Effects of tension between Ukraine and Russia on energy prices and the environment

Document Type : Original Article

Authors

1 associate Professor of Economics, Faculty of Management and Economics, Shahid Bahonar University

2 economics

3 Economics - Faculty of Economics and Management - Shahid Bahonar University, Kerman

10.48308/jem.2024.234354.1886

Abstract

Considering the importance of the war and the effects it has on the countries of the world as well as the environment, this research simulates the war between Russia and Ukraine on the variables of gross domestic growth, consumer welfare index, carbon emission rate, consumer price index in different regions of the world. For this purpose, we use a computable multi-regional dynamic general equilibrium model. 2014 is considered as the base year and the effects are analyzed based on the horizon of the International Energy Agency until 2030. We grouped the existing regions into 9 regions based on the criteria of the World Bank and implemented 4 scenarios accordingly. In general, our analysis showed that the reduction of Russian energy exports affects all regions of the world. Also, these shocks have the greatest impact on Russia first and then on Western countries that import energy. After Russia, carbon emissions have decreased the most in low-income countries that are importers, and in high-income countries, real GDP growth increases more steeply. The consumer welfare index in western importing countries and high-income countries has increased more than other countries.

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