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Energy Transition and Environmental Economics in MENA Region

Paper Session

Friday, Jan. 3, 2025 12:30 PM - 2:15 PM (PST)

San Francisco Marriott Marquis, Walnut
Hosted By: Middle East Economic Association
  • Chair: Shawkat Hammoudeh, Drexel University

Deriving a First Order Estimate of Economic Value of Red Sea Coral Reefs : Methodology and Case Study on KSA

Nathalie HILMI
,
The Scientific Centre of Monaco
Mine Cinar
,
Loyola University Chicago
Aurélien Calas
,
The Scientific Centre of Monaco
Alain Safa
,
Skill Partners

Abstract

The paper delves into the economic valuation of coral reefs in the Red Sea, with a specific focus on the Kingdom of Saudi Arabia (KSA). It underscores the critical need to assign monetary value to these ecosystems to ensure their preservation for future generations and to leverage their services sustainably, thereby showcasing the natural capital of KSA . Through a phased approach, the study conducts a preliminary assessment of four core ecosystem services provided by coral reefs: fisheries, coastal protection, tourism, and iconic value . This assessment involves analyzing existing scientific and economic data, identifying gaps, and developing scenarios to address uncertainties in valuation . Stakeholder engagement and expert input are integral to estimating the value of coral reefs and guiding future investments in conservation initiatives.
The Red Sea's coral reefs are highlighted for their rich biodiversity and unique reef morphologies that support local fisheries and provide natural coastal protection. The paper emphasizes the iconic value of the Red Sea coral reefs as a cultural ecosystem service, underscoring their significance at the national scale . Furthermore, the study acknowledges the Red Sea's role as a climate change refuge for coral reefs, contributing to global efforts to prevent the collapse of coral ecosystems. By conducting a first-order estimation of the economic value of coral reefs in KSA, the research aims to lay the groundwork for more comprehensive analyses in the future. This initial valuation serves as a roadmap for identifying data gaps, informing policy decisions, and guiding investments in coral reef protection and restoration . The study aligns with global initiatives such as the Paris Agreement and Sustainable Development Goals, emphasizing the importance of integrating nature conservation and restoration into economic strategies.

How does the EU ETS Phase III Impact on Green Innovation in MENA Border Countries?

Camilla Jensen
,
Roskilde University

Abstract

Keywords: Emissions Trading System (ETS), Middle East and North Africa (MENA), Enterprise Surveys (ES), Structural Equation Model (SEM), Trade Policy Spillovers, Carbon Leakage, 3rd Country Impact

JEL Codes: D03, C38, F13, Q52, Q56

This paper investigates the impact of the European Union Emissions Trading System (EU ETS) on 3rd countries in the Middle East and North Africa (MENA) region during Phase 3 (2015-2020). A structural equation model (SEM) model, previously calibrated with the Turkish and Italian World Bank Enterprise Survey (ES) datasets, is applied to other datasets available from the same data provider using the same methodology: Tunisia, Morocco, Lebanon and Egypt.

The hierarchical SEM model captures institutions (formal, informal and self-management), actions (adoption of energy conserving technologies) and outcomes (energy intensities) in one modeling framework and based on the same consistent data, only adding imputed values or dummies for ETS industries and industries with free allocations at high risk of carbon leakage.

Applying the SEM model and replicating the results for Turkey to the other four countries shows that impact may be heterogenous for the average country level effect. For Turkey positive trade policy spillovers dominate, whereas for Egypt the result is the opposite (carbon leakage impact dominates). Morocco gives similar results to Turkey and for Tunisia the effect is positive as for Egypt (the ETS is correlated with higher average energy intensities in the two cases of Tunisia and Egypt). The results for Lebanon are indeterminate. The system of free allocations has no independent impact in any of the five country cases investigated.

Various suggestions for improvements and robustness checks on the result are offered. Policymakers in MENA should anticipate a large impact of the CBAM on their ETS-related industries.

Government’s Role in Digital Transformation during the Pandemic: Evidence from Selected MENA Countries

Fatma Nur Karaman Kabadurmus
,
University of Wisconsin-Stout

Abstract

A growing body of research indicates a positive relationship between economic growth rates and the use of or access to digital technologies. Digital transformation is also a critical strategy for firms, enabling them to foster innovation and promote sustainable development. However, the degree of digitalization is heterogeneous across the countries in the Middle East and North Africa (MENA) region. For example, internet use ranges from 18% (Yemen) to 100% (Saudi Arabia) (International Telecommunications Union, 2021-22). Moreover, The MENA region has been experiencing persistently low growth long before the recent global shocks—including the COVID-19 pandemic, Russia's invasion of Ukraine, high inflation rates, tight policy measures, and the conflict in the Middle East.
Governments must create institutional and regulatory frameworks that support the use and accessibility of digital technologies since they are the primary driver of fundamental changes in economies and societies. To this end, this study examines the role of digital transformation and government policies on innovation performance at the firm level during the pandemic. We use the 2020-2022 World Bank Enterprise Survey (ES) COVID-19 module for four MENA countries (Jordan, Lebanon, Morocco, and Malta). The empirical evidence highlights that adopting digital technologies, such as online business practices and delivery options, fosters innovation. Additionally, government support for adopting digital technologies acts as a facilitator of innovation performance.
JEL Classifications
  • Q0 - General