A cross-sectoral analysis of energy shortages in Pakistan: based on supply-driven input-output model

Abstract

The impacts of energy shortages characterized by regular blackouts, natural gas, and electricity load shedding in Pakistan affected each economic sector, causing an energy-induced crisis and ecological sustainability issues. This study was conducted to reveal the benefits of renewable energy and describe the economic losses associated with electricity unavailability using supply-driven input-output as a price model across 34 sectors. The results revealed that exogenous shocks in electricity prices are responsible for bringing significant fluctuations across the business cycle in the country. Similarly, the overall output of Pakistan’s economy will decrease by 24.89 rupees due to a 1-kilowatt-hour reduction in electricity supply. Moreover, both forward and backward linkages of Pakistan’s economy revealed that higher electricity allocation coefficients pose significant output impacts on most sectors. We conclude that indirect output impacts require due consideration to avoid the underestimation problem due to total electricity shortages. It is recommended that the government provide a social and legal framework to boost the environmental sustainability and economic activities in the textile, oil refining, production of cement, and fertilizer sectors for sustainable economic growth.