Fossil Fuel Subsidies in Developing Countries: Economic, Fiscal, and Environmental Impacts
RFF Academic Seminar
Joseph Aldy, Associate Professor of Public Policy, Mossavar-Rahmani Center for Business and Government
John F. Kennedy School of Government, Harvard University
In 2008, fossil fuel subsidies in the developing world exceeded $500 billion. These subsidies distort the allocation of resources that results in excessive petroleum, gas, and coal consumption; weakens incentives for non-fossil technology innovation and deployment; increases conventional air pollution and carbon dioxide emissions; lowers economic output; imposes significant fiscal burdens; and contributes to the volatility of global energy markets. This paper uses petroleum product subsidy data to estimate price elasticities that in turn can be used to assess the impacts of subsidy elimination. In addition, I estimate the impacts of subsidy reform on sulfur dioxide and carbon dioxide emissions, as well as the potential impact of kerosene price rationalization on charcoal and wood fuel consumption. Finally, this paper estimates a negative relationship between fossil fuel subsidy expenditures and government spending on health and education.
Thursday, March 15, 2012
2:00 - 3:30 p.m.
Refreshments will be provided.
7th Floor Conference Room
1616 P St. NW
Washington, D.C. 20036
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