IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v10y2018i7p2239-d155174.html
   My bibliography  Save this article

Measuring the Economic Benefits of Industrial Natural Gas Use in South Korea

Author

Listed:
  • Hyo-Jin Kim

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

  • Su-Mi Han

    (Department of Integrated Energy & Environment, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

  • Seung-Hoon Yoo

    (Department of Energy Policy, Graduate School of Energy & Environment, Seoul National University of Science & Technology, 232 Gongreung-Ro, Nowon-Gu, Seoul 01811, Korea)

Abstract

Natural gas (NG) is an important input used in the industrial production of South Korea. Therefore, the government requires quantitative information to be provided about the economic benefits of industrial NG (ING) use to decide whether to invest in expanding the supply of ING or not. This manuscript tries to measure the economic benefits of NG use in the manufacturing industry by using a specific case in South Korea. For this purpose, a trans-log production function is estimated using the data collected from a national survey of 1100 firms in South Korea. Of them, 299 firms used ING. For a representative manufacturing firm, the point estimated for the economic benefits of ING use is obtained as KRW 2409 (USD 2.07) per m 3 , which is statistically meaningful. The average price of ING, which is defined as the total expenditure on ING purchased in 2016 and divided by the total amount of ING purchased in 2016, was KRW 667 (USD 0.57) per m 3 . Therefore, the economic benefits of ING use are 3.61 times as great as the average price of ING. This implies that ING produces more value than its price in South Korea.

Suggested Citation

  • Hyo-Jin Kim & Su-Mi Han & Seung-Hoon Yoo, 2018. "Measuring the Economic Benefits of Industrial Natural Gas Use in South Korea," Sustainability, MDPI, vol. 10(7), pages 1-10, June.
    • Handle: RePEc:gam:jsusta:v:10:y:2018:i:7:p:2239-:d:155174
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/10/7/2239/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/10/7/2239/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gang Li & Xiao-Sen Li & Keni Zhang & Bo Li & Yu Zhang, 2013. "Effects of Impermeable Boundaries on Gas Production from Hydrate Accumulations in the Shenhu Area of the South China Sea," Energies, MDPI, vol. 6(8), pages 1-19, August.
    2. Park, Sun-Young & Yoo, Seung-Hoon, 2013. "The economic value of LNG in the Korean manufacturing industry," Energy Policy, Elsevier, vol. 58(C), pages 403-407.
    3. Young, R.A., 1996. "Measuring Economic Benefits for Water Investments and Policies," Papers 338, World Bank - Technical Papers.
    4. Hua Wang & Somik Lall, 2002. "Valuing water for Chinese industries: a marginal productivity analysis," Applied Economics, Taylor & Francis Journals, vol. 34(6), pages 759-765.
    5. Se-Ju Ku & Seung-Hoon Yoo, 2012. "Economic Value of Water in the Korean Manufacturing Industry," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(1), pages 81-88, January.
    6. Lotfali Agheli, 2016. "Demand for Natural Gas in Food and Beverage Industries of Iran," International Journal of Energy Economics and Policy, Econjournals, vol. 6(3), pages 588-593.
    7. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2016. "The demand function for residential heat through district heating system and its consumption benefits in Korea," Energy Policy, Elsevier, vol. 97(C), pages 155-160.
    8. Diane Dupont & Steven Renzetti, 2001. "The Role of Water in Manufacturing," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(4), pages 411-432, April.
    9. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    10. Y lmaz BAYAR & Cuneyt KILIC, 2014. "Effects of Oil and Natural Gas Prices on Industrial Production in the Eurozone Member Countries," International Journal of Energy Economics and Policy, Econjournals, vol. 4(2), pages 238-247.
    11. Shaohui Liu & Wenjun Jiao & Qingwen Min & Jianzhong Yin, 2017. "The Influences of Production Factors with Profit on Agricultural Heritage Systems: A Case Study of the Rice-Fish System," Sustainability, MDPI, vol. 9(10), pages 1-10, October.
    12. Nicky J. Welton & Howard H. Z. Thom, 2015. "Value of Information," Medical Decision Making, , vol. 35(5), pages 564-566, July.
    13. Kim, Kayoung & Cho, Youngsang, 2017. "Estimation of power outage costs in the industrial sector of South Korea," Energy Policy, Elsevier, vol. 101(C), pages 236-245.
    14. Lim, Kyoung-Min & Lim, Seul-Ye & Yoo, Seung-Hoon, 2014. "Estimating the economic value of residential electricity use in the Republic of Korea using contingent valuation," Energy, Elsevier, vol. 64(C), pages 601-606.
    15. Boqiang Lin & Kui Liu, 2017. "Energy Substitution Effect on China’s Heavy Industry: Perspectives of a Translog Production Function and Ridge Regression," Sustainability, MDPI, vol. 9(11), pages 1-15, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yun-Ju Chen & Sheng Ming Hsu & Shu-Yi Liao & Tsung-Chi Chen & Wei-Chun Tseng, 2019. "Natural Gas or Algal Reef: Survey-Based Valuations of Pro-Gas and Pro-Reef Groups Specifically for Policy Advising," Energies, MDPI, vol. 12(24), pages 1-18, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hyo-Jin Kim & Hee-Hoon Kim & Seung-Hoon Yoo, 2018. "The Marginal Value of Heat in the Korean Manufacturing Industry," Sustainability, MDPI, vol. 10(6), pages 1-6, June.
    2. Hyo-Jin Kim & Gyeong-Sam Kim & Seung-Hoon Yoo, 2019. "Demand Function for Industrial Electricity: Evidence from South Korean Manufacturing Sector," Sustainability, MDPI, vol. 11(18), pages 1-11, September.
    3. So-Yeon Park & Seul-Ye Lim & Seung-Hoon Yoo, 2016. "The Economic Value of the National Meteorological Service in the Korean Household Sector: A Contingent Valuation Study," Sustainability, MDPI, vol. 8(9), pages 1-13, August.
    4. Se-Ju Ku & Seung-Hoon Yoo, 2012. "Economic Value of Water in the Korean Manufacturing Industry," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 26(1), pages 81-88, January.
    5. Jos順鲥s & Arnaud Reynaud & Alban Thomas, 2012. "Water reuse in Brazilian manufacturing firms," Applied Economics, Taylor & Francis Journals, vol. 44(11), pages 1417-1427, April.
    6. repec:npf:wpaper:12 is not listed on IDEAS
    7. repec:ind:nipfwp:12 is not listed on IDEAS
    8. Karabulut, Armağan & Egoh, Benis N. & Lanzanova, Denis & Grizzetti, Bruna & Bidoglio, Giovanni & Pagliero, Liliana & Bouraoui, Fayçal & Aloe, Alberto & Reynaud, Arnaud & Maes, Joachim & Vandecasteel, 2016. "Mapping water provisioning services to support the ecosystem–water–food–energy nexus in the Danube river basin," Ecosystem Services, Elsevier, vol. 17(C), pages 278-292.
    9. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2016. "The demand function for residential heat through district heating system and its consumption benefits in Korea," Energy Policy, Elsevier, vol. 97(C), pages 155-160.
    10. Randy A. Becker, 2016. "Water Use and Conservation in Manufacturing: Evidence from U.S. Microdata," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(12), pages 4185-4200, September.
    11. Khalid, Waqar & Özdeşer, Hüseyin & Jalil, Abdul, 2021. "An empirical analysis of inter-factor and inter-fuel substitution in the energy sector of Pakistan," Renewable Energy, Elsevier, vol. 177(C), pages 953-966.
    12. Park, Sun-Young & Yoo, Seung-Hoon, 2013. "The economic value of LNG in the Korean manufacturing industry," Energy Policy, Elsevier, vol. 58(C), pages 403-407.
    13. Linz, Teresa & Tsegai, Daniel W., 2009. "Industrial Water Demand analysis in the Middle Olifants sub-basin of South Africa: The case of Mining," Discussion Papers 49927, University of Bonn, Center for Development Research (ZEF).
    14. Kumar, Surender, 2004. "Analysing industrial water demand in India: An input distance function approach," Working Papers 04/12, National Institute of Public Finance and Policy.
    15. Shaofeng Jia & Qiubo Long & Raymond Yu Wang & Jiabo Yan & Deyong Kang, 2016. "On the Inapplicability of the Cobb-Douglas Production Function for Estimating the Benefit of Water Use and the Value of Water Resources," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(10), pages 3645-3650, August.
    16. Vincenzo Varriale & Antonello Cammarano & Francesca Michelino & Mauro Caputo, 2021. "Sustainable Supply Chains with Blockchain, IoT and RFID: A Simulation on Order Management," Sustainability, MDPI, vol. 13(11), pages 1-23, June.
    17. Valeria Costantini & Francesco Crespi & Giovanni Marin & Elena Paglialunga, 2016. "Eco-innovation, sustainable supply chains and environmental performance in European industries," LEM Papers Series 2016/19, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    18. Del Villar, Alberto, 2010. "Los precios de los servicios del agua. Un análisis prospectivo de demanda sobre los usos domésticos/Water Services Prices. A Water Demand Forecast Analysis for Household Uses," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 28, pages 333-356, Agosto.
    19. Lee, Alice J. & Ames, Daniel R., 2017. "“I can’t pay more” versus “It’s not worth more”: Divergent effects of constraint and disparagement rationales in negotiations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 141(C), pages 16-28.
    20. Hussain, Hadia & Murtaza, Murtaza & Ajmal, Areeb & Ahmed, Afreen & Khan, Muhammad Ovais Khalid, 2020. "A study on the effects of social media advertisement on consumer’s attitude and customer response," MPRA Paper 104675, University Library of Munich, Germany.
    21. A. G. Fatullayev & Nizami A. Gasilov & Şahin Emrah Amrahov, 2019. "Numerical solution of linear inhomogeneous fuzzy delay differential equations," Fuzzy Optimization and Decision Making, Springer, vol. 18(3), pages 315-326, September.
    22. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," Working Papers halshs-01179445, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:10:y:2018:i:7:p:2239-:d:155174. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.