stacking up the ladder a panel data analysis of tanzanian household energy choices energy use statistics in tanzania reflect the country s low level of industrialization and development in 2016 only 16 9 of rural and 65 3 of urban inhabitants in mainland tanzania were connected to some form of electricity we use a nationally representative three wave panel dataset 2008 2013 to contribute to the literature on household energy use decisions in tanzania in the context of the stacking and energy ladder hypotheses we firstly adopt a panel multinomial logit approach to model the determinants of household cooking and lighting fuel choices secondly we focus explicitly on energy stacking behaviour proposing various ways of measuring what is inferred when stacking behaviour is thought of in the context of the energy transition and presenting household level correlates of energy stacking behaviour thirdly since fuel uses have gender differentiated impacts we investigate women s bargaining power in the decision making process of household fuel choices we find that whilst higher household incomes are strongly associated with a transition towards the adoption of more modern fuels especially lighting fuels this transition takes place in a context of significant fuel stacking in tanzania government policy has been aimed mostly at connecting households to the electric grid however the public health environmental and social benefits of access to modern energy sources are likely to be diminished in a context of significant fuel stacking lastly we present evidence that the educational attainment of women in the household is an important aspect of household fuel choices

structural drivers of productivity and employment growth a decomposition analysis for 81 countries the paper uses accounting methods to decompose aggregate labour productivity and employment growth into their sectoral components as well as into within sector and employment reallocation effects for a sample of 81 developed and developing countries using data going back to the mid 1980s key findings are that aggregate labour productivity growth for developing countries taken together is driven as much by services as by industry in spite of strong differences between countries and that within sector effects on aggregate labour productivity growth are more important than employment reallocation effects a pattern that holds for all regions

the economic cost of global fuel subsidies by 2015 global oil consumption will reach 90 million barrels per day in part this high level of consumption reflects the fact that many countries provide subsidies for gasoline and diesel this paper examines global fuel subsidies using the latest available data from the world bank finding that road sector subsidies for gasoline and diesel totaled 110 billion in 2012 pricing fuels below cost is inefficient because it leads to overconsumption under baseline assumptions about supply and demand elasticities the total annual deadweight loss worldwide is 44 billion incorporating external costs increases the economic costs substantially

country level analysis of household fuel transitions abstract solid fuel combustion remains a dominant energy source for household heating and cooking in less developed countries as a result almost three billion people are exposed to household air pollution causing four million premature deaths annually primarily among poor women and children we analyze data from demographic and health surveys in 69 countries to identify determinants of transition from solid to cleaner fuel estimates from a population averaged linear model show that population density and size rural population share income inequality and charcoal production are positively associated with countries solid fuel use while gdp per capita electricity and natural gas production have the opposite effect economic development measured as gdp per capita has the strongest link to solid fuel use a standard deviation increase in per capita gdp above its mean reduces solid fuel use from 70 to 57 of households electricity production is another strong predictor solid fuel use drops by 11 when electricity production increases by one standard deviation above the mean in addition in a fixed effects linear model population size has a positive association with solid fuel use while increases in gdp per capita and the number of governments renewable energy incentives are associated with lower dependence on solid fuels

fossil fuel subsidy reforms and their impacts on firms abstract while the potential adverse effects of fossil fuel subsidy reform are well documented for households the literature has largely ignored the effect of subsidy reform on firms competitiveness this paper discusses how firms are affected by and respond to energy price increases caused by subsidy reforms it highlights that cost increases both direct and indirect do not necessarily reflect competitiveness losses since firms have various ways to mitigate and pass on price shocks this paper presents and discusses direct and indirect transmission channels for price shocks and firms response measures absorbing cost shocks into profits inter fuel substitution increasing energy and material efficiency and passing on price increases it argues that further micro econometric studies using enterprise surveys are essential for quantifying the role of these mechanisms and for designing policy measures that ensure that competitiveness losses due to subsidy reforms are minimised

the economic case for low carbon development in rapidly growing developing world cities a case study of palembang indonesia where costs or risks are higher evidence is lacking or supporting institutions are less developed policymakers can struggle to make the case for low carbon investment this is especially the case in developing world cities where decision makers struggle to keep up with the pace and scale of change focusing on palembang in indonesia this paper considers the economic case for proactive investment in low carbon development we find that a rapidly growing industrial city in a developing country can reduce emissions by 24 1 in 2025 relative to business as usual levels with investments of usd405 6 million that would reduce energy expenditure in the city by usd436 8 million emissions from the regional grid could be reduced by 12 2 in 2025 relative to business as usual trends with investments of usd2 9 billion that would generate annual savings of usd175 million these estimates understate the savings from reduced expenditure on energy subsidies and energy infrastructure the compelling economic case for mainstreaming climate mitigation in this developing country city suggests that the constraints on climate action can be political and institutional rather than economic there is therefore a need for more effective energy governance to drive the transition to a low carbon economy

household welfare and co2 emission impacts of energy and carbon taxes in mexico abstract we analyse the effects of environmental taxes on welfare and carbon emissions at the household level for the case of mexico the integrated welfare environmental analysis which is based on a censored energy consumer demand system extends previous work in two ways first the estimation of a full matrix of substitution elasticities allows us to test the necessity of incorporating second order effects into the welfare analysis second the substitution elasticities derived from the demand system are used to estimate the shortrun co2 emission reduction potential we find that first order approximations of welfare effects provide reasonable estimates particularly for carbon taxes analog to evidence in other low and middle income countries the taxation of all energy items is found to be regressive with the exception of motor fuels the analysis of the emission implications of different tax scenarios indicates that short run emission reductions at the household level can be substantial though the effects depend on how revenue is recycled this effectiveness combined with moderate and manageable adverse distributional impacts renders the carbon tax a preferred mitigation instrument considering the large effect of food price increases on poverty and the limited additional emission saving potential the inclusion of ch4 and n2o in a carbon tax regime is not advisable

economics of energy subsidy reforms in bangladesh abstract as in many countries around the world subsidies to energy in bangladesh impose a significant fiscal burden with benefits that disproportionately accrue to high income households using a computable general equilibrium model this study investigates the economy wide impacts of the removal of direct subsidies in the electricity sector and indirect subsidy in natural gas in bangladesh the study finds that the removal of energy subsidies would be beneficial to the economy and would increase gdp the magnitude of the economic impact depends on how the budgetary savings from the removal of electricity subsidy and the increased revenues due to the removal of indirect subsidies to natural gas are reallocated to the economy recycling the savings or the new revenues to fund investment would benefit the country most followed by the case of utilizing them to fund cuts in income taxes and finally to fund cuts in indirect taxes while the reallocation of budgetary savings to households through lump sum transfers is found inferior to other recycling options considered it could be the preferred from the distributional perspective however further analysis is needed to confirm this

economies of scale in nuclear power generation current prospects for the expansion of nuclear electric generating capacity appear dim there has not been a domestic order placed for a nuclear power plant since 1978 and over 80 plants have been cancelled since the early 1970s while a host of economic political and environmental factors are responsible for the current state of the nuclear power industry concern has increasingly focused on the cost effectiveness of nuclear power with critics arguing that nuclear power is not an economically feasible alternative economies of scale are a crucial consideration in addressing nuclear power costs at the plant level scale economies could be associated with the size of generating units or with multiunit siting if the former is important the strong trend toward larger reactors would imply that all else equal electricity produced by new plants should cost less than previous experience would indicate siting several reactors at a plant which is common practice in france for example would lead to lower costs if the latter factor is important despite the importance of these issues virtually no empirical evidence on economies of scale in nuclear power operations is available 2 existing studies of nuclear power production costs 20 7 26 23 22 typically specify some plant size and type often the proverbial 1 000 mwe plant and sum up the costs of the inputs required to run it including a capital cost by contrast cost analyses for fossil fueled electricity generation are more sophisticated 3 perhaps the first application of econometric modeling in this area was by nerlove 19 however a more up to date example is the study of christensen and greene 4 who estimated a translog cost function using cross sections of privately owned utilities in 1955 and 1970 straightforward application of christensen and greene s techniques to nuclear power is prob

measuring the effects of price controls using mixed complementarity models abstract government involvement in managing domestic prices of energy and other commodities is a major issue in emerging economies we examine one aspect of the problem price controls when governments set or cap prices we show how a mixed complementarity problem mcp formulation can be used to model and assess the impacts of price controls in multi sector economic equilibrium models both the gains from deregulation and the consequences of imposing new or altering existing regulations can thus be measured we present three distinct models that capture different price control situations firms have to meet demand and receive an implicit subsidy demand rationing occurs due to an associated price control constraint and subsidies limit demand rationing we present an approach to measuring the effects on the equilibrium in the first case and the levels of disequilibrium induced by price controls in the other cases we also show how to determine the most efficient allocation program when a government engages in rationing we illustrate the cases described by these models using markets that have or had price controls

incidence and impact the regional variation of poverty effects due to fossil fuel subsidy reform since fossil fuel subsidy reforms can induce significant distributional shifts and price shocks effective compensation and social protection programs are crucial based on the statistical simulation model by araar and verme 2012 this study estimates the regional variability of direct welfare effects of removing fuel subsidies in nigeria uncompensated subsidy removal is estimated to increase the national poverty rate by 3 4 on average however uniform cash compensation that appears effective at the national average is found to fail to mitigate price shocks in 16 of 37 states thus putting livelihoods and public support for reforms at risk states that are estimated to incur the largest welfare shocks coincide with hotspots of civil unrest following nigeria s 2012 subsidy reform attempt the study illustrates how regionally disaggregated compensation can be revenue neutral and maintain or reduce pre reform poverty rates in all states overall it highlights the importance of understanding differences in vulnerability and designing tailored social protection schemes which ensure public support for subsidy reforms

the unequal benefits of fuel subsidies a review of evidence for developing countries summary this paper reviews evidence on the impact of fuel subsidy reform on household welfare in developing countries on average the burden of subsidy reform is substantial and is approximately neutrally distributed across income groups a 0 25 decrease in the per liter subsidy results in a 5 decrease in income for all groups more than half of this impact arises from the indirect impact on prices of other goods and services consumed by households fuel subsidies are a costly approach to protecting the poor due to substantial benefit leakage to higher income groups in absolute terms the top income quintile captures six times more in subsidies than the bottom

impacts of removing fuel import subsidies in nigeria on poverty abstract the petroleum sector contributes substantially to the nigerian economy however the potential benefits are diminished due to the existence of significant subsidies on imports of petroleum products subsidies on imported petroleum products are considered to be an important instrument for keeping fuel prices and hence the cost of living low the costs of these subsidies however has risen dramatically in recent years due to increased volatility in world petroleum and petroleum product prices and increased illegal exportation of subsidized petroleum products into neighboring countries removing the subsidy on fuel is one of the most contentious socio economic policy issues in nigeria today in this paper an economy wide framework is used to identify the impact of removing the fuel subsidy on the nigerian economy and investigates how alternative policies might be used to meet socio economic objectives related to fuel subsidies the results show that while a reduction in the subsidy generally results in an increase in nigerian gdp it can have a detrimental impact on household income and in particular on poor households accompanying the subsidy reduction with income transfers aimed at poor households or domestic production of petroleum products can alleviate the negative impacts on household income

decentralization and fuel subsidies abstract this paper explores the role of decentralization in explaining variation in fuel subsidies across countries using panel data over the period 1998 2008 and for 108 countries it emerges that the effect of decentralization taken to be an increase in the number of government levels broadly decreases both diesel and gasoline subsidies with this effect being more pronounced when the level of political accountability is low for developing countries for which political accountability is low decentralization decreases gasoline and diesel subsidies by at least 6 98 and 12 99 respectively for developed countries for which political accountability is high decentralization does not have any impact on both gasoline and diesel what this evidence points to is that in developing economies where voters are poorly informed and accountability is low decentralization appears to be associated with lower fuel subsidies

the effects of the energy price reform on households consumption in iran abstract the substantial subsidizing of energy prices over the years has led to high energy consumption inefficiencies fiscal pressures and environmental problems in iran to address the increasing socio economic problems associated with the energy subsidies the government embarked on an aggressive energy price reform through which energy subsidies were removed and cash handouts were given to all households in 2010 in this paper i analyze the effectiveness of the energy price reform in iran by estimating energy demand elasticities for households in different income groups i apply a two stage consumer optimization model and estimate the system of energy expenditures shares using the household budget survey data for the period 2001 2008 the results show that the overall price elasticities of demand are small but income elasticities are close to one the results also indicate heterogeneous responses to energy price and income changes in different income groups specifically the urban households show stronger response to price changes but rural households particularly mid income households to income changes these findings suggest that the current policy of price increases would not solely be able to reduce energy consumption and therefore it should be geared towards increasing energy efficiency through a series of price and non price measures

how price inelastic is demand for gasoline in fuel subsidizing economies abstract in recent years governments that have historically subsidized domestic fuel consumption face an ever growing challenge in maintaining fuel subsidies and have embarked on subsidy reform this paper estimates the price and income elasticity of demand for gasoline in countries where fuel prices are government subsidized we make use of biennial panel road sector data for 32 countries over the 1998 2010 period and find demand for gasoline to be price inelastic both in the short run and long run we estimate the short run price and income elasticities at 0 05 and 0 16 and the long run price and income elasticities at 0 25 and 0 81 respectively it is our contention that concerned governments should play an active role in identifying and committing to a road map to progressively abandoning fuel subsidies they should also not be discouraged by relatively small consumption corrections in the short run a reduction in subsidies can eventually release considerable amount of resources for more crucial and potentially growth enhancing public services such as education and health

impacts of energy subsidy reform on the malaysian economy and transportation sector malaysia is paying a high level of subsidies on the consumption of energy about 5 of its gdp therefore reforming the energy subsidies as planned by the government will have a significant impact on household welfare and energy intensive sectors such as the transport sector this study employs a computable general equilibrium cge model to highlight the transmission channels through which the removal of energy subsidies affects the domestic economy the findings show that the shock increases real gdp and real investment while decreasing malaysian total exports and imports the removal of energy subsidies also decreases the aggregate energy demand and consequently decreases the level of carbon emissions in the malaysian economy in addition households experience significant falls in their consumption and welfare the transport sector is significantly influenced through an increase in production costs due to an increase in the prices of intermediate inputs the total output and total exports of the whole transport sector decrease while its imports increase in addition the use of all kinds of transport by households decreases significantly the malaysian energy subsidy reform leads to an initial decrease in co2 emissions and demand for electricity gas and petroleum products in the entire transport sector

the impact of phasing out fossil fuel subsidies on the low carbon transition abstract there is growing consensus on the fact that fossil fuel subsidies provided by governments in high income countries represent a misalignment on emissions reduction with the global climate agenda in addition a discussion emerged on the negative socio economic and environmental externalities associated with fossil fuel subsidies nevertheless pathways for phasing out fossil fuel subsidies in high income countries and their implications on the low carbon transition have not yet been assessed with the aim to narrow this knowledge gap we extend the eirin stock flow consistent behavioral model to study the implications on sustainable development of the gradual phasing out of fossil fuels subsidies whose revenues could be used by the government to subsidize energy investments in green capital e g solar panels either via fiscal policies or green bonds we assess the effects on green growth employment credit and bonds market as well as the distributive effects across heterogeneous households and sectors a smooth phasing out of fossil fuels subsidies contributes to improve macroeconomic performance to decrease inequality and helps the government to find fiscal space to support stable renewable energy policies renewable energy subsidies contribute to foster the low carbon transition but could imply distributive effects depending on the way in which they are implemented

household welfare implications of fossil fuel subsidy reforms in developing countries abstract with over 200 countries reaching an agreement with the stated aim of restricting global warming to well below 2 c above pre industrial levels the most comprehensive climate change agreement was recently signed though most of the hard work lies ahead it marks an important first step for the collective global community to address climate change fossil fuels continue to remain one of the largest contributors to greenhouse gas emissions and for many developing countries high levels fossil fuels continues to enable an overconsumption of fossil fuels given the sensitivity of governments to subsidy reforms this study examines the household welfare implications of the removal of fossil fuel subsidies it finds that while welfare implications are unambiguously positive for government the results are mixed for private households although in an overwhelming majority of cases the results are positive however even in the cases where the welfare implications are negative for private households we find that it is possible for governments to carry out the reforms in such a way as to be welfare improving to households incomes by compensating them with some of the fiscal savings gained from the subsidy reform

energy subsidy reform for growth and equity in egypt the approach matters abstract phasing out energy subsidies is high on the agenda of policymakers in several middle eastern and north african countries the impact of such reform can vary widely depending on the country and policy this paper contributes to the existing literature by examining the phasing out of energy subsidies in egypt under alternative economic scenarios in particular we consider egypt s short and long term economic adjustment under different assumptions on labor market flexibility spending options of subsidy savings and alternative social protection measures results from economy wide model simulations suggest that energy subsidy cuts may hamper economic growth in the short term but depending on the policy measure will improve growth perspectives and household welfare in the longer term yet findings also point to likely adverse impacts of the reform on household consumption in the short and longer run to counteract such negative impacts targeted social protection measures should be continued and scaled up in parallel with the phasing out of energy subsidies

a macroeconomic analysis of energy subsidies in a small open economy we construct a dynamic model of a small open economy to analyze the effects of large energy subsidies the model includes domestic energy production and consumption trade in energy at world market prices as well as private and public sector production the model is calibrated to egypt and used to study reforms such as reductions in energy subsidies with corresponding reductions in various tax instruments or increases in infrastructure investment we calculate the new steady states transition paths to the new steady state and the size of the associated welfare losses or gains our main results for a 15 cut in energy subsidies are 1 steady state gross domestic product drops in most of our experiments as less energy is used in production 2 steady state consumption rises in most of our experiments 3 welfare can rise by as much as 0 6 in consumption equivalent terms 4 the largest gains in terms of output and of welfare can be obtained when savings from energy subsidy cuts are used to fund additional infrastructure investment jel e21 e63 h55 j26 j45 to understand the effects of subsidies and taxes on an energy sector and on consumption in a given country requires establishing a complete picture of the market in which it operates and of the various policies past and present that have applied to it iea 2010c 11 1 introduction a report by the international energy agency iea 2010a in 2010 identified 37 countries that together account for 95 of global subsidized fossil fuel consumption and found that total fuel consumption subsidies were about 557 billion in 2008 a stark increase from 342 billion in 2007 countries with the highest subsidies for energy turn out to be smaller oil producing countries like iran 65 billion in subsidies in 2009 20 of gross domestic product gdp saudi arabia venezuela and egypt iea 2010b the underpricing of energy can lead to excess consumption of energy that together with the need to finance these subsidies can have adverse economic effects both intra and intertemporally energy subsidies may therefore have large adverse effects on capital accumulation economic growth and hence welfare especially for future generations the iea estimates that many countries forgo faster growth of up to 2 6 by subsidizing energy iea 2010c since 2008 many major oil subsidizing countries have started to bring their prices in line with world market prices among them china russia india and indonesia many of the concerns about the inefficiency of energy subsidies have focused on environmental aspects and green house gas ghg emissions in particular the iea 2010c estimates that a world wide reduction of fuel subsidies could decrease ghg emissions in the long run by around 10 there are relatively few studies of the short term and long term macroeconomic effects of reductions in energy subsidies these effects are complex and require an explicit dynamic modeling approach there are many interrelated effects 1 phasing out energy subsidies alters the price of energy relative to other consumption goods and hence not only the quantity demanded for energy but also the demand for other goods 2 the degree of complementarity substitutability between these consumption goods together with the expectations of the time path for the phase out influences savings behavior and thus capital accumulation of households 3 changing energy subsidies influences use of energy in production whether energy is a complement or a substitute to other factors of production influences total output and marginal products of all factors of production 4 changes in factor payments influence household income and thus consumption and savings behavior 5 phasing out energy subsidies allows for other changes in the government budget such as changes in tax rates or other government expenditures which in turn will influence firm and household behavior

polarizing information and support for reform abstract we examine whether political polarization is an obstacle to common value reforms we conduct experiments in two ideologically polarized countries the united states and egypt subjects vote between enacting a reform which yields higher expected financial payoffs than the costs of implementation for all but has indirect differential benefits for supporters of only one group of voters versus not enacting the reform and everyone receiving lower payoffs we find that when the groups are polarized ideologically subjects are less likely to vote for reform when informed that another political group would differentially benefit and more likely to support reform should their own group benefit more when subjects are told that one group will differentially benefit from reform they are significantly more likely to explain their vote as being influenced by their own group membership in contrast we find that when subjects are organized into nonpolarized groups group membership predicts reform support less and when there are no differential benefits for a particular group the effect of membership on support is significantly reduced hence we find that the effect of polarization on support for common value reform is contingent on the existence of indirect differential benefits and the degree of ideological polarization of the groups who receive those benefits