The Welfare Impact of Rural Electrification
-
Upload
mari-compton -
Category
Documents
-
view
53 -
download
3
description
Transcript of The Welfare Impact of Rural Electrification
The Welfare Impact of Rural Electrification
Howard White
IEG, World Bank
Introduction
IEG impact studies Rigorous and relevant Theory-based Link to CBA
Rural electrification (RE) Multi-country Portfolio review Multiple data sets Country case studies
Overview
Strategy and portfolio Output achievements Who benefits? Identifying benefits Returns Policy implications
Underlying theme of evaluation design
Evaluation design I: portfolio review Identify all RE projects – there is no list and RE
activities fall under many projects Dedicated RE – becoming more common Larger energy sector project – RE component may be
very small (e.g. a study), usual rule of thumb is 10% budget to count
Multi-sector – mainly Community Driven Development (CDD)
Portfolio review analyses the universe of projects Quantitative Qualitative
What counts as a RE project?
1980-95 1996-2000 Total
Dedicated RE project
17 (33%) 25 (37%) 42
Energy sector with RE component
23 (44%) 21 (30%) 44
Multisectoral 12 (23%) 22 (32%) 34
Shifting regional focus
Changing strategy
1993 Policy Papers Environment Private sector
1996: Rural energy and development: improving energy supplies for 2 billion people
2001 sector board paper ‘helping poor directly’ one of four pillars, which includes priority to gender issues
One consequence of strategy: Increasing number of RET and off-gird projects Percentage projects with off-grid
1980-95: 2% 1996-2006: 60%
Percentage RE projects with RET 1980-95: 35% 1996-2006: 62%
Practice lags strategy: welfare
Practice lags strategy: gender
First conclusion
Disconnect between strategy and project design, with little explicit attention to poverty and gender objectives in the majority of projects
Outputs
Most (but not all) projects deliver on infrastructure
In particular a series of dedicated projects can make a very substantial contribution to RE coverage Indonesia Bangladesh
There has been progress on institutional issues but it is uneven
Evaluation design II: the role of descriptive analysis (the factual) Targeting – profiles of who benefits? So need
characteristics Uses of electricity – need detailed data on
appliance usage Alternative fuel sources – need detailed data
on fuel usage for all activities
Issues in questionnaire design
Who benefits?
0
5
10
15
20
25
30
0 10 20 30 40 50 60 70
Rural electrification rate
Sh
are
of
the
bo
tto
m 4
0%
in
ele
ctr
ifie
d h
ou
se
ho
lds
Bangladesh
Philippines
Ghana
Peru
Nepal
Who benefits? II
Poorest remain excluded
0
10
20
30
40
50
60
70
80
90
0 2 4 6 8 10 12 14
Years since grid connection
Ele
ctr
ific
ati
on
ra
te
All households
Poor households
54% connect in first year
Another 10% connect in the next two years...
… then it takes 7 years for the next 10% to connect
Second conclusion
RE reaches poorer groups as coverage expands, but there remains a residual of unconnected households in connected villages for many years
Evaluation design III: who is the control group? (the counterfactual) Need a control group identical to treatment
group Selection bias
Program placement Self-selection
Approaches RCTs Statistical matching (PSM or regression discontinuity) Regression
Is selection just on observables?
Uses
Lighting TV Other household appliances Small business appliances Social facilities
Uses of electricity
Benefits Domestic benefits
Recreation Homework Information NOT cooking
Productive uses Home enterprise Industry Agriculture
Social benefits Facilities Staffing SafetyEnvironmental benefitsNeed HIGH QUALITY data on all these
Quantification of benefits
Approach WTP Income gain Value of fertility decline Environmental benefits
The problem of double counting
Consumer surplus & WTP
0
2
4
6
8
10
12
0 20 40 60 80 100 120 140
Quantity
Pri
ce Pk
Pe
QeQk
A
B C
D E
Costs versus benefits I
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
Bangladesh1990
Lao PDR 2005 Philippines1994
India (NathpaJhakri) 1989
India(Rajasthan)
2000
Indonesia 2000
US
$/kW
h
WTP Price Cost of supply
Cost versus benefits 2
WTP > supply cost ERRs high (20-30%) Higher for grid extension than off-grid, for
which costs higher and benefits lower
Third conclusion
WTP is high enough to ensure a good ERR and financial sustainability in many cases (caveat on Africa). Grid extension economically superior to off-grid programs.
Policy implications
Good economic analysis can inform policy Design to catch up with strategy
Smart subsidies Consumer information Support to productive uses
Balance grid and off-grid