Abstract
When South Korea develops a new city, the government has made a preliminary decision on one of two heating systems, an individual heating system (IHS) or a district heating system (DHS). However, it is still unclear which system is desirable in terms of maximizing the national economic effect. Thus, this article aims to derive quantitative information about the economic effects of the same amount of production or investment in the two systems through an input-output (IO) analysis using the recently published 2017 IO table. More specifically, the production-inducing effects, value-added creation effects, and wage-inducing effects are systematically analyzed focusing on the IHS and DHS sectors. The results show that one dollar of production or investment in IHS or DHS causes about 1.073 and 1.388 dollars of production, about 0.228 and 0.658 dollars of value-added, and about 0.051 and 0.108 dollars in wages, respectively, throughout the national economy. Overall, the economic effects of the DHS sector are greater than those of the IHS sector. That is, when the same amount of investment or production is made in the two sectors, DHS produces more economic effects than IHS.
Highlights
The heating systems of South Korea have evolved into various forms with economic development.Before the 1980s, the primary fuels for residential heating were wood thicket and briquette
That is, when supplying heat in urban areas with high population density, policy makers must decide whether to provide individual heating system (IHS) or district heating system (DHS) to the areas. The latter has been preferred to the former because the latter uses cogeneration to dramatically reduce energy use; both heating systems use natural gas as fuel. It is still unclear which system is desirable in terms of maximizing the national economic effects
Using the demand-driven model, which is the basic model of IO analysis, this study investigates three economic effects: production-inducing effects, value-added creation effects, and wage-inducing effects
Summary
The heating systems of South Korea have evolved into various forms with economic development. Before the 1980s, the primary fuels for residential heating were wood thicket and briquette. After the second oil crisis and in accordance with the South Korean government’s energy diversification policy, natural gas was introduced in order to lower dependence on oil consumption. Since the 1980s, with economic development, heating fuel has started to change from oil to natural gas. The heating system was mainly changed to an individual heating system (IHS). Natural gas was supplied to the metropolitan area for the first time with the establishment of an acquisition base and a pipeline network. It has spread to metropolitan areas, and the number of households that have been supplied with IHS was 17.75 million as of 2017 [1]
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