Utility Subsidies as Social Transfers: An Empirical Evaluation of Targeting Performance

21 Pages Posted: 19 Oct 2007

Abstract

Subsidies to residential utility customers are important in-kind transfer mechanisms in developing countries. Do these subsidies reach the poor? This article finds the average targeting performance of water and electricity subsidies to be similar to that of other social-transfer mechanisms using the same targeting method. The most common form a quantity-based consumption subsidy aiming to subsidize low-volume customers is highly regressive. Many geographically-targeted and most means-tested utility subsidies are progressive, but still exclude many poor households. Connection subsidies are an attractive alternative in low coverage areas, but they will only reach the poor if utilities extend network access to poor households and if households choose to connect.

Suggested Citation

Komives, Kristin and Halpern, Jonathan and Foster, Vivien and Wodon, Quentin T. and Abdullah, Roohi, Utility Subsidies as Social Transfers: An Empirical Evaluation of Targeting Performance. Development Policy Review, Vol. 25, No. 6, pp. 659-679, November 2007. Available at SSRN: https://ssrn.com/abstract=1022691 or http://dx.doi.org/10.1111/j.1467-7679.2007.00391.x

Kristin Komives (Contact Author)

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Jonathan Halpern

Georgetown University ( email )

Washington, DC 20057
United States

Vivien Foster

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Quentin T. Wodon

World Bank ( email )

1818 H Street NW
Washington, DC 20433
United States
202-473-1446 (Phone)
202-522-0054 (Fax)

Roohi Abdullah

World Bank ( email )

Washington, DC 20433
United States

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