The cost of failing to prevent gas supply interruption: A CGE assessment for Peru

Carlos Romero, Omar Chisari, Leonardo Mastronardi and Arturo Vásquez Cordano

ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, 2015, vol. 2015/2, issue 2, 131-148

Abstract: Since 2000, there has been a noticeable progress in social and economic indicators of Peru. Even though the country risk has diminished dramatically, several threats remain. One of the key ones is the possibility of involuntary (transitory or permanent) interruptions of the natural gas pipeline transportation system. Given the significant endowments of natural gas reserves in Peru (Camisea gas field) and its relevance in the economy, shortages of natural gas due to pipelines failures can wreak havoc because it is important from the government revenue and it is a basic input for domestic manufacturing and household energy consumption. Earthquakes, unexpected social unrest or intentional actions could interrupt the service of some of the fundamental pipelines of the grid. One pipeline with three branches connects the upstream to the distribution centers. To take into account the economy wide impact of the interruption of gas supply we built a CGE model considering modifications of relative prices, markets reactions and income effects. We simulate different scenarios considering the three most important branches of the Camisea pipeline. The results show that those shocks would represent an important decline of GDP in the short run when substitution is limited (about or 0.2% by day) and an abrupt reduction of welfare for households. The estimated daily cost is in the range of 335 million of USD for the worst case scenario.

JEL-codes: C68 D58 Q54 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.francoangeli.it/riviste/Scheda_Rivista. ... 404&Tipo=ArticoloPDF (text/html)
Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit

Related works:
Working Paper: The cost of failing to prevent gas supply interruption: a CGE assessment for Peru (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fan:efeefe:v:html10.3280/efe2015-002009

Ordering information: This journal article can be ordered from
http://www.francoang ... io.aspx?IDRivista=10

Access Statistics for this article

ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT is currently edited by FrancoAngeli

More articles in ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT from FrancoAngeli Editore
Bibliographic data for series maintained by Stefania Rosato ().