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The World Bank warns: The increase in energy prices would increase poverty and deaths from the cold in Albania
Written by SOT.COM.AL 22 Shtator 2023
Households with lower incomes tend to spend more of their budget on energy than those with higher incomes.
When moving from the lowest to the highest income levels, household energy expenditure as a share of total expenditure decreases by 8 percent in Albania and 4 percent in Croatia, Tajikistan and Turkey (see chart below), refers to a recent World Bank study for 22 countries in the Southeast Europe and Central Asia (ECA) region.
Even before the recent energy crisis, the poorest households were allocating up to 60 percent of their budgets to essentials such as food, shelter and energy, which left few funds available for better heating and insulation.
The Bank's study shows that households are at risk of falling into absolute poverty when energy prices rise. Further price increases could push many citizens in the 22 countries of the ECA Region into extreme poverty and the proportion of the population unable to keep their homes warm.
From other comparative data, Albania is among the countries with the highest level of poverty in the Region, and the shocks that may come from the increase in energy prices will be higher.
Many households also limit their heating demand below the normal standard. Kosovo reported that over 40 percent of its population could not keep their homes warm, followed by Albania, Bulgaria, and North Macedonia.
When analyzing the population that has an income 60 percent less than the average, Kosovo and Albania report respectively 53 and 58 percent of the population at this level of income that cannot provide heating.
The lack of heating has serious effects that lead to loss of life. The WB cites reports documenting high winter death rates among those living in low temperatures in their homes. There are also health costs associated with the additional burden on health systems. These risks are often more severe for children and the elderly.
Only 9 countries in the Region offer support schemes, compensating households for heating their homes, but they are often inefficient. For example, in Albania electricity subsidies are the most common compensation for pensioners with approximately 5 euros per month, while in Bosnia it is almost 200 euros per month.
If heating prices become unaffordable, households are often left with two unattractive choices: reduce home heating levels or switch to gas or wood-fired alternatives which often have higher emissions.