Resource Rent Taxation and Benchmarking – A New Perspective for the Swiss Hydropower Sector
AbstractThe electricity generation in Switzerland is mainly based on hydropower (55% of total production). The exploitation of water in the hydropower sector can generate significant so-called resource rents. These are defined by the surplus return above the value of capital, labor, materials and energy used to exploit hydropower. In Switzerland, hydropower producers pay to the State a fixed fee per kW gross capacity. With this system the substantial differences in costs, revenues and in the production characteristics of the hydropower plants are not taken into account. In this context, the following paper has two main goals: 1) To discuss the introduction in the Swiss hydropower sector of a new payment system based on a resource rent tax; 2) To propose a combination of a RRT system with a benchmarking analysis of the production cost obtained through the estimation of a stochastic frontier variable cost function. We estimate a true random effects stochastic frontier variable cost function using panel data in order to overcome the asymmetric information problem. In addition, using the information on cost efficiency of the single companies, we show how to introduce in the RRT scheme a benchmark system which gives incentives to minimize the production costs.
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Bibliographic InfoPaper provided by CEPE Center for Energy Policy and Economics, ETH Zurich in its series CEPE Working paper series with number 09-67.
Length: 21 pages
Date of creation: Aug 2009
Date of revision:
Resource Rent Taxation; Hydropower; Efficiency;
Other versions of this item:
- Banfi, Silvia & Filippini, Massimo, 2010. "Resource rent taxation and benchmarking--A new perspective for the Swiss hydropower sector," Energy Policy, Elsevier, vol. 38(5), pages 2302-2308, May.
- Silvia Banfi & Massimo Filippini, 2009. "Resource Rent Taxation and Benchmarking.A New Perspective for the Swiss Hydropower Sector," Quaderni della facoltÃ di Scienze economiche dell'UniversitÃ di Lugano 0906, USI Università della Svizzera italiana.
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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