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Impact of Energy Price Reform on Environmental Emissions; A Computable General Equilibrium Approach

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  • Manzoor, Davood
  • Haqiqi, Iman

Abstract

An increase in energy prices will decrease fossil fuel consumption; on the other hand, the cost-push will encourage technology improvement for firms and households. These changes will affect the emission level. This paper studies the changes in yearly pollutant emissions after an energy price reform in Iran. We apply a computable general equilibrium model which consists of 7 energy goods (Electricity, natural gas, liquid gas, gasoline, kerosene, fuel, gas-oil) and also 7 pollutants (CO, CO2, SO2, SO3, CH, SPM, NOx). The model is calibrated based on a Micro Consistent Matrix of 2001 from the Ministry of Energy. We also assume different scenarios of energy layer elasticity which describe different technology changes in our sensitivity analysis. The findings suggest that by an increase in energy prices, the emission of most pollutants would decrease except for CO and CH. For these two, depending on the technology changes after the policy, their emission may decline or not. The decline in CO2 emission will be between 9 and 16 percent.

Suggested Citation

  • 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.
    • Handle: RePEc:pra:mprapa:95818
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    References listed on IDEAS

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    1. Schmitz, Simon, 2001. "Do Energy Prices Induce Progress in Energy-Related Technology? An Empirical Study," Discussion Paper Series 26224, Hamburg Institute of International Economics.
    2. Hiro Lee & Joaquim Oliveira Martins & Dominique van der Mensbrugghe, 1994. "The OECD Green Model: An Updated Overview," OECD Development Centre Working Papers 97, OECD Publishing.
    3. Hope, Einar & Singh, Balbir, 1995. "Energy price increases in developing countries : case studies of Colombia, Ghana, Indonesia, Malaysia, Turkey, and Zimbabwe," Policy Research Working Paper Series 1442, The World Bank.
    4. Schmitz, Simon, 2001. "Do energy prices induce progress in energy-related technology? An empirical study," HWWA Discussion Papers 147, Hamburg Institute of International Economics (HWWA).
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Haqiqi, Iman & Manzoor, Davood, 2012. "Environmental Impacts of Phasing out Energy Subsidies," MPRA Paper 95688, University Library of Munich, Germany, revised 2016.
    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 & 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.
    4. Haqiqi, Iman & Yasharel, Sepideh, 2018. "Removing Fossil Fuel Subsidies to Help the Poor," MPRA Paper 95907, University Library of Munich, Germany.
    5. 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.
    6. 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.
    7. Mirshojaeian Hosseini , Hossein & Majed , Vahid & Kaneko , Shinji, 2015. "The Effects of Energy Subsidy Reform on Fuel Demand in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(2), pages 23-47, January.
    8. Aghababaei, Mohammad Ebrahim, 2019. "General Equilibrium Resource Elasticity in an Open Resource-Abundant Economy," MPRA Paper 97851, University Library of Munich, Germany.
    9. 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; Computable General Equilibrium model; Emissions; Micro Consistent Matrix; Technological change;
    All these keywords.

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • 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
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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