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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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

id	okr-10986-22443
recordtype	oai_dc
spelling	okr-10986-224432021-04-23T14:04:09Z Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus Grainger, Corbett Zhang, Fan Schreiber, Andrew 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 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. 2015-08-17T18:38:49Z 2015-08-17T18:38:49Z 2015-08 Working Paper http://documents.worldbank.org/curated/en/2015/08/24879184/distributional-impacts-energy-cross-subsidization-transition-economies-evidence-belarus http://hdl.handle.net/10986/22443 English en_US Policy Research Working Paper;No. 7385 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Belarus
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	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
spellingShingle	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 Grainger, Corbett Zhang, Fan Schreiber, Andrew Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus
geographic_facet	Europe and Central Asia Belarus
relation	Policy Research Working Paper;No. 7385
description	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.
format	Working Paper
author	Grainger, Corbett Zhang, Fan Schreiber, Andrew
author_facet	Grainger, Corbett Zhang, Fan Schreiber, Andrew
author_sort	Grainger, Corbett
title	Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus
title_short	Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus
title_full	Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus
title_fullStr	Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus
title_full_unstemmed	Distributional Impacts of Energy Cross-Subsidization in Transition Economies : Evidence from Belarus
title_sort	distributional impacts of energy cross-subsidization in transition economies : evidence from belarus
publisher	World Bank, Washington, DC
publishDate	2015
url	http://documents.worldbank.org/curated/en/2015/08/24879184/distributional-impacts-energy-cross-subsidization-transition-economies-evidence-belarus http://hdl.handle.net/10986/22443
_version_	1764451097030688768

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

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