3FOOD

Third Industrial Revolution Consulting Group
Industrial Revolution infrastructure is deployed and made increasingly interoperable in
subsequent years.
A SHORT NARRATIVE ON THE DEEPER MODELING SYSTEM AS A
POLICY ASSESSMENT TOOL
Although the DEEPER Model is not a general equilibrium model as the LuxGEM model now
being developed by STATEC, it does provide sufficient accounting detail to match importadjusted
changes in investments and expenditures within one sector of the economy and
balance them against changes in other sectors. 404 More to the point of this exercise, it can
specifically explore the energy and related non-energy productivity benefits from what is now
characterized as a TIR Innovation Scenario—especially as it is transformed into a pro-active
Third Industrial Revolution Master Plan.
One critical assumption that underpins the core result of the DEEPER analysis is that any
productive investment or spending—whether in energy efficiency, renewable energy, and/or a
more dynamic infrastructure that pays for itself over a reasonably short period of time—will
generate a net reduction in the cost of energy services (as well as a lower cost of other resources
which are needed to maintain the material well-being of the Luxembourg economy). That net
reduction of energy and resource expenditures can then be spent for the purchase of other
goods and services. In other words, as we noted in the discussion surrounding Figure 1, the
redirecting of €1 million in value-added spending away from energy suggests there may be
roughly a net gain of about 5.8 jobs. Depending on the many sectoral interactions, as well as
the complete assessment of the many effects summarized and discussed in Table 1 of this
assessment, the net gain in jobs may widen or close as the changed pattern of spending works
its way through the model, and as changes in labor productivity changes the number of jobs
needed in each sector over a period of time. 405
404 When both equilibrium and dynamic input-output models use the same technology, investment, and cost
assumptions, both sets of models should generate reasonably comparable set of outcomes. For a diagnostic
assessment of this conclusion, see, “Tripling the Nation’s Clean Energy Technologies: A Case Study in Evaluating the
Performance of Energy Policy Models,” Donald A. Hanson and John A. “Skip” Laitner, Proceedings of the 2005
ACEEE Summer Study on Energy Efficiency in Industry, American Council for an Energy Efficient Economy,
Washington, DC, July 2005.
405 Note that unlike many policy models, DEEPER also captures trends in labor productivity. That means the
number of jobs needed per million dollars of revenue will decline over time. For example, if we assume a 1.5
percent labor productivity improvement over the 36-year period from 2014 through 2050, 16 jobs supported by
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