104 Step 5 Examination of factor substitutions due to technological changes This section captures the input output modelling for the energy food water nexus, which is comprised of the following steps[.]
104 Step 5: Examination of factor substitutions due to technological changes This section captures the input-output modelling for the energy-food-water nexus, which is comprised of the following steps: a) The SC2 - Energy scenario: Modelling the energy production mix The technical input-output parameters are modified for all energy-related industries, which means that this method should be applied to all 54 sectors However, these 54 sectors are quantified by dividing them into seven key sectors, including energy The SC2 scenario includes four major assumptions, as followings: Assumption 1: Technological change and impacts on the total electricity supply mix Electricity – Fossil = 0.573 * Electricity supply Electricity – Hydro = 0.169 * Electricity supply Electricity – Renewables = 0.158 * Electricity supply Electricity – Solar = 0.1 * Electricity supply This assumption is based on the Decision No 1208/QD-TTg approving the national master plan for power development (Decision No 1208, 2011) Assumption 2: Private investment in the electricity sector with an ownership ratio of 49% and public investment of 51% (Decision No 168/ QD-TTg approving a plan for restructuring of power sector in the period of 2016 - 2020 with an outlook to 2025) Assumption 3: Private investment efficiency in electricity is higher than that of public investments, which impacts electricity output; ICOR (Incremental Capital-Output Ratio) is applied to measure capital efficiency Total Output = xij * 1.7433 where 1.7433 is the value of the ICOR of fixed capital, and ICOR is identified as the ratio of the total investment / increase in output (Bui, 2009) Assumption 4: A productivity shock in the electricity sector impacts other sectors is assumed by 10% b) The SC3-Food scenario: Modelling the food production mix The input-output technical parameters are modified for all food sectors in this research; therefore, this method should be applied to all 54 sectors However, the 54 sectors in the SC3-Food scenario are quantified by dividing them into 10 key