T21 Planning Model

The T21 model is a relatively large size model, comprising more than 1,000 equations, about 60 stock variables, and several thousands feedback loops. The figure below is a conceptual overview of the T21 model structure, with linkages between the economic, social, and environmental spheres. Within each sphere are sectors that interact with each other and with sectors in the other spheres. All sectors in the T21 SF belong to one of the three spheres.

All the major concepts in each sphere are modelled endogenously, which implies that causes are determined by the interlinked structure of the system itself. For instance, the education level of the population, which is an output of the Education sector, influences the productivity level of the labour force in the Production sector, which then determines the Government’s available public funds that governs the level of investment back into the Education sector, determining future developments in the population’s level of education. This is a major strength of T21 – its capability to capture the complex web of causal interrelations and numerous important feedback loops.

The Economy sphere contains the major production sectors (agriculture, industry and services), which are characterized by expanded Cobb-Douglas production functions with inputs of resources, labour, capital, technology and an inclusive total factor productivity (TFP) variable. Production activities especially relevant to the agriculture sector, such as crops production, animal production, fisheries, forestry, etc. are included in specific sub-sectors. The government sector generates taxes based on economic activity and allocates expenditures by major category. Public expenditure impacts on the overall economic performance and on the delivery of public services. Standard IMF budget categories are employed and key macro balances are incorporated into the model. The household sector traces household revenue and disposable income (based on economic activity, government’s subsidies and transfers, remittances, etc.), which is then used to support private saving and consumption. In the investment sector, private and public investment is allocated to the different production sectors. The Rest of the World sub-sector comprises trade, current account transactions, and capital flows (including debt management).

The Society sphere contains detailed population dynamics by sex and age cohort; health and education challenges and programs; basic infrastructure; employment; and poverty levels and income distribution. These sectors take into account, for example, the interactions of income, healthcare, nutrition, and adult literacy rates on fertility and life expectancy, which in turn determine population growth. Population determines the labour force over time, which shapes employment. Education and health, together with other factors, influence labour productivity and life expectancy. An HIV/AIDS sector is also included, which shows the impacts of the disease on population and productivity, and the effects of different treatment programs. Food sufficiency and nutrition availability are also addressed.

The Environment sphere tracks the consumption of natural resources – both renewable and non-renewable – and can estimate the impact of the depletion of these resources on production and other factors. It examines the effect of soil erosion and other forms of environmental degradation and their impact on other sectors, such as agricultural productivity and nutrition. Additional issues addressed are fossil fuel use and emissions, biodiversity loss, forest depletion, land and water degradation, air and water pollution, and greenhouse gas emissions.