At the national level, international commitments have to be translated into domestic actions that are compatible with the economic and social structure of a nation. Both of these policy issues should be tackled with an adequate support of scientific knowledge. Because of the complexity of the issues involved, numerical models are often used to perform simulations and policy analysis. These models include an ecological module, simulating the effects of antropogenic and natural emissions on temperature levels, and a social module, modelling the effects of climate on productivity and economic activity levels. Normally, the socio-economic side of the model has a general equilibrium structure, with intertemporal optimisation and endogenous capital stock formation.
International trade is considered in terms of goods or emission permits, or both.
Economic modelling could also be fruitfully used to assess and guide political decisions at the national level. Indeed, international agreements only fix aggregate targets in terms of emissions generation or concentration of pollutants, giving freedom to the national governments about the choice of instruments and about the sectoral allocation of control costs. In this case, ecological modelling is a much less relevant issue, whereas a greater detail in terms of industries and households becomes more relevant. Computable General Equilibrium models are useful tools in this context, and in this paper we shall show how IAM and CGE models could be used in a complementary way to investigate some environmental policy issues. First, the structure of IAM and CGE models, and the way they can complement each other, will be discussed from a theoretical perspective.