Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus

Subsidies and cross-subsidies in the energy sector are common throughout Eastern Europe and Central Asia. In Belarus, revenues from an industrial tariff on electricity are used to cross-subsidize heating for households. Input-output (IO) data and a...

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Bibliographic Details
Main Authors:	Grainger, Corbett, Zhang, Fan, Schreiber, Andrew
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2015
Subjects:	SUBSTITUTION CUSTOMER MULTIPLIERS PRICE LEVELS PRODUCTION UTILITY FUNCTIONS DISTRICT HEATING INCOME RATE OF RETURN EQUILIBRIUM PRICE HOUSEHOLD ANALYSIS PERFECT COMPETITION MARGINAL COST EXCHANGE COST OF ELECTRICITY INCOME GROUP PRICING SCHEME CONSUMER GOODS DOMESTIC MARKET EXPORTS PRODUCTION INCREASES ELASTICITY WELFARE OPTIMIZATION SUBSIDIZATION EQUILIBRIUM DISTRIBUTION VARIABLES DOMESTIC PRICE FACTORS OF PRODUCTION PRICING SUBSIDY PRICE TAX INPUTS PAYMENTS WEALTH TRENDS COST OF FUNDS SAVINGS PRODUCTION STRUCTURE COSTS OIL PRODUCTION OF COKE PRICING POLICY RENT ECONOMIC COOPERATION RESIDENTIAL ENERGY OUTPUTS PRODUCTS OIL PRODUCTS EXTERNALITIES MARKETS ECONOMICS LITERATURE INCOME LEVELS PRODUCT ELASTICITY OF SUBSTITUTION UTILITY NATURAL RESOURCES INVENTORY CONSUMER DEMAND EXPORT MARKET FUELS SUBSTITUTES SUBSIDIES REAL ESTATE CONSUMER GROUPS TAXES PRICE CHANGE EXPENDITURE EQUILIBRIUM ANALYSIS CONSUMPTION VALUE ADDED SUBSTITUTE TAX RATE CAPITAL HEAT COST INCREASE VALUE ELECTRICITY PRODUCTION FUNCTIONS DEMAND SUPPLY COSTS FOSSIL FUEL INTERMEDIATE GOODS PRICE CHANGES AGRICULTURE CONSUMERS EXPENDITURES INCOMES TAX RATES CONSUMER GOOD SHARES MARKET BENCHMARK FOREIGN EXCHANGE ENERGY PRICES PRODUCTION FUNCTION CAPITAL RETURNS ECONOMIC SYSTEMS OUTPUT ELECTRICITY PRICES FUNCTIONAL FORMS ECONOMIC DEVELOPMENT TRADE GOODS THEORY GENERAL EQUILIBRIUM ANALYSIS SHARE DEVELOPING ECONOMY TARIFF SUPPLY BANKING FUEL REVENUE EQUILIBRIUM PRICES CONSUMER PRICES COMMUNICATION TRANSITION ECONOMIES COMMODITIES BENCHMARK DATA TOTAL OUTPUT CUSTOMERS PRICE INDEX COMMODITY INTERNATIONAL MARKETS FOSSIL APPROACH PRICES ENERGY PRICE ECONOMIC STATISTICS PRODUCTION COSTS ENERGY DEVELOPMENT POLICY INCOME GROUPS COMPETITION
Online Access:	http://documents.worldbank.org/curated/en/2015/08/24879184/distributional-impacts-energy-cross-subsidization-transition-economies-evidence-belarus http://hdl.handle.net/10986/22443

Description
Summary:	Subsidies and cross-subsidies in the energy sector are common throughout Eastern Europe and Central Asia. In Belarus, revenues from an industrial tariff on electricity are used to cross-subsidize heating for households. Input-output (IO) data and a household consumption survey are used to analyze the distributional impacts of this cross-subsidization. This paper illustrates cost shares and electricity-intensity of different sectors and consumption categories and uses the IO data to obtain first-order estimates of the distributional incidence of policy reform. The paper then analyzes distributional impacts of subsidy reform with a Computable General Equilibrium model. Although poorer households benefit from reduced heating costs, the increase in prices of other consumer goods due to higher electricity prices more than offsets the benefits they receive from the subsidies. The analysis finds that the current cross-subsidies are regressive, and policy reform would be highly progressive.

Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus

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