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.
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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.