To Raise or Not to Raise? Impact Assessment of Russia's Incremental Gas Price Reform

37 Pages Posted: 16 Aug 2012

See all articles by Christophe Heyndrickx

Christophe Heyndrickx

affiliation not provided to SSRN

Viktoria Alexeeva-Talebi

ZEW – Leibniz Centre for European Economic Research

Natalia Turdyeva

Bank of Russia

Date Written: 2012

Abstract

The growing momentum for gas price liberalization in Russia is increasingly constrained by fears of potentially strong adverse impact that market-based price setting principle will have on the economy. Based on a novel multi-regional, multi-sector and multi-household computable general equilibrium (CGE) model of the Russian Federation, this paper presents a simple yet a flexible framework for evaluating gas price reform. We found that the reform is feasible at low economic cost, without greater disparities in terms of increased inequity within and between country’s federal districts. Large redistributive impacts can arise from specific mechanisms to recycle revenues. In terms of global environmental credentials, gas price liberalization can bring Russia on a substantially more sustainable path. The potential to foster adoption of energy efficiency measures by exploiting the revenue-recycling effect is, however, limited.

Keywords: Regional general equilibrium model, sustainable development, natural gas pricing, Russia

JEL Classification: D58, H21, H22, Q48

Suggested Citation

Heyndrickx, Christophe and Alexeeva-Talebi, Viktoria and Turdyeva, Natalia, To Raise or Not to Raise? Impact Assessment of Russia's Incremental Gas Price Reform (2012). ZEW - Centre for European Economic Research Discussion Paper No. 12-052, Available at SSRN: https://ssrn.com/abstract=2129801 or http://dx.doi.org/10.2139/ssrn.2129801

Christophe Heyndrickx

affiliation not provided to SSRN ( email )

Viktoria Alexeeva-Talebi (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Natalia Turdyeva

Bank of Russia ( email )

12 Neglinnaya Street
Moscow, 107016
Russia

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