Transcript Natural Gas and Income Distribution in Bolivia

Natural Gas and
Inequality in Bolivia
Lykke E. Andersen
Symposium on Natural Gas and
Sustainable Development
Doha, Qatar, 6-8 February 2006
1
Overview
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The history of oil and gas in Bolivia
Bolivian attitudes towards gas exports
Investigating the distributional
consequences of the Natural Gas boom in
a Computable General Equilibrium (CGE)
model
The structure of the Bolivian economy
Simulations in a Bolivian CGE model
Conclusions
2
The History of Oil in Boliva
Royalties: 12%
Taxes: 19%
YPFB: 19%
Ley de
Hidrocarburos
Royalties: 50%
Taxes: 10%
Nuevo Ley de
Hidrocarburos
Nationalization !
Nationalization !
Roy.: 45-25%
Taxes: 3%
Capitalization
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D.S 21060
10
Royalties: 11%
Taxes: 19%
Códico de Petroleo
opens up for FDI
PETROBRAS
Repsol
BG
ENRON
Shell
...
Royalties: 11%
5
Ley Orgánico
de Petróleo
Nationalization !
First oil discovery in Bolivia
Standard Oil
Bolivian Gulf
Year
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1908
1904
1900
0
1896
Petroleum Production in Bolivia _
(Million Barrels per Year)
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The History of Natural Gas
in Boliva
Nuevo Ley de
Hidrocarburos
600,000
Nationalization !
500,000
400,000
Roy.: 45-25%
Taxes: 3%
Royalties: 12%
Taxes: 19%
YPFB: 19%
Capitalization
300,000
Nationalization !
Ley de
Hidrocarburos
Contract with Brazil
signed - 20 years
Hidrocarburos
200,000
PETROBRAS
Repsol
BG
ENRON
Shell
...
Contract with Argentina
signed - 20 years
Hidrocarburos
100,000
YPFB
Bolivian Gulf
Year
2005
2003
2001
1999
1997
1995
1993
1991
1989
1987
1985
1983
1981
1979
1977
1975
1973
1971
1969
1967
1965
1963
1961
1959
1957
1955
0
1953
Natural Gas Production in Bolivia _
(Million Cubic Feet per Year)
Royalties: 50%
Taxes: 10%
Bolivian attitudes towards
export of Natural Gas
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More than 2/3 of the Bolivian
population does not want the Gas to
be exported
(According to an opinion survey by UNDP in 2003).
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Why can’t people just relax and enjoy
the big revenues?
(about $400 million/year or 30%)
 Bad
experiences with the
mining sector.
 Only the rich will benefit.
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The structure of the
Bolivian economy
Table 2: Employment and income in Bolivia 1999, by labor category
Employment
(No. of persons)
1. Rural small-holder
2. Agricultural worker (unskilled)
3. Non-agricultural worker (unskilled)
4. Urban informal
5. Employee (skilled)
6. Employer
Total economically active population
1,409,313
66,672
296,451
878,203
626,368
292,734
3,569,741
Main exporting sectors:
Mining, Modern Agriculture, Natural Gas
Employment
(%)
39.5
1.8
8.3
24.6
17.5
8.2
100.0
Average
monthly
income (Bs.)
244
725
651
415
1,240
2,683
704
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Figure 1: Natural gas exports from Bolivia (1972 – 2019)
Export (billion cubic feet)
450
400
Brazil (Projection according to contract)
350
Argentina
300
250
200
150
100
Source: YPFB
2017
2014
2011
2008
2005
2002
1999
1996
1993
1990
1987
1984
1981
1978
1975
0
1972
50
Year
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The effects of the Natural Gas
boom on the Bolivian economy
Difference in GDP growth rates (in percentag e points)
Figure 2: Increase in GDP growth rates due to Natural Gas exports
3.0
2.5
2.0
1.5
1.0
0.5
0.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Year
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Figure 3: Increase in total GDP due to Natural Gas exports
1.140
1.120
1.100
Ratio of GDP
1.080
1.060
1.040
1.020
1.000
0.980
0.960
0.940
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Year
10
Figure 4: Government savings in percent of total savings, GAS versus NO GAS scenario
20%
15%
GAS
NO GAS
10%
5%
0%
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98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
Government savings (in % of total savings)
25%
Year
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Figure 5: Changes in sectoral value added due to Natural Gas exports
1.2
Construction
Capital goods
Utilities
Formal services
Informal services
Intermediate goods
Coca
Consumer goods
Traditional agriculture
Modern agriculture
Mining
1.15
1.1
1.05
1
0.95
0.9
0.85
Year
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
0.8
1998
Ratio of value-added (GAS/NO GAS)
1.25
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Figure 8: Changes in household income due to Natural Gas exports
Government
Employers
1.15
Non-agricultural workers
Public enterprises
1.1
Employees
Private enterprises
1.05
Urban informals
1
Agricultural workers
Smallholders
0.95
20
14
20
12
20
10
20
08
20
06
20
04
20
02
20
00
0.9
19
98
Ratio of income (GAS/NO GAS)
1.2
Year
13
Figure 9: Increase in GDP with Natural Gas exports but inefficient capital formation
GDP ratio (GAS/NO GAS)
1.08
1.06
1.04
1.02
1
0.98
50% capital formation
efficiency
0.96
25% capital formation ratio
0.94
98
9
1
00
0
2
02
0
2
04
0
2
06
0
2
08
0
2
10
0
2
12
0
2
14
0
2
Year
14
Ratio of factor incomes (GAS/NO GAS)
Figure 10: Changes in factor incomes with inefficient capital formation
1.040
1.020
1.000
0.980
0.960
Capital income
Skilled workers
Informal sector
Unskilled urban
Smallholders
Unskilled agricultural
0.940
0.920
0.900
0.880
98 999 000 001 002 003 004 005 006 007 008 009 010 011 012 013
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1
1
2
2
2
2
2
2
2
2
2
2
2
2
2
2
Year
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Conclusions
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What have the natural gas boom
meant for Bolivia so far?
Five years of severe social unrest and
economic crisis.
 The military massacre during the Gas
War of 2003 resulted in more deaths
than in any previous presidency
(including military dictatorships).
 The resignation of several presidents.
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Conclusions
Layoffs (about 50% of the workforce in
the sector was laid off after
capitalization).
 Massive government revenues. But
these benefit mainly skilled workers in
the public sector, thus causing higher
inequality.
 None of these consecuences are
inevitable, though. Results depend very
much on how the government is reinvesting the revenues, and much less
on how big those revenues are.
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