This paper advocates computable general equilibrium models as a methodological tool that is particularly suitable for measuring the impacts of policy interference on the three dimensions of sustainable development, i.e. environmental quality, economic performance (gross efficiency) and equity. These dimensions are inherently intertwined and subject to trade-offs. Computable general equilibrium models can incorporate various important sustainable development indicators in a single consistent framework and allow for a systematic quantitative trade-off analysis.
Böhringer, Christoph and Andreas Löschel (2004), Measuring Sustainable Development: The Use of Computable General Equilibrium Models, ZEW Discussion Paper No. 04-14, Mannheim. Download