Energy capital, productive capital and economic growth : a crossmunicipality granger causality analysis
- Authors: Chiviya, Kudzai
- Date: 2017
- Subjects: Electric power distribution - South Africa , Electric power distribution - Economic aspects - South Africa , South Africa. Electricity Supply Commission , Electric power failures - South Africa , Municipal government - South Africa , Eskom (Firm) , Power resources - South Africa , Economic development - South Africa
- Language: English
- Type: Masters (Thesis)
- Identifier: http://hdl.handle.net/10210/271851 , uj:28921
- Description: M.Com. (Local Economic Development) , Abstract: In 2008 South Africa experienced a period of constrained electricity supply, which led to wide-spread blackouts. In order to deal with these electricity capacity constraints, there has since been a shift in focus in the country with significant investment in this sector. Most studies in the energy-economic growth nexus have focused on the economic effects of energy use. There is a body of literature that has looked at infrastructure investment and economic growth, but does not treat energy investment as a particular kind. We argue that it is not only energy consumption that matters for economic growth, but the investment it its production as well. Investors might carefully watch energy capacity development in order to make their investment decisions in other economic sectors, which make investment in energy a possible trigger of capital formation in other sectors and subsequent economic growth. With this hypothesis, our paper investigates the causal relationship between investments in energy and capital formation in other sectors of the economy on one hand, and the causal relations to economic growth on the other. We use annual data for 228 South African municipalities from 1993 to 2015. The paper uses the newly developed heterogeneous panel Granger causality methodology, which improves the traditional causality approaches in accounting for heterogeneity and cross-sectional dependence in the panel data. Traditional approaches were developed under the assumption of homogeneity in slope, intercept or both, and the independence of panel units. Our findings are therefore more robust to heterogeneity issues and account for individual differences between municipalities. Another difference between this paper and the majority of academic work is our shift in focus from a national level to a local/municipal level. Our findings suggest that there is an overall bidirectional causal relationship between investments in energy, capital formation in other sectors of the economy, and economic growth. This finding highlights the potential that investments in energy have to trigger capital formation in other sectors and promote economic growth. Such findings will have significant local economic development implications in terms of the role of energy capital in attracting capital in other sectors, with broader implications for economic growth in view of job creation and poverty reduction.
- Full Text:
- Authors: Chiviya, Kudzai
- Date: 2017
- Subjects: Electric power distribution - South Africa , Electric power distribution - Economic aspects - South Africa , South Africa. Electricity Supply Commission , Electric power failures - South Africa , Municipal government - South Africa , Eskom (Firm) , Power resources - South Africa , Economic development - South Africa
- Language: English
- Type: Masters (Thesis)
- Identifier: http://hdl.handle.net/10210/271851 , uj:28921
- Description: M.Com. (Local Economic Development) , Abstract: In 2008 South Africa experienced a period of constrained electricity supply, which led to wide-spread blackouts. In order to deal with these electricity capacity constraints, there has since been a shift in focus in the country with significant investment in this sector. Most studies in the energy-economic growth nexus have focused on the economic effects of energy use. There is a body of literature that has looked at infrastructure investment and economic growth, but does not treat energy investment as a particular kind. We argue that it is not only energy consumption that matters for economic growth, but the investment it its production as well. Investors might carefully watch energy capacity development in order to make their investment decisions in other economic sectors, which make investment in energy a possible trigger of capital formation in other sectors and subsequent economic growth. With this hypothesis, our paper investigates the causal relationship between investments in energy and capital formation in other sectors of the economy on one hand, and the causal relations to economic growth on the other. We use annual data for 228 South African municipalities from 1993 to 2015. The paper uses the newly developed heterogeneous panel Granger causality methodology, which improves the traditional causality approaches in accounting for heterogeneity and cross-sectional dependence in the panel data. Traditional approaches were developed under the assumption of homogeneity in slope, intercept or both, and the independence of panel units. Our findings are therefore more robust to heterogeneity issues and account for individual differences between municipalities. Another difference between this paper and the majority of academic work is our shift in focus from a national level to a local/municipal level. Our findings suggest that there is an overall bidirectional causal relationship between investments in energy, capital formation in other sectors of the economy, and economic growth. This finding highlights the potential that investments in energy have to trigger capital formation in other sectors and promote economic growth. Such findings will have significant local economic development implications in terms of the role of energy capital in attracting capital in other sectors, with broader implications for economic growth in view of job creation and poverty reduction.
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South Africans’ willingness to pay for renewable and nuclear energy to avoid power outages
- Authors: Nkosi, Nomsa Phindile
- Date: 2016
- Subjects: Electric power failures - South Africa , Electric power failures - Economic aspects , Renewable energy sources , Nuclear energy
- Language: English
- Type: Masters (Thesis)
- Identifier: http://hdl.handle.net/10210/124244 , uj:20894
- Description: Abstract: At the end of 2007, as electricity demand surpassed supply, South Africa began experiencing widespread blackouts. Given the threat this posed to the national grid, ‘load shedding’ was introduced. Losses due to power outages are often associated with industry and business; but households too are end users of electricity, and their welfare is negatively affected by power outages, the result of increased electricity dependence over the years. South African households – like households in many developing countries – are faced with regular power outages. This is a serious problem, since the outages that households experience are both frequent and long in duration. Despite the efforts of all concerned, South African households will continue to face electricity supply challenges for the foreseeable future. The primary objective of this study is to quantify household’s willingness to pay (WTP) to avoid power outages. The second objective is to estimate households’ WTP for nuclear-generated energy. The third objective is to assess the level of support for renewable energy. In this study, the contingent valuation method (CVM) is used to elicit outage costs, to estimate WTP for South Africa’s proposed second nuclear power plant, and to identify the determinants of support for renewable energy. Face-to-face surveys were undertaken around Gauteng province, as well as in areas in close proximity to the proposed Thyspunt nuclear power plant in the Eastern Cape province. The surveys were conducted using electronic equipment (devices, or tablets) rather than the orthodox paper method. This analysis of power outages caters for different outage situations, including planned and unplanned outages, summer and winter outages, peak and off-peak outages, and weekday and weekend outages. Models used to assess the determinants of WTP to avoid power outages were the random parameter Tobit model, the standard Tobit model, and the Spike model, consisting of a probit model followed by a truncated regression model. With a few exceptions, all the outage scenarios’ estimated parameters are significant at the one percent level, except for the off-peak scenario. The coefficients of all the slopes are positive, meaning that on average, costs are higher for planned outages, during winter, during peak times, and on weekdays. Moreover, WTP increases with duration, which was expected. Overall, WTP is driven mainly by duration of power outage, and by seasonality... , M.Com. (Economics)
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- Authors: Nkosi, Nomsa Phindile
- Date: 2016
- Subjects: Electric power failures - South Africa , Electric power failures - Economic aspects , Renewable energy sources , Nuclear energy
- Language: English
- Type: Masters (Thesis)
- Identifier: http://hdl.handle.net/10210/124244 , uj:20894
- Description: Abstract: At the end of 2007, as electricity demand surpassed supply, South Africa began experiencing widespread blackouts. Given the threat this posed to the national grid, ‘load shedding’ was introduced. Losses due to power outages are often associated with industry and business; but households too are end users of electricity, and their welfare is negatively affected by power outages, the result of increased electricity dependence over the years. South African households – like households in many developing countries – are faced with regular power outages. This is a serious problem, since the outages that households experience are both frequent and long in duration. Despite the efforts of all concerned, South African households will continue to face electricity supply challenges for the foreseeable future. The primary objective of this study is to quantify household’s willingness to pay (WTP) to avoid power outages. The second objective is to estimate households’ WTP for nuclear-generated energy. The third objective is to assess the level of support for renewable energy. In this study, the contingent valuation method (CVM) is used to elicit outage costs, to estimate WTP for South Africa’s proposed second nuclear power plant, and to identify the determinants of support for renewable energy. Face-to-face surveys were undertaken around Gauteng province, as well as in areas in close proximity to the proposed Thyspunt nuclear power plant in the Eastern Cape province. The surveys were conducted using electronic equipment (devices, or tablets) rather than the orthodox paper method. This analysis of power outages caters for different outage situations, including planned and unplanned outages, summer and winter outages, peak and off-peak outages, and weekday and weekend outages. Models used to assess the determinants of WTP to avoid power outages were the random parameter Tobit model, the standard Tobit model, and the Spike model, consisting of a probit model followed by a truncated regression model. With a few exceptions, all the outage scenarios’ estimated parameters are significant at the one percent level, except for the off-peak scenario. The coefficients of all the slopes are positive, meaning that on average, costs are higher for planned outages, during winter, during peak times, and on weekdays. Moreover, WTP increases with duration, which was expected. Overall, WTP is driven mainly by duration of power outage, and by seasonality... , M.Com. (Economics)
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