Publication: The Welfare Impact of Rural Electrification : A Reassessment of the Costs and Benefits
Date
2008
ISSN
Published
2008
Author(s)
Independent Evaluation Group
Abstract
It has long been claimed that rural
electrification greatly improves the quality of life.
Lighting alone brings benefits such as increased study time
and improved study environment for school children, extended
hours for small businesses, and greater security. But
electrification brings more than light. It's second
most common use is for television, which brings both
entertainment and information. The people who live in rural
areas greatly appreciate these benefits and are willing to
pay for them at levels more than sufficient to cover the
costs. However, the evaluation of these and other benefits,
as well as of their distribution, has been sparse. This
report reviews recent methodological advances made in
measuring the benefits of rural electrification (RE) and
commends them. It also notes that the understanding of the
techniques shown in project documents is sometimes weak, and
quality control for the economic analysis in project
documents lacking. This study shows that willingness to pay
for electricity is high, exceeding the long-run marginal
cost of supply. Hence, in principle, RE investments can have
good rates of return and be financially sustainable. But
caveats are in order. The first caveat is that attention
needs to be paid to ensuring least cost supply, including
limiting system losses. Second, continued attention needs to
be paid to achieving the right balance between financial
sustainability and reaching the poor.
Citation
“Independent Evaluation Group. 2008. The Welfare Impact of Rural Electrification : A Reassessment of the Costs and Benefits. © Washington, DC : World Bank. http://hdl.handle.net/10986/6519 License: CC BY 3.0 IGO.”