Willingness to pay for electricity access in extreme poverty: Evidence from sub-Saharan Africa. (April 2020)

• Record Type: Journal Article
• Authors: Sievert, Maximiliane; Steinbuks, Jevgenijs
• Is Part Of: World development. Volume 128(2020)
• Publication Date: 2020-04
• Subjects: O12 -- O13 -- O55 -- Q42; Electricity access -- Extreme poverty -- Sub-Saharan Africa -- Willingness-to-pay; Economic history -- 1990- -- Periodicals; Economic assistance -- Developing countries -- Periodicals; 330.9
• DOI: 10.1016/j.worlddev.2019.104859
• Languages: English
• ISSNs: 0305-750X

Abstract

Highlights: Consumer preferences, costs and quality of electricity determine access technology. Electricity access has a high value relative to households' expenditures. Willingness-to-pay for electricity access is low relative to its service cost. Households' income is critical driver of willingness-to-pay for electricity access. Short-term household electrification should focus on off-grid solar technologies. Abstract: Improving electricity access in low-income countries is complicated because of high service costs and low electricity consumption levels in rural areas. This study elucidates this problem by analyzing poor Sub-Saharan African households' willingness-to-pay for different types of electricity access, including both grid and lower cost off-grid technologies. We show both theoretically and empirically that at low levels of income, low-cost decentralized off-grid solar technologies provide the highest utility from the households' perspective. We, therefore, recommend concentrating the near-term rural household electrification efforts on these technologies.