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Poverty and distributional impact of gas price hike in Armenia

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  • Ersado, Lire

Abstract

Armenia meets about 75 percent of its energy needs through imports, with natural gas imports from Russia accounting for about 80 percent of total energy imports and 60 percent of total primary energy supply. Because of high dependence on imported energy, Armenia is vulnerable to external energy price shocks, which are often beyond the control of its policymakers. A most recent case in point was the 2010 Russian gas tariff increase, which led to a nearly 40 percent increase in the retail gas price for residential consumers. Coming on the heels of the global economic recession that hit Armenia's economy hard, the price hike amplified the impact on households that rely primarily on gas for heating and cooking. Using aggregate energy consumption data and a nationally representative household survey immediately before the crisis, this paper provides an overview of household energy consumption patterns, highlights Armenia's energy vulnerability, and estimates the direct poverty and distributional impacts of the increase in the cost of imported gas. The analysis shows that the gas price hike resulted in a significant increase in energy expenditures, with disproportionately higher impact on the poor and vulnerable households. The paper concludes with a discussion on the effectiveness of the mitigation measures employed by the Government of Armenia.

Suggested Citation

  • Ersado, Lire, 2012. "Poverty and distributional impact of gas price hike in Armenia," Policy Research Working Paper Series 6150, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6150
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    References listed on IDEAS

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    1. Baclajanschi, Iaroslav & Bouton, Lawrence & Mori, Hideki & Ostojic, Dejan & Pushak, Taras & Tiongson, Erwin R., 2006. "The impact of energy price changes in Moldova," Policy Research Working Paper Series 3960, The World Bank.
    2. Heltberg, Rasmus, 2004. "Fuel switching: evidence from eight developing countries," Energy Economics, Elsevier, vol. 26(5), pages 869-887, September.
    3. Julian A. Lampietti & Anthony A. Kolb & Sumila Gulyani & Vahram Avenesyan, 2001. "Utility Pricing and the Poor : Lessons from Armenia," World Bank Publications, The World Bank, number 13913, November.
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    Cited by:

    1. Krauss, Alexander, 2016. "How natural gas tariff increases can influence poverty: Results, measurement constraints and bias," Energy Economics, Elsevier, vol. 60(C), pages 244-254.
    2. Gassmann F. & Tsukada R., 2013. "Switching off or switching source : energy consumption and household," MERIT Working Papers 047, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. repec:eee:enepol:v:109:y:2017:i:c:p:590-600 is not listed on IDEAS

    More about this item

    Keywords

    Energy Production and Transportation; Energy and Environment; Environment and Energy Efficiency; Transport and Environment; Water and Industry;

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