Abstract

It is widely accepted that the costs of underpricing energy are large, whether in advanced or developing countries. This paper explores how large these costs can be by focussing on the size of the external effects that energy subsidies in particular generate in two important sectors—transport and agriculture—in two countries in the Middle East and North Africa, the Arab Republic of Egypt (transport) and the Republic of Yemen (agriculture). The focus is mainly on the costs associated with congestion and pollution, as well as the impact of underpriced energy for depletion of scarce water resources, including through crop selection. Quantifying the size of external effects in developing countries has received relatively little analytical attention, although there is a significant body of literature for developed countries. By building on earlier research, as well as employing the United Nations ForFITS model, the paper provides indicative estimates of the external costs of energy subsidies, as manifested in congestion and pollution. The estimates using simulations indicate that these costs could be materially reduced by elimination or reduction of energy subsidies. The paper also describes the impact of energy subsidies on water consumption in a region where water resources are particularly limited. The findings provide further evidence of the adverse and significant consequences of subsidizing energy. Document type: Book

Abstract

Road networks are essential for economic, social, environmental, and security reasons. Road networks are therefore considered critical networks according to the consequences of their disruptions (Tacnet and Mermet 2012). Flooding poses an important threat to roads, and can lead to massive obstruction of traffic and damage to road structures, with possible long-term effects (Buren and Buma 2012). Flooding leads to significant repair costs for road control authorities, access difficulties for emergency services (Versini, Gaume, and Andrieu 2010a), and disruption for road users and the community at large. The consequences for businesses and the economy in general can be very significant (Brabhaharan, Wiles, and Frietag 2006). Because of the time and costs required for rebuilding, sustainable and long-term planning is crucial; therefore, the consideration of flood risk constitutes an important input for decision making in planning this type of infrastructure. Flood risk analysis for road networks allows plans to be carried out in an appropriate manner, allocating resources for prevention, mitigation, and restoration (Balijepalli and Oppong 2014; Jenelius and Mattsson 2014). This report summarizes the main concepts and methodologies that are used to assess flood risk for road networks. The report presents references and examples, and is intended to be a starting point for practitioners in the field.