The IFs preprocessor uses historical data to prepare data for the base year of the model, currently 2010. We describe the general workings of the IFs preprocessor here. However, there are some peculiarities in the infrastructure model, specifically related to the initialization of the variables related to spending on infrastructure.
Because of the paucity and inconsistency of the historical data on infrastructure spending discussed above, IFs does not use actual historical data on spending, but rather estimates spending in the first year of the model based upon data on the stocks of and access to infrastructure after the pre-processor has filled any gaps in the historical data. The procedure is as follows:
- We assume that: 1) the amount of infrastructure requiring maintenance in the base year is given by the level of infrastructure in the previous year (2009) times a factor based on the lifetime of the infrastructure (see table 5 below), and 2) the amount of newly constructed infrastructure is the difference between the amount of infrastructure in the base year (2010) and the previous year (2009).
- Total spending on maintenance, INFRAINVESTMAINT, is estimated as the amount of infrastructure requiring maintenance times the unit cost for each type of infrastructure (see Table 6 below).
- Total spending on new construction, INFRAINVESTNEW, is estimated as the amount of new construction times the unit cost for each type of infrastructure. If the amount of newly constructed infrastructure is less than or equal to zero, spending on that type of infrastructure is set to zero.
- For each type of infrastructure, public spending on maintenance, INFRAINVESTMAINTPUB, and new construction, INFRAINVESTNEWPUB, are estimated by multiplying the total spending by infrastructure specific parameters, infrainvmaintpubshrm and infrainvnewpubshrm , indicating the share of total spending that is assumed to be public.
- The sum of estimated public spending on maintenance and new construction, across all types of core infrastructure, provides an initial estimate of government consumption for core infrastructure, GDS(Infrastructure).
- If, in the first year budgeting process, total estimated government consumption on core infrastructure is reduced, an infrastructure cost adjustment factor, INFRACOSTADJFAC, is calculated as the ratio of the final to the initial value of GDS(Infrastructure). The value of INFRACOSTADJFAC is also used to adjust infrastructure spending in future years. It gradually converges to 1 over the time period given by the parameter infracostadjfacconvtime .
- The initial estimates of INFRAINVESTMAINT, INFRAINVESTNEW, INFRAINVESTMAINTPUB, and INFRAINVESTNEWPUB are each multiplied by INFRACOSTADJFAC to calculate their final values.
- The initial value of public spending on other infrastructure, GDS(InfraOther ), is calculated as a function of average income, GDPPCP, multiplied by INFRACOSTADJFAC. This function is:
GDS(InfraOther) = government spending on other infrastructure in billion constant 2005 dollars
GDP = gross domestic product at market exchange rates in billion constant 2005 dollars
GDPPCP = gross domestic product per capita at purchasing power parity in thousand constant 2005 dollars