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 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.

Bibliographic Details

Main Authors:	Grainger, Corbett, Zhang, Fan, Schreiber, Andrew
Format:	Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2015-08
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
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