Publication: United Mexican States Reducing Fuel Subsidies: Public Policy Options
Loading...
Published
2013-05
ISSN
Date
2015-04-16
Author(s)
Editor(s)
Abstract
This paper analyzes the economic, distributional, and environmental impact that energy subsidy reductions and alternative compensating mechanisms might have in Mexico. To achieve that goal, author use a computable general equilibrium model of the Mexican economy. They make several important changes to the original model to build the energy subsidies (to gasoline, diesel, electricity and liquefied petroleum gas) into the benchmark and then do an array of simulations to see the effects of removing such subsidies. The report results for 2012, which is the initial year; 2018, which will be the end of the next administration; and 2024 and 2030, which represent the medium and long term, respectively. When doing the simulations, author look at possible compensation mechanisms and analyze the impact on the income groups that may be affected by the reduction of energy subsidies.
Link to Data Set
Citation
“World Bank. 2013. United Mexican States Reducing Fuel Subsidies: Public Policy Options. © World Bank. http://hdl.handle.net/10986/21755 License: CC BY 3.0 IGO.”
Digital Object Identifier
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Fiscal Implications of Climate Change(2012-01-01)This paper provides a primer on the fiscal implications of climate change, in particular the policies for responding to it. Many of the complicated challenges that arise in limiting climate change (through greenhouse gas emissions mitigation), and in dealing with the effects that remain (through adaptation to climate change impacts), are of a fiscal nature. While mitigation has the potential to raise substantial public revenue (through charges on greenhouse gas emissions), adaptation largely leads to fiscal outlays. Policies may unduly favor public spending (on technological solutions to limit emissions, and on adaptation), over policies that lead to more public revenue being raised (emissions charges). The pervasive uncertainties that surround climate change make the design of proper policy responses even more complex. This applies especially to policies for mitigation of emissions, since agreement on and international enforcement of cooperative abatement policies are exceedingly difficult to achieve, and there is as yet no common view on how to compare nearer-term costs of mitigation to longer-term benefits.Publication Economic Implications of Reducing Carbon Emissions from Energy Use and Industrial Processes in Brazil(World Bank, Washington, DC, 2012-07)The overall impacts on the Brazilian economy of reducing CO2 emissions from energy use and industrial processes can be assessed using a recursive dynamic general equilibrium model and a hypothetical carbon tax. The study projects that in 2040 under a business-as-usual scenario, CO2 emissions from energy use and industrial processes would be almost three times as high as in 2010 and would account for more than half of total national CO2 emissions. Current policy aims to reduce deforestation by 70 percent by 2017 and emissions intensity of the overall economy by 36-39 percent by 2020. If policy is implemented as planned and continued to 2040, CO2 emissions from energy use and industrial processes would not have to be cut until 2035 as reductions of emissions through controlling deforestation would be enough to meet emission targets. The study also finds evidence that supports the double dividend hypothesis: using revenue from a hypothetical carbon tax to finance a cut in labor income tax significantly lowers the gross domestic product impacts of the carbon tax. Using carbon tax revenue to subsidize wind power can effectively increase the output of wind power in the country, although the impact of the tax on gross domestic product would be somewhat increased.Publication India’s Economic Growth and Environmental Sustainability : What Are the Tradeoffs?(2012-09)One of the key environmental problems facing India is that of particle pollution from the combustion of fossil fuels. This has serious health consequences and with the rapid growth in the economy these impacts are increasing. At the same time, economic growth is an imperative and policy makers are concerned about the possibility that pollution reduction measures could reduce growth significantly. This paper addresses the tradeoffs involved in controlling local pollutants such as particles. Using an established Computable General Equilibrium model, it evaluates the impacts of a tax on coal or on emissions of particles such that these instruments result in emission levels that are respectively 10 percent and 30 percent lower than they otherwise would be in 2030. The main findings are as follows: (i) A 10 percent particulate emission reduction results in a lower gross domestic product but the size of the reduction is modest; (ii) losses in gross domestic proudct from the tax are partly offset by the health gains from lower particle emissions; (iii) the taxes reduce emissions of carbon dioxide by about 590 million tons in 2030 in the case of the 10 percent reduction and 830 million tons in the case of the 30 percent reduction; and (iv) taken together, the carbon dioxide reduction and the health benefits are greater than the loss of gross domestic product in both cases.Publication Trade in a ‘Green Growth’ Development Strategy : Global Scale Issues and Challenges(2012-10)This paper surveys the state of knowledge about the trade-related environmental consequences of a country's development strategy along three channels: (i) direct trade-environment linkages (overexploitation of natural resources and trade-related transport costs); (ii) 'virtual trade' in emissions resulting from production activities; and (iii) the product mix attributes of a 'green-growth' strategy (environmentally preferable products and goods for environmental management). Trade exacerbates over-exploitation of natural resources in weak institutional environments, but there is little evidence that differences in environmental policies across countries has led to significant 'pollution havens.' Trade policies to 'level the playing field' would be ineffective and result in destructive conflicts in the World Trade Organization. Lack of progress at the Doha Round suggests the need to modify the current system of global policy making.Publication Green Prices(World Bank, Washington, DC, 2012-07)"Getting the prices right" is a good starting point but is not sufficient for achieving environmentally efficient outcomes. Other policy interventions are often necessary to complement pricing policies. Moreover, when pricing is not at all feasible, regulatory and command-and-control policies must be used instead. This paper focuses on three interrelated themes at the core of the pricing problem. First, there is the incorporation of non-marketed activities with environmental consequences into aggregate measures of economic performance: the so-called "green-GDP." Second, there is the problem regarding the reliable estimation of the valuation of the shadow prices that properly reflect environmental externalities. Third, there is the issue of full-cost pricing that requires the pricing of environmental externalities for guiding both individual and public decision-making.
Users also downloaded
Showing related downloaded files
Publication Supporting Womens Agro-Enterprises in Africa with ICT(Washington, DC, 2015-02)A new generation of information and communication technologies (ICTs) is finding a small foothold among poor, small-scale farmers in developing countries. Even so, many barriers still prevent poor rural people from accessing, using, and benefiting from new ICT tools and platforms, and those barriers are arguably higher for rural women. The relationship between gender and agriculture has been studied intensively over the years, and many agricultural interventions now include gender as a crosscutting issue or mainstream gender throughout their operations. Studies of the relationship between gender and the use of ICTs in agriculture have started to appear only quite recently, however. The Africa Region of the World Bank views ICTs as potentially transformative technology for rural development and seeks to incorporate the use of ICTs throughout its portfolio of projects. The present study was designed to examine the feasibility of integrating ICTs into two large investment programs: the Irrigation Development and Support Project (IDSP) in Zambia and the Kenya Agricultural Productivity and Agribusiness Project (KAPAP). The specifi c goal was to examine how ICT-based interventions might be designed to strengthen women s participation in commodity value chains under the two projects.Publication Supporting Policy Reform from the Outside(Published by Oxford University Press on behalf of the World Bank, 2020-02)Sound economic and social policies are important if countries wish to prosper and achieve sustainable development. It is far from guaranteed, however, that policymakers select and implement good policies, which provides a rationale for external policy support. Indeed, many organizations are engaged in supporting policy reform processes in recipient countries. This study investigates the limits and opportunities of supporting policy reform by focusing on four dimensions of support: conditional financing, policy dialogue, technical evidence and political institutions. Four findings follow from a review of the literature. First, without commitment on the recipient side, conditional financing is unlikely to induce policy reform. Second, when external actors acquire a seat at the policy dialogue table, it is important to detect (and influence) the beliefs policymakers hold. Third, outside parties should bring sound evidence to the table about the costs, benefits, and effectiveness of their policy proposals. Finally, supporting changes in political institutions without considering general equilibrium effects can be counterproductive. The study concludes with a discussion and some avenues for future research in this field.Publication What Makes a Good City Strategy?(2015-12)The objective of this paper is to review and analyze the best practices in developing and implementing city strategies, particularly in lower-income environments. It reviews available evidence to formulate the list of basic criteria that good strategies should meet, discusses three key questions that city strategies should address, and suggests how the widely applied LED and CDS approaches can be improved in the future.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Prosperity Unearthed(Washington, DC: World Bank, 2025-04-08)The Middle East and North Africa (MENA) region, rich in hydrocarbons, has experienced both prosperity and challenges due to its vast oil and gas reserves. The region holds more than half of the world’s oil reserves and 40 percent of its gas reserves. While these resources have propelled some countries to high-income status and supported regional economic growth through jobs, remittances, and investments, they have also been associated with economic instability and overreliance on a narrow range of commodity exports, as well as resource contests and conflict. "Prosperity Unearthed: Wealth-Sharing Mechanisms for Peace and Equitable Growth in the Middle East and North Africa" delves into the varying development outcomes and wealth-sharing practices in the MENA region and proposes strategies for fostering inclusive prosperity and peace. The book examines wealth sharing through three lenses: time, space, and fragility and conflict. It assesses how policymakers have managed resource distribution over time (saving versus spending) and across geographical areas (concentrating versus distributing). The findings highlight that deviations from best practices in these dimensions have contributed to the region’s unmet development potential, particularly in fragile and conflict-affected area. Key recommendations include decoupling fiscal spending from volatile hydrocarbon revenues to ensure macroeconomic stability and long-term sustainability, implementing transparent and accountable governance mechanisms, and adopting rules-based policies for equitable resource distribution. The book emphasizes the importance of inclusive economic policies, robust transparency arrangements, and strong institutions in achieving sustainable development. By leveraging hydrocarbon resources effectively, MENA countries can build sustainable, inclusive prosperity. The book underscores the need for strong fiscal management, regional cooperation, transparent governance, and inclusive growth strategies to transform resource wealth into improved physical infrastructure, human capital, and economic institutions. These efforts are crucial for fostering peace, stability, and equitable growth in the region.