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Environmental Impacts of Phasing out Energy Subsidies

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  • Haqiqi, Iman
  • Manzoor, Davood

Abstract

Here, we investigate the environmental impacts of removing these subsidies in terms of emission of air pollutants. The paper employs a multi-pollutant, multi-fuel and multi-sector Computable General Equilibrium (CGE) model calibrated using 2001 Energy Micro Consistent Matrix (EMCM) of Iranian Ministry of Energy. We consider the possibility of pollutant substitution, which may change the pollutants mix and cause new environmental problems. Our findings suggest that pollutant substitution may happen if a policy causes extreme changes in relative energy prices. The magnitude of this substitution depends on energy substitution elasticities as well as sectoral activity level changes, energy share parameters, and emission factors. For the Iran case, we found that CO and CH emissions would increase after rising in energy prices.

Suggested Citation

  • Haqiqi, Iman & Manzoor, Davood, 2012. "Environmental Impacts of Phasing out Energy Subsidies," MPRA Paper 95688, University Library of Munich, Germany, revised 2016.
    • Handle: RePEc:pra:mprapa:95688
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    References listed on IDEAS

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    2. Haqiqi, Iman & Manzoor, Davood & Aghababaei, Mohammad, 2013. "Impacts of Electricity Efficiency Improvements on Factors Market: A Computable General Equilibrium Approach," MPRA Paper 95825, University Library of Munich, Germany.
    3. Asghar, Shahmoradi & Iman, Haqiqi & Zahedi, Raziyeh, 2011. "Impact Analysis of Energy Price Reform and Cash Subsidy Payment in Iran: A CGE Approach," MPRA Paper 95809, University Library of Munich, Germany.
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    7. Haqiqi, Iman & Bahalou, Marziyeh, 2015. "A General Equilibrium Analysis of Unskilled Labor Entry and Skilled Labor Exit in Iran," MPRA Paper 95781, University Library of Munich, Germany.
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    13. Manzoor, Davood & Haqiqi, Iman, 2013. "Impacts of Energy Price Increase and Cash Subsidy Payments on Energy Demand," MPRA Paper 95826, University Library of Munich, Germany.
    14. Jeffrey C Peters, 2016. "The GTAP-Power Data Base: Disaggregating the Electricity Sector in the GTAP Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 209-250, June.
    15. Manzoor, Davood & Haqiqi, Iman, 2012. "Impact of Energy Price Reform on Environmental Emissions; A Computable General Equilibrium Approach," MPRA Paper 95818, University Library of Munich, Germany.
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    17. Haqiqi, Iman & Shahi, Zahra & Ismaili, Mahdi, 2017. "Impact of Cash Subsidy Transfer in a Nonlinear Programming Model for Economic Input-Output Analysis," MPRA Paper 95783, University Library of Munich, Germany.
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    Cited by:

    1. Haqiqi, Iman & Bahalou, Marziyeh & Shamsaee, Arezoo, 2017. "An Economic General Equilibrium Model for Evaluation of Production Support Policies in Developing Countries," MPRA Paper 95865, University Library of Munich, Germany.
    2. Bahalou, Marziyeh & Haqiqi, Iman, 2016. "A General Equilibrium Model with Labor-Leisure and Domestic-Abroad Choice for Assessment of Labor Migration in a Small Open Economy," MPRA Paper 95863, University Library of Munich, Germany.
    3. Haqiqi, Iman & Bahalou, Marziyeh & Hamidi, Razieh, 2014. "Measurement and Evaluation of Equality of Opportunity: A Numerical Look at Education, Health, and Income Inequality," MPRA Paper 95866, University Library of Munich, Germany.
    4. Haqiqi, Iman & Mirian, Narges, 2015. "A Financial General Equilibrium Model for Assessment of Financial Sector Policies in Developing Countries," MPRA Paper 95841, University Library of Munich, Germany.

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    More about this item

    Keywords

    Air Pollution; Fossil Fuels; Energy Subsidy; Government Intervention; Carbon Dioxide; Emissions;
    All these keywords.

    JEL classification:

    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling

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