Willingness to Pay for Electricity Access in Extreme Poverty: Evidence from Sub-Saharan Africa

39 Pages Posted: 6 Aug 2019

See all articles by Maximiliane Sievert

Maximiliane Sievert

RWI - Leibniz Institute for Economic Research

Jevgenijs Steinbuks

World Bank - Development Research Group (DECRG)

Date Written: June 20, 2019

Abstract

Improving electricity access in low-income countries is a challenging problem because of the high costs of grid extension and low demand for grid electricity in rural areas. This study elucidates these constraints by analyzing poor households' willingness-to-pay for different types of electricity access, including lower cost off-grid technologies. The theoretical model illustrates how consumer preferences, operational and capital costs of electricity service delivery, and availability of power supply affect households' decisions to acquire electricity technology. These effects are then assessed empirically by estimating beneficiaries' willingness-to-pay for electricity in three low-income countries that have pockets of households living in extreme poverty -- Burkina Faso, Senegal, and Rwanda. Consistent with the theoretical model, the results indicate very low household willingness-to-pay for electricity access, and that willingness-to-pay diminishes as households' income declines. Therefore, the study recommends concentrating in the nearer term on ultra-low-cost decentralized off-grid solar technologies in programs to provide household electricity to the poor in rural areas.

Keywords: Energy Policies & Economics, Electric Power, Energy Demand, Energy and Mining, Energy and Environment, Energy Technology & Transmission, Inequality

Suggested Citation

Sievert, Maximiliane and Steinbuks, Jevgenijs, Willingness to Pay for Electricity Access in Extreme Poverty: Evidence from Sub-Saharan Africa (June 20, 2019). World Bank Policy Research Working Paper No. 8906, Available at SSRN: https://ssrn.com/abstract=3430517

Maximiliane Sievert (Contact Author)

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Jevgenijs Steinbuks

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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