The Benefits of Rural Electrification in Developing Countries

I am always surprised when people question the benefits of rural electrification programs in developing countries as sometimes happens. The argument goes something like this. People in rural areas cannot afford much more than the amount of electricity required for basic lighting. In addition, there are other investments that may be more worthwhile than electricity such as education, health clinics, or clean water. This is fair enough, so let’s examine some of the benefits of rural electrification. Before getting started, here are some links to related posts on this blog.

The Household Benefits of Lighting with Electricity: Consumer Surplus Explained

Electric Power for Rural Growth, 2nd Edition

Measuring the Benefits of Rural Electrification

Measuring Household Lighting: Survey Design Issues

Rural Electrification and Communication

Facing Rural Energy Realities in Bangladesh

Impact of Rural Electrification in Peru:  A "New" Study

One reason for this skeptical attitude towards the impact of electricity in developing countries is that as friend of mine used to say, “Electricity by itself is nothing more than a dangerous wire.” The service being purchased is not really electricity at all, but such benefits as cooling, lighting, communications, cooling, heating, and socializing. Electricity is a means to an end and not the end itself. It also should be noted that electricity can be provided through a grid as is the case in most of the developed world, or through decentralized generation that often is based on renewable energy.

Computer Lab in Northern Vietnam:
Source: World Bank

The surprising thing is that those questioning the benefits of rural electrification go home in the evening, turn on their televisions, check their email, browse the internet, enjoy heating in winter and air conditioning in summer, sometimes cook their meals with electricity and sit down in a comfortable chair and read a nice book. It is true that not all of the benefits of electricity are affordable to poor people in developing countries, but certainly lighting, television, fans, and are within their means. Computers and internet cannot be far behind. Really, how can societies advance without electricity? I will leave the issue whether the benefits are with the costs of providing electricity for a later blog post.
To view a film and other resources continue below.

Some years ago I completed a book on this subject called Electric Power for Rural Growth. In 2014 I published the second edition. There also has been a comprehensive review of The Welfare Impact of Rural Electrification in the World Bank by the Independent Evaluation Group. For evaluating the impact of improved and less expensive lighting for rural households, there is an interesting economic four page article by Henry Peskin that explains the theory of consumer surplus and how it is applied to evaluating the benefits of rural electrification in A Primer on Consumer Surplus. For a more comprehensive work on this subject the original study that applied this approach to rural electrification was pioneered in study called Rural Electrification and Development in the Philippines.

For the more statistically inclined there are some recent papers just published on The Welfare Impact of Rural Electrification in Vietnam and Bangladesh. According the Vietnam paper, based two surveys in 2002 and 2005 households who adopt electricity experience improvements in the school attendance of their children. Electricity is used immediately for television viewing and of course for electric lighting making it easier to read, socialize, and enjoy the evening hours. In some cases this can lead to improved incomes as lighting makes possible running small businesses in the home.

Gender, Energy and Development

Energy is often thought of as poles, wires, and transmission lines. However, the only reason for this infrastructure exists is that they provide some sort of service to industry, businesses, and households. The same can be said for gas pipelines, large storage tanks for liquid petroleum gas and other types of energy. People, businesses, and other organizations pay for all of these energy services. That is the only reason that they exist at all.

Fuelwood Collection S. India by  D Barnes

So it is somewhat surprising that gender is often overlooked in the provision of energy services in developing counries. Electricity certainly has an impact on women and girls in developing countries through making the home environment more livable, encouraging girls to attend school, and reducing household drudgery. Rural electrification and electricity access now is recognized as a significant priority in many developing countries, especially those in S. Asia and Africa. But while attention often is paid to the wires and poles, is there enough attention to appliances operated by women including fans, small refrigerators, spice grinders, rice cookers, toasters, and others?

Also somewhat overlooked in the energy development business is that women and girls also can be the main suppliers of household energy in developing countries. There have been numerous studies documenting that woman and to a lesser extent men spend much time collecting most of their cooking fuels from the local environment. This fuel collection is time consuming and diverts time from both income earning or other household activities. In addition, the literature on the adverse health impacts of indoor air pollution resulting from burning biomass fuels on open fires or low quality stoves has become very well documented during the last 20 years. Finally, cooking fuels in developing countries contribute about 1 billion tons of CO2 to the atmosphere every year, and yet there is barely a mention of household fuels in the climate change debate.

See more below the break.

Rural Electrification and Low Connection Costs

Village in Maharashtra India: by D. Barnes

Many developing countries still have very high connection costs.  This helps with the utility to recover costs of providing serive, but it also means that many people even in areas with electricity available may not be able to afford a connection to the electricity grid.  Reasearch from around the world indicates that those countries wth low new service connection costs or which provide financal assistance for such costs have much higher rates of connection by poorer households. 

Given that the benefits of rural electrification are quite high, should countries or utilities with high connection costs consider changing their policies?

For more information see short note on
Transformative Power.

There will be more to come on this topic in the future as we are just collecting collecting cost information from a large number of countries.  See new post added in 2013.