Energy Subsidy Reform Assessment Framework : Assessing the Readiness of Social Safety Nets to Mitigate the Impact of Reform
This note provides guidance to policy makers who are looking to utilize Social Safety Nets (SSNs) to mitigate the welfare impacts of energy subsidy reforms (ESRs) on the poor. The good practice note explains (a) why SSNs are an effective tool in th...
| Main Authors: | , |
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| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/180951530884246896/Assessing-the-Readiness-of-Social-Safety-Nets-to-Mitigate-the-Impact-of-Reform-Energy-Subsidy-Reform-Assessment-Framework-ESRAF-Good-Practice-Note-5 http://hdl.handle.net/10986/30255 |
| Summary: | This note provides guidance to policy
makers who are looking to utilize Social Safety Nets (SSNs)
to mitigate the welfare impacts of energy subsidy reforms
(ESRs) on the poor. The good practice note explains (a) why
SSNs are an effective tool in the context of ESR, and (b)
different options for rapid scale-up or implementation of
SSNs. It introduces a three-stage analytical approach that
includes (a) assessing the welfare losses caused by ESR; (b)
taking stock of existing SSN and near-SSNs, and modeling
expansion options; and (c) assessing the readiness of the
existing or planned SSNs for providing protection against
the negative consequences of the price shock. The scope of
this good practice note is confined to cases where ESRs lead
to higher prices paid by energy consumers. As good practice
note one outlines, ESRs do not necessarily lead to higher
prices, and could even decrease prices paid, such as when
producer subsidies in the form of price support paid for by
consumers are eliminated, or when consumer price subsidies
lead to illegal diversion and out-smuggling, acute fuel
shortages, and prices that are even higher than official
prices on the black markets. The latter is particularly
important: consumers may be paying much higher prices before
the reform, having to develop coping mechanisms to deal with
energy shortages. ESRs may improve the quality of energy
delivery service, reducing energy shortages and thereby
improving the welfare of energy consumers. In this context,
the note has been prepared for social protection specialists
and government officials responsible for social sectors
portfolio. It provides an overview and guidance on the use
of tools, principles, methods, and practices, in the
analysis of social protection issues relevant to ESR. The
note has a narrow focus, specifically looking at SSNs as
measures that can support the poor during times of ESR. |
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