Modeling the Environmental Macrostructural and Social Impacts of Reducing Energy Subsidies (by the Example of Uzbekistan)

Abstract—: Based on the generalization of the world’s existing approaches to modeling the consequences of limiting energy subsidies in relation to Uzbekistan, the necessity of using the input–output method in its various modifications is substantiated. The developed model structure is based on three channels of distribution of the shock to the economy, the employed and the environment from the restriction of energy subsidies: price, investment and structural. Each of them models different effects of restricting energy subsidies: rising energy tariffs and their impact on output and overall inflation rate; assessment of additional budget revenues in comparison with shortfall in tax revenues due to the slowdown in the growth of energy-intensive industries; negative effects on employment and incomes of the population; positive effects for the environment; growth of external debt during the implementation of green investment projects and a number of others. Using the example of Uzbekistan, the article discusses the results of modeling the consequences of the implementation of various scenarios for the reform of energy subsidies at the macro and sectoral levels, the effects on the environment and financial sustainability. At the same time, issues of limiting the negative social consequences of the reform of energy subsidies by introducing energy efficient technologies and renewable energy sources, stimulating final demand, and slowing down the rate of reduction of subsidies were studied. © 2023, Pleiades Publishing, Ltd.