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1. Revisiting Distributional Effects of Energy Subsidies in Argentina

Author:
Octavio Bertín, Thomas García, Francisco Pizzi, Alberto Porto, Julian Puig, and Jorge Puig
Publication Date:
06-2024
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We review the distributional incidence of residential energy subsidies using the attractive case of Argentina, a developing country that has massively subsidized electricity in recent decades. Using multiple data sources, we explore two central dimensions, usually omitted in previous research. On the one hand, we focus on geography given that previous studies mostly focus on the Buenos Aires Metropolitan Area (i.e., AMBA), the most populated region in the country. However, Argentina’s territorial heterogeneity demands further analysis, given that the stage of electricity distribution introduces heterogeneities between jurisdictions. On the other hand, we focus on the subsidies’ financing given that previous studies do not focus on the net incidence. Our results indicate that: regional disparities in the costs of electricity distribution and the prices set by the distribution companies are key drivers of the distributional incidence. Also omitting subsidies’ financing may lead to overestimating the belief about their redistributive effect.
Topic:
Development, Electricity, Subsidies, and Distributive Incidence
Political Geography:
Argentina and South America

2. Distributional Effects of Reducing Energy Subsidies: Evidence from Recent Policy Reform in Argentina

Author:
Fernando Giuliano, Maria Ana Lugo, Ariel Masut, and Jorge Puig
Publication Date:
09-2020
Content Type:
Working Paper
Institution:
Center for Distributive, Labor and Social Studies (CEDLAS)
Abstract:
We analyze the distributional effects of the reduction in energy subsidies in Ar- gentina since 2016. As the policy reform also includes the introduction of a scheme to protect less well-off families (social tariff), we also review how well the targeting mechanism works. We apply traditional benefit-incidence analysis using household surveys and administrative data, focusing on residential subsidies to natural gas and electricity in the Buenos Aires Metropolitan Area. We find that the social tariff is relatively pro-poor, with significantly higher coverage among the poorest households. There are some exclusion errors in the low-income deciles and large inclusion errors in the medium- and high-income deciles. The distributive incidence of subsidies does not appear to have changed substantially. Energy subsidies in Argentina (lower in aggregate terms) continue to be, although progressive, pro-rich. The distributional effect is explained by the fact that generalized subsidies to all categories of consumption coexist with a relatively well targeted social tariff. Re- garding energy budget shares, monthly spending on electricity has increased from 1.1 percent of total household income to 3.4 percent. Monthly spending on piped gas rose from 1.3 percent to 3.3 percent. These shares are in line with many other countries in the region. Naturally, there has been a convergence of tariffs toward service provision costs.
Topic:
Energy Policy, Reform, Subsidies, and Public Spending
Political Geography:
Argentina and South America