Energy price shocks induced by the Russia-Ukraine conflict jeopardize wellbeing

Abstract

The significant spike in global energy prices induced by the Russian-Ukrainian (RU) conflict is perceived as highly uncertain that may rise household living costs and adversely affect Sustainable Development Goals such as poverty elimination. However, the impacts on human wellbeing are entirely obscured by conventional economic analyses. Using the input-output price model and a human needs framework, we assess the impact of energy price shocks caused by the RU conflict on eight dimensions of human needs in 49 countries/regions. Our findings show that the non-material dimension Creation and the material dimension Protection are the most affected human needs globally, with declines of 3.7%–8.5% and 3.6%–8.4%, respectively. Households in BRICS countries are hit hardest on these human needs (2.0-2.2 times the global average) owing to higher price increases and higher energy-dependent consumption patterns. The human need satisfaction of low-income groups is not only severely affected, but also the poorer the country in which they reside, the more serious the decline of their satisfaction, while there is no such problem for higher income groups. Our findings underscore the need to consider both material and frequently overlooked non-material dimensions of wellbeing when designing targeted policies to protect the vulnerable from energy price shocks.