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Working Paper

Estimating the Size of External Effects of Energy Subsidies in Transport and Agriculture

POLLUTION COSTS POPULATION DENSITIES FUEL PRICE INCREASE PUBLIC TRANSIT TRANSPORT SECTOR FUEL PRICE INCREASES COST OF TRAVEL CARBON DIOXIDE FOSSIL FUELS PASSENGERS ROAD ACCIDENTS ENVIRONMENTAL COSTS CAR OWNERSHIP ELASTICITY GASOLINE JOURNEY VEHICLE OWNERSHIP TOLL VEHICLE CLASS COSTS OF CONGESTION TYPE OF TRANSPORT AIR TRANSPORT PRICING GREENHOUSE GAS VEHICLE CLASSES TRANSPORT SERVICES UNDERGROUND MODAL CHOICE TRANSPORT MODES TRAVEL COSTS FUEL ECONOMY CRASHES AIR POLLUTION ELASTICITIES OF ROAD TRAFFIC ELASTICITIES OF VEHICLE TRAVEL URBAN TRIPS TRANSPORT SYSTEMS EFFICIENT VEHICLES VEHICLE MILES VEHICLE EMISSIONS FUEL USE FUEL PRICE ELASTICITIES EXTERNALITIES VEHICLE TYPES URBAN BUSES TRIPS HIGH ENERGY DRAINAGE TRAVEL SURVEY PRICE ELASTICITY TRANSPORT DATA GAS EMISSIONS FUEL TAXES FUELS FUEL COSTS SUBSIDIES INFRASTRUCTURE LAND USE LONG RUN ELASTICITY BUSES PRIVATE VEHICLES VEHICLE FUEL ECONOMY TRANSPORT NETWORK EMISSION CONGESTION DRIVING TRANSPORTATION FUEL EFFICIENCY AIR POLLUTION DEATHS POLICIES MARGINAL EXTERNAL COSTS TRUCKS PRICE ELASTICITIES PUBLIC TRANSPORT NETWORK CARS TRADING PATTERNS ACCESSIBILITY TRUCK USE PRICE CHANGES EMISSION FACTORS PETROLEUM GAS FUEL PRICES PASSENGERS AS WELL PUBLIC TRANSPORT INFRASTRUCTURE COSTS OF FUEL URBAN MOBILITY VEHICLE EFFICIENCY FUEL TAX RAILWAY MINISTRY OF TRANSPORT CAR WALKING TRANSPORT TECHNOLOGIES VEHICLE FUEL VEHICLE COST COST OF TRANSPORT TRANSPORT ACTIVITY DIESEL FUEL RAIL FUEL MOTOR VEHICLE AIR POLLUTION TRIP CONGESTION COST TRANSPORT DEMAND TRANSPORT SYSTEM VEHICLE REGISTRATIONS VEHICLE AIR POLLUTION DIESEL ROAD TRANSPORT TRAVEL TIME TRANSPORT POLICIES FUEL COST FREIGHT ROAD TRAFFIC URBAN TRANSPORT LONG-DISTANCE TRAVEL FUEL SUBSIDIES AUTOMOBILE FUEL-EFFICIENT VEHICLES TRAFFIC CONGESTION PRICE OF FUEL ROAD DEATHS TRANSPORT SERVICE ENVIRONMENTAL DEGRADATION GREENHOUSE GAS EMISSIONS VEHICLE TRAVEL ELASTICITY TRANSPORT INFRASTRUCTURE VEHICLES FREIGHT TRANSPORT TRANSPORTATION RESEARCH EMISSIONS TRANSIT BENEFITS GASOLINE CONSUMPTION FATAL INJURIES LORRIES POLLUTANT EMISSIONS SUBSIDY TRAFFIC TAX GAS CONSUMPTION PUBLIC TRANSPORT MODES VEHICLE USE MOTOR VEHICLE OWNERSHIP TRAFFIC VOLUME SPEEDS TRAFFIC MANAGEMENT VEHICLE VEHICLE TRAVEL ROAD TRANSPORT ECONOMICS COSTS CAR OCCUPANCY LAND USE ACCESSIBILITY ELASTICITY OF VEHICLE TRAVEL ROAD SECTOR TRANSPORT POPULATION GROWTH LONG-DISTANCE CONGESTION CHARGING MODE OF TRANSPORT MOBILITY TRAVEL DEMAND ROAD INJURIES MODES OF TRANSPORT POLLUTION EXHAUST EMISSIONS PRICE SENSITIVITY FUEL CONSUMPTION TRAFFIC ACCIDENTS INJURY GASOLINE PRICE TAXES PRICE CHANGE ENERGY CONSUMPTION VEHICLE USAGE TRAVEL COST OF CONGESTION TRANSIT CLIMATE CHANGE VEHICLE FLEET ROAD SAFETY CONGESTION COSTS EXCESS FUEL CONSUMPTION ELASTICITIES MOTOR VEHICLE TAX SUBSIDIES MOTOR VEHICLES PUBLIC TRANSPORT ODOMETER SIGNALS MODAL CHOICES PRICE SENSITIVITIES VEHICLE FUEL EFFICIENCY HIGHWAY ADMINISTRATION HIGHWAY GASOLINE TAXES RAILWAYS INLAND TRANSPORT FUEL PRICE VEHICLE KILOMETERS ACCIDENTS FUEL OIL INVESTMENTS COSTS OF TRANSPORT PEDESTRIANS LONG-RUN ELASTICITIES NOISE SAFETY PASSENGER TRANSPORT
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World Bank Group, Washington, DC
Africa | Egypt, Arab Republic of | Yemen, Republic of
2015-04-02T18:43:24Z | 2015-04-02T18:43:24Z | 2015-04

It is widely accepted that the costs of underpricing energy are large, whether in advanced or developing countries. This paper explores how large these costs can be by focussing on the size of the external effects that energy subsidies in particular generate in two important sectors—transport and agriculture—in two countries in the Middle East and North Africa, the Arab Republic of Egypt (transport) and the Republic of Yemen (agriculture). The focus is mainly on the costs associated with congestion and pollution, as well as the impact of underpriced energy for depletion of scarce water resources, including through crop selection. Quantifying the size of external effects in developing countries has received relatively little analytical attention, although there is a significant body of literature for developed countries. By building on earlier research, as well as employing the United Nations ForFITS model, the paper provides indicative estimates of the external costs of energy subsidies, as manifested in congestion and pollution. The estimates using simulations indicate that these costs could be materially reduced by elimination or reduction of energy subsidies. The paper also describes the impact of energy subsidies on water consumption in a region where water resources are particularly limited. The findings provide further evidence of the adverse and significant consequences of subsidizing energy.

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