic consequences of a hypothetical plant pest incursion. The model is very detailed at the industry and regional level. It includes a theory of regional labour market adjustment. In our example, a hypothetical Pierce's disease incursion, direct regional e...

Indonesia’s national and regional/local policy makers are becoming increasingly concerned with disparities between regions. Aggregate incomes and expenditures in one region may change proportionally more than national changes. This paper contains a technical summary of the structure and special features of INDOTERM model, a member of the TERM famil...

The Erwinia amylovora incursion in the Royal Botanic Gardens, Melbourne (RBGM) in autumn 1997 cost the Australian pome fruit and nursery industries an estimated A$20 million in lost revenue. The cost of the national orchard and urban surveys, eradication programs, diagnostics, and media management was estimated at A$2.2 million and involved some 25...

TERM (The Enormous Regional Model) is a “bottom-up” CGE model of Australia which treats each region as a separate economy. TERM was created specifically to deal with highly disaggregated regional data while providing a quick solution to simulations. This makes it a useful tool for examining the regional impacts of shocks that may be region-specific...

The present study uses a dynamic multiregional computable general equilibrium (CGE) model to estimate the micro- and macroeconomic effects of a hypothetical disease or pest outbreak. Our example is a Karnal bunt incursion in wheat in Western Australia. The extent of the incursion, the impact of the disease or pest on plant yields, the response of b...

A recent analysis indicated that the direct financial cost of weeds to Australia's winter grain sector was approximately $A1.2bn in 1998-1999. Costs of this magnitude represent a large recurring productivity loss in an agricultural sector that is sufficient to impact significantly on regional economies. Using a multi-regional dynamic computable gen...

To make CGE models realistic, inequality constraints (e.g., import quotas) or non-differentiable functions (e.g., income tax schedules) are sometimes needed. Both situations may be described using complementarity conditions, which state that either an equation is true or its complementary variable is at a boundary value. The paper describes a pract...

This paper demonstrates that dynamic computable general equilibrium (CGE) simulations can provide estimates of the economy-wide effects of industrial stoppages. Such estimates could be used in broad discussions of the contribution to economic welfare of improved industrial relations. They could also be used in narrowly focussed discussions, e.g. in...

TERM (The Enormous Regional Model) is a "bottom-up" CGE model of Australia which treats each region as a separate economy. TERM was created specifically to deal with highly disaggre- gated regional data while providing a quick solution to simulations. This makes it a useful tool for examining the regional impacts of shocks that may be region-specif...

RunMONASH, a software program, written by Ken Pearson, is used to solve the CGE model, MONASH. RunMONASH produces a base case forecast for a set of years in sequence. In response to some additional policy shocks, RunMONASH calculates a policy deviation from this base case, again for the same sequence of years. This paper outlines the reasons for wr...

This is a guide to the variable dimension version of MMRF-GREEN, a dynamic multi-regional, fiscal model of the economy of Australia. We first detail the multi-regional core of the model. Then we introduce dynamics to the model. A section on the fiscal extension of the model follows. A subsequent section details enhancements designed to improve the...