Strategic Eurasian Natural Gas Model for Energy Security

The mathematical formulation of a large-scale equilibrium natural gas simulation model is presented. Although large-scale natural gas models have been developed and used for energy security and policy analysis quite extensively (e.g., Holz (2007), Egging et al. (2008), Holz et al. (2009) and Lise et al. (2008)), this model differs from earlier ones in its detailed representation of the structure and operations of the Former Soviet Union (FSU) gas sector. In particular, the model represents: (i) market power of transit countries, (ii) transmission pipelines in Russia, Ukraine, Belarus and Central Asia, (iii) differentiation among gas production regions in Russia, and (iv) gas trade relations between FSU countries (e.g., Gazprom’s re-exporting of Central Asian gas). To demonstrate the model, a social benefit-cost analysis of the Nord Stream gas pipeline project from Russia to Germany via the Baltic Sea is provided. It is found that Nord Stream project is profitable for its investors and the project also improves social welfare in all market power scenarios. Also, if transit countries (Ukraine and Belarus) exert substantial market power then the economic value of Nord Stream to its investors and to society improves substantially. We also found that the value of Nord Stream investment is rather sensitive to the degree of downstream competition in European markets and that lack of downstream competition might result in the negative value of the Nord Stream system to Gazprom

Implications and Policy Options of California's Reliance on Natural Gas

Examines existing and currently anticipated infrastructure, rising gas prices, and recurring supply problems, and looks at options to alleviate the problem. Part of a series of research reports that examines energy issues facing California

Removing Cross-Border Capacity Bottlenecks in the European Natural Gas Market: A Proposed Merchant-Regulatory Mechanism

We propose a merchant-regulatory framework to promote investment in the European natural gas network infrastructure based on a price cap over two-part tariffs. As suggested by Vogelsang (2001) and Hogan et al. (2010), a profit maximizing network operator facing this regulatory constraint will intertemporally rebalance the variable and fixed part of its two-part tariff so as to expand the congested pipelines, and converge to the Ramsey-Boiteaux equilibrium. We confirm this with actual data from the European natural gas market by comparing the bi-level price-cap model with a base case, a no-regulation case, and a welfare benchmark case, and by performing sensitivity analyses. In all cases, the incentive model is the best decentralized regulatory alternative that efficiently develops the European pipeline system.regulation, transportation network, investment

Improving the Tanzanian-Mombasa cross-border tomato product chain: a study of Mombasa tomato market : draft report

The study of Mombasa tomato market is part of the project “Development of Commercial Field Vegetable Production, Distribution and Marketing for the East African Market”. The project is implementing a pilot activity on improving crossborder tomato chains from Ngarenanyuki, Tanzania, to Mombasa, Kenya. The overall objective of the study was to assess the requirements, institutional setting and current supply issues of the Mombasa tomato market and to describe the supply chain logistics and characteristics

Gas models and three difficult objectives

Competition, security of supply and sustainability are at the core of EU energy policy. The Commission argues that making the European gas market more competitive (completing the internal gas market) will be instrumental in the pursuit of these objectives. We examine the question through the eyes of existing models of the European gas market. Can model tell us anything on this problem? Do they confirm or infirm the analysis of the Commission appearing in fundamental documents such the Green Paper, the Sector Inquiry or the new legislation package? We argue that results of existing models contradict a fundamental finding (paragraph 77) of the Sector Inquiry. We further elaborate on the basis of the economic assumption underlying the models, that changing the assumptions implicitly contained in paragraph 77 cast doubts on a large part of the reasoning justifying the completion of the internal gas market. We also explain that models could help arriving at a better definition of the relevant market, which is so important in the reasoning of the Commission. Last we also find model results that question the effectiveness of ownership unbundling. As to security of supply, we explain that models can also contribute to assess the value of additional infrastructure in the context of security of supply, but this potential seems largely untapped. Last we note that sustainability has not yet penetrated models of gas markets. We conclude by suggesting other area of immediate concern, possibly of higher technical difficulty, that modellers could address in future research.

North American Barley Trade and Competition

International Relations/Trade,

The cost of being landlocked : logistics costs and supply chain reliability

A large proportion of the least developed countries are landlocked and their access to world markets depends on the availability of a trade corridor and transit systems. Based on empirical evidence from World Bank projects and assessments in Africa, Central Asia, and elsewhere, this paper proposes a microeconomic quantitative description of logistics costs. The paper theoretically and empirically highlights that landlocked economies are primarily affected not only by a high cost of freight services but also by the high degree of unpredictability in transportation time. The main sources of costs are not only physical constraints but widespread rent activities and severe flaws in the implementation of the transit systems, which prevent the emergence of reliable logistics services. The business and donor community should push toward implementation of comprehensive facilitation strategies, primarily at the national level, and the design of robust and resilient transport and transit regimes. A better understanding of the political economy of transit and a review of the implementation successes and failures in this area are needed.Transport Economics Policy&Planning,Transport and Trade Logistics,Common Carriers Industry,Economic Theory&Research,Rural Roads&Transport

Non-tariff barriers in EAC customs union: implications for trade between Uganda and other EAC countries

A key objective for the adoption of East African Community (EAC) Customs Union was to enhance economic gains through elimination of tariffs and non-tariff barriers (NTBs) within the member states. This study has established that several NTBs continue to exist, and some have persisted. The NTBs that have persisted for more than three years include a long list of customs documentation requirements, cumbersome formalities, and limited testing and certification arrangements. Other NTBs that still exist include: un-standardized weighbridges; several road blocks; lack of recognition of individual country’s standards; and the existence of several un-harmonised standards. The simulation results of spatial equilibrium model of maize trade with and without NTBs show that at the EAC level there are positive production, trade and welfare implications attributable to elimination of NTBs in intra-regional maize trade. The gains are greatest in trade and production in Uganda compared to Kenya and Tanzania. To eliminate the existing NTBs and to reduce the possibility of new ones being created, first and foremost, the EAC countries need to design effective mechanisms for identifying and verifying information about NTBs and ensuring their elimination. This will require giving the EAC Secretariat the mandate to compel individual countries to eliminate any identified NTB and to ensure that no new ones are created. Second, policy and legislative decisions made by, for example, Council of Ministers should be communicated in time for effective implementation...Non-tariff barriers, East African Community, EPRC, Uganda, Agribusiness, Agricultural Finance, Community/Rural/Urban Development, Consumer/Household Economics, Financial Economics, Industrial Organization, Labor and Human Capital, Productivity Analysis, Public Economics,

Optimal Commodity Taxation when Land and Structures must be Taxed at the Same Rate

We show that the optimal property tax rate rises with the ratio of land rents to structure and land development costs. California’s high ratio of income to property tax revenue and the distribution of Federal housing subsidies thus appear geographically misplaced. Proportional taxation of non-housing commodities is not optimal, even when elasticities with respect to wages are identical. Absent externalities, the desirability of transportation taxes and “anti-sprawl” growth controls hinge on the relative importance of time versus money in commuting costs.