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The effects of energy price changes: heterogeneous welfare impacts and energy poverty in Indonesia
[journal article]
Abstract We study the welfare and energy poverty implications of energy price change scenarios in Indonesia. Our analysis extends previous analyses of energy price impacts at the household level in three ways. First, by employing a household energy demand system (QUAIDS), we are able to distinguish between f... view more
We study the welfare and energy poverty implications of energy price change scenarios in Indonesia. Our analysis extends previous analyses of energy price impacts at the household level in three ways. First, by employing a household energy demand system (QUAIDS), we are able to distinguish between first- and second-order welfare effects over the income distribution. Second, our results point to the ownership of energy-processing durables as another source of impact heterogeneity. Third, we extend the welfare analysis beyond the money-metric utility effects and look at energy poverty, which is understood as the absence of or imperfect access to reliable and clean modern energy services. The analysis indicates that energy prices may serve as an effective instrument to reduce energy use but also have important adverse welfare effects. The latter can, however, be mitigated by appropriate compensation policies.... view less
Keywords
demand; private household; pricing policy; energy supply; Indonesia; market price; welfare economics; energy; simulation; equilibrium model; income distribution; energy industry; scenario
Classification
Special areas of Departmental Policy
National Economy
Free Keywords
Indonesian Survei Sosial Ekonomi Nasional; SUSENAS
Document language
English
Publication Year
2019
Page/Pages
p. 180-200
Journal
Environment and Development Economics, 24 (2019) 2
DOI
https://doi.org/10.1017/S1355770X18000402
ISSN
1469-4395
Status
Published Version; peer reviewed