IDEAS home Printed from https://ideas.repec.org/a/taf/jdevef/v8y2016i1p105-128.html
   My bibliography  Save this article

Estimating the impact on poverty of Ghana’s fuel subsidy reform and a mitigating response

Author

Listed:
  • Edgar F.A. Cooke
  • Sarah Hague
  • Luca Tiberti
  • John Cockburn
  • Abdel-Rahmen El Lahga

Abstract

The study simulates the welfare implications of the fuel subsidy reform carried out in early 2013 and the required scaling up of cash transfers to mitigate the impact of the subsidy removal on poor households in Ghana. Approximately 78 per cent of fuel subsidies benefited the wealthiest group, with less than 3 per cent reaching the poorest quintiles. We find that the removal of the fuel subsidies, by causing an increase in prices, results in a negative impact on household welfare. The negative effect is worst for the poorest group who experience reduction in their total consumption of 2.1 per cent. The simulation estimates that the poverty rate rises by 1.5 percentage points leading to an additional 395,180 individuals being pushed into poverty.

Suggested Citation

  • Edgar F.A. Cooke & Sarah Hague & Luca Tiberti & John Cockburn & Abdel-Rahmen El Lahga, 2016. "Estimating the impact on poverty of Ghana’s fuel subsidy reform and a mitigating response," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 8(1), pages 105-128, March.
    • Handle: RePEc:taf:jdevef:v:8:y:2016:i:1:p:105-128
    DOI: 10.1080/19439342.2015.1064148
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/19439342.2015.1064148
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/19439342.2015.1064148?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Arze del Granado, Francisco Javier & Coady, David & Gillingham, Robert, 2012. "The Unequal Benefits of Fuel Subsidies: A Review of Evidence for Developing Countries," World Development, Elsevier, vol. 40(11), pages 2234-2248.
    2. Maria Vagliasindi, 2013. "Implementing Energy Subsidy Reforms : Evidence from Developing Countries," World Bank Publications - Books, The World Bank Group, number 11965, December.
    3. repec:wbk:wbpubs:13081 is not listed on IDEAS
    4. Quentin Wodon, 2012. "Improving the Targeting of Social Programs in Ghana," World Bank Publications - Books, The World Bank Group, number 13082, December.
    5. Mr. David Coady & Mr. Javier Arze del Granado, 2010. "The Unequal Benefits of Fuel Subsidies: A Review of Evidence for Developing Countries," IMF Working Papers 2010/202, International Monetary Fund.
    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. Cecile Couharde & Sara Mouhoud, 2020. "Fossil Fuel Subsidies, Income Inequality, And Poverty: Evidence From Developing Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 981-1006, December.
    2. Ofori, Roland O., 2023. "The economic cost of fuel subsidies in Ghana," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    3. Pu, Lei & Wang, Xiuhui & Tan, Zhongfu & Wang, Huaqing & Yang, JiaCheng & Wu, Jing, 2020. "Is China's electricity price cross-subsidy policy reasonable? Comparative analysis of eastern, central, and western regions," Energy Policy, Elsevier, vol. 138(C).
    4. Bhattacharyya, Ranajoy & Ganguly, Amrita, 2017. "Cross subsidy removal in electricity pricing in India," Energy Policy, Elsevier, vol. 100(C), pages 181-190.
    5. Maboshe, Mashekwa & Kabechani, Akabondo & Chelwa, Grieve, 2019. "The welfare effects of unprecedented electricity price hikes in Zambia," Energy Policy, Elsevier, vol. 126(C), pages 108-117.
    6. Stefan Bakker & Gary Haq & Karl Peet & Sudhir Gota & Nikola Medimorec & Alice Yiu & Gail Jennings & John Rogers, 2019. "Low-Carbon Quick Wins: Integrating Short-Term Sustainable Transport Options in Climate Policy in Low-Income Countries," Sustainability, MDPI, vol. 11(16), pages 1-17, August.
    7. Bah, Muhammad Maladoh & Saari, M. Yusof, 2020. "Quantifying the impacts of energy price reform on living expenses in Saudi Arabia," Energy Policy, Elsevier, vol. 139(C).
    8. Meskoub, M., 2015. "Cash transfer as a social policy instrument or a tool of adjustment policy: from indirect subsidies (to energy and utilities) to cash subsidies in Iran, 2010-2014," ISS Working Papers - General Series 610, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    9. Ragchaasuren Galindev & Tsolmon Baatarzorig & Nyambaatar Batbayar & Delgermaa Begz & Unurjargal Davaa & Oyunzul Tserendorj, 2019. "Impact of Fiscal Consolidation on the Mongolian Economy," Working Papers MPIA 2019-20, PEP-MPIA.

    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. Cecile Couharde & Sara Mouhoud, 2020. "Fossil Fuel Subsidies, Income Inequality, And Poverty: Evidence From Developing Countries," Journal of Economic Surveys, Wiley Blackwell, vol. 34(5), pages 981-1006, December.
    2. Joel E. Smith & Johannes Urpelainen, 2017. "Removing fuel subsidies: How can international organizations support national policy reforms?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 17(3), pages 327-340, June.
    3. David Coady & Ian W H Parry & Baoping Shang, 2018. "Energy Price Reform: Lessons for Policymakers," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 12(2), pages 197-219.
    4. Jon Sampedro & Iñaki Arto & Mikel González-Eguino, 2017. "Implications of Switching Fossil Fuel Subsidies to Solar: A Case Study for the European Union," Sustainability, MDPI, vol. 10(1), pages 1-12, December.
    5. Mr. Kangni R Kpodar & Ms. Stefania Fabrizio & Kodjovi M. Eklou, 2019. "Export Competitiveness - Fuel Price Nexus in Developing Countries: Real or False Concern?," IMF Working Papers 2019/025, International Monetary Fund.
    6. Benedict Clements & David Coady & Stefania Fabrizio & Sanjeev Gupta & Baoping Shang, 2014. "Energy subsidies: How large are they and how can they be reformed?," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    7. Lucas W. Davis, 2017. "The Environmental Cost of Global Fuel Subsidies," The Energy Journal, International Association for Energy Economics, vol. 0(KAPSARC S).
    8. Michelle Harding & Chiara Martini & Alastair Thomas, 2014. "Taxing Energy Use in the OECD," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    9. Arzaghi, Mohammad & Squalli, Jay, 2015. "How price inelastic is demand for gasoline in fuel-subsidizing economies?," Energy Economics, Elsevier, vol. 50(C), pages 117-124.
    10. Eberechukwu Uneze & Adedeji Adeniran, 2014. "Exploring Domestic Financing Options for Post-2015 Development Agenda in Selected Sub-Saharan African Countries," Southern Voice Occasional Paper 18, Southern Voice.
    11. Neil McCulloch, 2017. "Energy subsidies, international aid, and the politics of reform," WIDER Working Paper Series wp-2017-174, World Institute for Development Economic Research (UNU-WIDER).
    12. Malla, Sunil & Timilsina, Govinda R, 2014. "Household cooking fuel choice and adoption of improved cookstoves in developing countries : a review," Policy Research Working Paper Series 6903, The World Bank.
    13. Mundaca, Gabriela, 2017. "Energy subsidies, public investment and endogenous growth," Energy Policy, Elsevier, vol. 110(C), pages 693-709.
    14. Plante, Michael, 2011. "The long-run macroeconomic impacts of fuel subsidies in an oil-importing developing country," MPRA Paper 33823, University Library of Munich, Germany.
    15. Olabisi, Michael & Tschirley, David L. & Nyange, David & Awokuse, Titus, 2019. "Energy demand substitution from biomass to imported kerosene: Evidence from Tanzania," Energy Policy, Elsevier, vol. 130(C), pages 243-252.
    16. Daniel Lederman & Guido Porto, 2016. "The Price Is Not Always Right: On the Impacts of Commodity Prices on Households (and Countries)," The World Bank Research Observer, World Bank, vol. 31(1), pages 168-197.
    17. Kojima, Masami, 2013. "Drawing a roadmap for oil pricing reform," Policy Research Working Paper Series 6450, The World Bank.
    18. Cevik, Serhan & Saadi Sedik, Tahsin, 2014. "A Barrel of Oil or a Bottle of Wine: How Do Global Growth Dynamics Affect Commodity Prices?," Journal of Wine Economics, Cambridge University Press, vol. 9(1), pages 34-50, May.
    19. Stephen Howes & Paul Wyrwoll, 2012. "Climate Change Mitigation and Green Growth in Developing Asia," Working Papers id:5059, eSocialSciences.
    20. Henok Asmelash, 2016. "Falling oil prices and sustainable energy transition: Towards a multilateral agreement on fossil-fuel subsidies," WIDER Working Paper Series 013, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Statistics

    Access and download statistics

    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:taf:jdevef:v:8:y:2016:i:1:p:105-128. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RJDE20 .

    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.