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University of Birzeit, Ramallah (2014)

A computable general equilibrium model of renewable energy in Palestine

Awawda, Sameera

Titre : A computable general equilibrium model of renewable energy in Palestine

Auteur : Awawda, Sameera

Université de soutenance : University of Birzeit, Ramallah, Palestine

Grade : Master’s degree in Economics 2014

Résumé partiel
This thesis finds the economic impact of using solar energy to generate electricity instead of fossil fuels (oil, natural gas and coal) - traditional technique- in Palestine. The thesis especially emphasizes the impact on public finance, external trade, labor market, and households’ total income. It is important to study the impact on the public finance because of the accumulated debt to the Israeli Electricity Company which has exceeded NIS 1 billion in 2013. These amounts are usually deducted from the customs clearance. The study also finds the impact on foreign trade, especially trade with Israel because of the dependency of the Palestinian economy on the Israeli economy. In fact, electricity imports forms 10% from total imports from Israel. The Palestinian economy is characterized by being a ‘service economy’. The service sector1 contributes for the largest share in GDP, which amounts to 75.1% including the electric service. This means that the contribution of the productive sectors such as the agricultural and industrial sectors in GDP is smaller which reflects the fragility of the Palestinian economy. Improving the electricity sector, as part of the service sector, is very necessary for the development of the Palestinian economy in general and the development of the productive sectors, agricultural and industrial in particular. This study fills the literature gap on energy and the economy in Palestine by analyzing economic effects of solar energy use by using a computable general equilibrium (CGE) model. In addition, it quantifies these effects. Such quantitative analyses have not been done before for the Palestinian economy. Being the first to investigate this important issue, it provides the basis for a more elaborated model that directly addresses renewable energy production for policy recommendations. This study is important to attract the attention of politicians and stakeholders due to its importance in improving the difficult economic situation in Palestine. This study utilizes the PalMod CGE model (USAID, 2013) which is based on the Palestinian Social Accounting Matrix for the year 2011. This analysis is carried out using the General Algebraic Modeling System (GAMS) computer package. The data required for the SAM is available from the Palestinian Central Bureau of Statistics (PCBS).

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