Energy subsidies and poverty: The case of fossil fuel subsidies in Burkina Faso

Cash transfers; Energy poverty; Energy subsidies; Monetary poverty; Redistribution policies; Social safety nets; Burkina Faso; Cash transfer; Redistribution policy

Abstract :

[en] Burkina Faso has long relied on energy subsidies to facilitate the access of the population to energy products. However, there is no evidence that they contribute to monetary nor energy poverty reduction. This paper aims to assess the effectiveness of fossil fuel subsidies in alleviating monetary and energy poverty in Burkina Faso, focusing on Liquefied Petroleum Gas (LPG) and liquid fuel subsidies. It then evaluates the impact of shifting expenditure from energy subsidies towards universal cash transfer to the poor. The distributional impact of subsidies on households is estimated using the price-gap approach, computing the difference between the reference price and the end-user price across the income distribution. Unlike many price-gap analyses, our price-gap estimate takes into account regional disparities in energy pricing. The analysis reveals that energy subsidies are not pro-poor. Rather, (i) end-user prices of LPG and liquid fuel are not aligned with monetary poverty, (ii) subsidies have a near zero impact on energy and monetary poverty, as those at the bottom income distribution barely benefit from the subsidies, (iii) there is a geographical dimension to the regressiveness of subsidies, as the reform impacts wealthier regions only. Alternative energy policies under the form of a cash transfer targeting the poor maximize redistribution while being budget-neutral.

Disciplines :

Special economic topics (health, labor, transportation...)

Author, co-author :

Vandeninden, Frieda ; Université de Liège - ULiège > Département des sciences sociales > Economie politique et économie de la santé ; World Bank, Washington D.C., United States

Grun, Rebekka; World Bank, Washington D.C., United States

Fecher-Bourgeois, Fabienne ; Université de Liège - ULiège > Département des sciences sociales > Economie politique et économie de la santé

Language :

English

Title :

Energy subsidies and poverty: The case of fossil fuel subsidies in Burkina Faso

Publication date :

October 2022

Journal title :

Energy for Sustainable Development

ISSN :

0973-0826

eISSN :

2352-4669

Publisher :

Elsevier B.V.

Volume :

Pages :

581 - 591

Peer reviewed :

Peer Reviewed verified by ORBi

Development Goals :

1. No poverty
7. Affordable and clean energy

Additional URL :

https://api.elsevier.com/content/article/PII:S0973082622001491?httpAccept=text/xml

Available on ORBi :

since 09 December 2022

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