Electrification has been shown to accelerate opportunities for women by moving them into more productive activities, but whether improvements in economic outcomes also change gender norms and practices within the household remains unclear.
... See More + This paper investigates the causal link between electricity access and women's empowerment, using a large gender-disaggregated data set on India. Empowerment is measured by women's decision-making ability, mobility, financial autonomy, reproductive freedom, and social participation. Using propensity score matching, the study finds that electrification enhances all measures of women's empowerment and is associated with an 11-percentage point increase in the overall empowerment index. Employment and education are identified as the two most important causal channels through which electrification enables empowerment.
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Policy Research Working Paper WPS8796 MAR 28, 2019
Electricity shortages are among the biggest barriers to South Asia’s development. Some 255 million people—more than a quarter of the world’s off-grid population—live in South Asia, and millions of households and firms that are connected experience frequent and long hours of blackouts.
... See More + Inefficiencies originating in every link of the electricity supply chain contribute significantly to the power deficit. Three types of distortions lead to most of the inefficiencies: institutional distortions caused by state ownership and weak governance; regulatory distortions resulting from price regulation, subsidies, and cross-subsidies; and social distortions (externalities) causing excessive environmental and health damages from energy use. Using a common analytical framework and covering all stages of power supply, In the Dark identifies and estimates how policy-induced distortions have affected South Asian economies. The book introduces two innovations. First, it goes beyond fiscal costs, evaluating the impact of distortions from a welfare perspective by measuring the impact on consumer wellbeing, producer surplus, and environmental costs. And second, the book adopts a broader definition of the sector that covers the entire power supply chain, including upstream fuel supply and downstream access and reliability. The book finds that the full cost of distortions in the power sector is far greater than previously estimated based on fiscal cost alone: The estimated total economic cost is 4–7 percent of the gross domestic product in Bangladesh, India, and Pakistan. Some of the largest costs are upstream and downstream. Few other reforms could quickly yield the huge economic gains that power sector reform would produce. By expanding access to electricity and improving the quality of supply, power sector reform would also directly benefit poor households. The highest payoffs are likely to come from institutional reforms, expansion of reliable access, and the appropriate pricing of carbon and local air pollution emissions.
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Strong growth, driven by consumption and public investment, has continued. Macroeconomic stability is strained. Inflation has picked up, driven by food price increases initially and by non-food inflation more recently.
... See More + Notwithstanding rebound in garment exports and remittances, the current account deficit has widened significantly because of a surge in imports. A large increase in the disbursement of medium and long-term loans helped contain pressure on foreign exchange reserves and moderate the depreciation of the exchange rate. Monetary growth has been subdued because of decline in public sector borrowing from banks and reduced net international reserves, creating room for increased private sector credit growth. However, weak deposit growth and the persistence of high levels of non-performing loans have led to rise in lending rates. The fiscal deficit has increased despite underspending on public investment as revenue growth fell well short of the budget target. Excessive reliance on expensive saving instruments to finance the budget deficit has continued.Over the near-term, growth is expected to remain resilient, underpinned by strong domestic demand. Inflation is likely to accelerate with rising aggregate demand resulting in part from election related increase in private spending, an expansionary fiscal policy and depreciating exchange rate. The current account deficit and the fiscal deficits are projected to widen, but the risks of both external and public debt distress are low. Downside risks include fiscal slippages aggravated by drying up of assistance for supporting the Rohingyas, delays in banking reforms, loss of monetary policy predictability due to diminished central bank independence and weakening reform momentum in the run-up to the elections. Moving forward, creating more and better jobs by boosting private investments, diversifying exports and building human capital remain the top most policy priorities. In addition to handling macroeconomic imbalances through increased flexibility in the exchange rate and interest rates, this would require ensuring a predictable and efficient system of business regulation, faster progress on the implementation of the mega infrastructure projects, improving financial sector governance, and ensuring an adequate and reliable supply of electricity.
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As many as 50 million people in Pakistan may still live without connection to the electric grid. Pakistan also has some of the world's worst power outages.
... See More + Using data from a nationally representative two-period panel survey, this paper presents the first empirical evidence on the cost of unreliable electricity supply to households in Pakistan. The results show that lack of connectivity and poor reliability may be costing the country at least $4.5 billion (1.7 percent of gross domestic product) a year. Addressing the problem requires energy sector reforms to correct regulatory and institutional distortions in the gas and electricity sectors.
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Policy Research Working Paper WPS8582 SEP 12, 2018
This paper revisits the relationship between energy intensity and economic growth, using a flexible piecewise linear regression model. Based on a panel data set of 137 economies during 1990-2014, the analysis identifies a threshold effect of income growth on energy intensity change: although energy intensity is negatively correlated with income growth throughout the entire sample and study period, the declining rate significantly slows by more than 30 percent after the level of per capita income reaches $5,000.
... See More + Based on index decomposition, the analysis also finds that although structural change is important for intensity levels in all countries, the efficiency effect is more important in higher-income countries. The results suggest that when countries move beyond lower-middle-income levels, energy efficiency policies become far more critical for sustaining the rate of improvement in energy efficiency.
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Policy Research Working Paper WPS8322 JAN 30, 2018
Power shortages present a significant challenge to manufacturers, who rely on power as a key input to production. In Pakistan, power shortages are commonplace, but empirical evidence on the impact of shortages is still lacking.
... See More + Using a survey of 4,500 manufacturing firms for the year 2010-11, this paper estimates the impact of electricity shortages on firm productivity in Pakistan. The analysis finds that a 10 percent increase in the duration of outages on average leads to a 0.14 percent decrease in a firm's total revenue and a 0.36 percent decrease in the value added, all else being equal. There is heterogeneity in the impacts of shortages across sectors: the industries that are most energy-intensive, such as manufacturers of metal, wood, and paper, are affected the most severely by shortages.
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Policy Research Working Paper WPS8130 JUN 29, 2017
In many parts of the developing world, access to electricity is uneven and inconsistent, characterized by frequent and long hours of power outages.
... See More + Many countries now engage in systematic load shedding because of persistent power shortages. When and where electricity is provided can have important impacts on welfare and growth. But quantifying those impacts is difficult because utility-level data on power outages are rarely available and not always reliable. This paper introduces a new method of tracking power outages from outer space. This measure identifies outage-prone areas by detecting excess fluctuations in light outputs. To develop these measures, the study processed the complete historical archive of sub-orbital Defense Meteorological Satellite Program's Operational Linescan System (DMSP-OLS) nighttime imagery captured over South Asia on every night since 1993. The analysis computes annual estimates of the Power Supply Irregularity index for all 600,000 villages in India from 1993 to 2013. The Power Supply Irregularity index measures are consistent with ground-based measures of power supply reliability from the Indian Human Development Survey, and with feeder-level outage data from one of the largest utilities in India. The study’s methods open new opportunities to study the determinants of power outages as well as their impacts on welfare.
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Policy Research Working Paper WPS8131 JUN 29, 2017
Achieving universal access to electricity is one of the most important energy policy goals set by governments in the developing world. The recent empirical literature, however, paints a mixed picture about the economic viability of rural electrification.
... See More + Although many studies find substantial socioeconomic benefits from rural electrification, others propose that these benefits are overstated. This paper examines the hypothesis that the magnitude and the nature of benefits associated with electrification are highly context dependent. Using a panel data of 7,018 rural households in Bangladesh for 2005 and 2010, the paper explores two underlying determinants of the heterogeneity: the quality of electricity supply and the number of years of being connected to the grid. The analysis uses an instrumental variable and propensity-score-weighed fixed-effects model to address potential endogeneity of electricity adoption. The analysis finds that power outages have a negative impact on almost all development outcomes considered, while some benefits of electrification accrue only over the long run. The overall gain from expanding access to and improving reliability of electricity supply in Bangladesh is estimated to be US$2.3 billion a year.
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Policy Research Working Paper WPS8102 JUN 12, 2017
This paper examines the effect of energy costs on industry export competitiveness. Most studies in the literature use direct energy consumption (energy consumption at the final stage of production) and domestic energy prices to compute energy costs faced by domestic industries.
... See More + Using multi-country input-output information, this study measures the effect of aggregate energy costs on export performance, where aggregate energy costs include not only direct energy costs, but also indirect energy costs passed on through the upstream supply chain. This study develops a theoretical trade model that incorporates tradable intermediate goods to inform its empirical strategy. It then estimates a reduced-form model using a panel data for 10 manufacturing sectors in 43 countries from 1991 to 2012. The analysis finds that ignoring input-output relationships can lead to significant over- or underestimates of the effect of energy price shocks on exports, depending on intermediate factor intensities and trade relationships. Using estimated trade elasticities, the study simulates the economic consequences of energy cross-subsidies and carbon taxes. The results show that energy cross-subsidies that raise energy tariffs on industry to support lower rates for households and farmers in India could reduce the country's net manufacturing exports by $6.1 billion a year. Similarly, a carbon tax that unilaterally increases energy prices by 10 percent in the European Union could reduce European Union-wide net manufacturing exports by 1.9 percent annually.
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Policy Research Working Paper WPS8076 MAY 30, 2017
Chan,H. Ron; Manderson,Edward John Matlock; Zhang,FanDisclosed
This paper examines the causal relationship between energy efficiency and economic growth based on panel data for 56 high- and middle-income countries from 1978 to 2012.
... See More + Using a panel vector autoregression approach, the study finds evidence of a long-run Granger causality from economic growth to lower energy intensity for all countries. The study also finds evidence of long-run bidirectional causality between lower energy intensity and higher economic growth for middle-income countries. This finding suggests that beyond climate benefits, middle-income countries may also earn an extra growth dividend from energy efficiency measures.
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Policy Research Working Paper WPS8077 MAY 30, 2017
This paper estimates the welfare impact of rural electrification in India using nationally representative household panel survey data for 2005 and 2012.
... See More + Analysis based on a propensity-score-weighted fixed-effects model finds that while electrification is associated with a broad range of social and economic benefits, the size of the effects depends importantly on the reliability of electricity service. Gaining access to electricity combined with a reliable power supply is associated with a 17 percent increase in income during the sample period, but gaining access to electricity alone is associated with only a 9.6 percent increase in income. The net gain from both increasing the access rate and reducing power outages in rural India is estimated to be US$11 billion a year. Moreover, India's rural electrification policy appears to be progressive because lower-income households benefit more from access to electricity than higher-income households during the sample period.
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Policy Research Working Paper WPS7889 NOV 14, 2016
The government of Belarus (GoB) plans to increase district heating (DH) tariffs to cost-recovery levels and gradually phase out subsidies, replacing them with social assistance programs.
... See More + The purpose of this report is to analyze the social, sectoral, and fiscal impacts of the tariff reform and to identify and recommend measures to mitigate adverse impacts of DH tariff increases on the households. The analysis shows that a negative social impact is manageable if a tariff increase is accompanied by countervailing measures to compensate for the loss of purchasing power, in particular of the poor, through targeted social assistance, and energy efficiency programs. The reform is more likely to be successful if communication campaigns to address consumer concerns are carried out before significant price increases, and consumer engagement and monitoring systems are established. When tariff reform and mitigation measures are properly sequenced and coordinated, the reform will become more socially acceptable, consumers will benefit from better quality of services, the government will achieve positive fiscal savings, and the DH sector will become sustainable in the long term. The report is organized as follows: chapter one describes the GoB’s plans for the sector. Chapter two analyzes the principal challenges in the sector that necessitate tariff reform. Chapter three discusses tariff reform options and the likely impact of pursuing each of these options. Chapter four concludes by recommending a reform action package that includes customer communication and engagement, social protection measures, and investments in energy efficiency.
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Subsidies and cross-subsidies in the energy sector are common throughout Eastern Europe and Central Asia. In Belarus, revenues from an industrial tariff on electricity are used to cross-subsidize heating for households.
... See More + Input-output (IO) data and a household consumption survey are used to analyze the distributional impacts of this cross-subsidization. This paper illustrates cost shares and electricity-intensity of different sectors and consumption categories and uses the IO data to obtain first-order estimates of the distributional incidence of policy reform. The paper then analyzes distributional impacts of subsidy reform with a Computable General Equilibrium model. Although poorer households benefit from reduced heating costs, the increase in prices of other consumer goods due to higher electricity prices more than offsets the benefits they receive from the subsidies. The analysis finds that the current cross-subsidies are regressive, and policy reform would be highly progressive.
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Policy Research Working Paper WPS7385 AUG 06, 2015
This paper analyzes the dynamic effects of rate-of-return regulation on firms’ emissions compliance behavior when the price of emissions permits is uncertain.
... See More + The paper shows that uncertainty regarding the price of permits would motivate a regulated firm to adopt a more self-sufficient strategy and would reduce the cost-effectiveness of emission allowance trading. When allowance transactions are treated as capital investments, uncertainty could reverse the classic Averch-Johnson effect, so that a regulated firm would purchase fewer permits in the ex ante period than its unregulated counterpart. These results are driven by the asymmetric impact of a price change on the expected marginal value of allowances under rate-of-return regulation. A wider variation in the permit price and a decline in the regulated rate of return would amplify the asymmetry. These results have implications for the efficiency of the proposed global carbon trading system.
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Policy Research Working Paper WPS7343 JUN 26, 2015
Input-output analysis has been proven to be a powerful instrument for estimating embodied (direct plus indirect) energy usage through economic sectors.
... See More + Using 9 economic input-output tables of years 1987, 1990, 1992, 1995, 1997, 2000, 2002, 2005, and 2007, this paper analyzes energy flows for the entire city of Beijing and its 30 economic sectors, respectively. Results show that the embodied energy consumption of Beijing increased from 38.85 million tonnes of coal equivalent (Mtce) to 206.2 Mtce over the past twenty years of rapid urbanization; the share of indirect energy consumption in total energy consumption increased from 48 to 76, suggesting the transition of Beijing from a production-based and manufacturing-dominated economy to a consumption-based and service-dominated economy. Real estate development has shown to be a major driving factor of the growth in indirect energy consumption. The boom and bust of construction activities have been strongly correlated with the increase and decrease of system-side indirect energy consumption. Traditional heavy industries remain the most energy-intensive sectors in the economy. However, the transportation and service sectors have contributed most to the rapid increase in overall energy consumption. The analyses in this paper demonstrate that a system-wide approach such as that based on input-output model can be a useful tool for robust energy policy making.
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The European Union emissions trading scheme is the first international cap-and trade program for CO2 and the largest carbon pricing regime in the world.
... See More + A principle concern over the Emissions Trading Scheme is the potential impact on the competitiveness of industry. Using a panel of 5,873 firms in 10 European countries during 2001-2009, this paper seeks to assess the impact of the carbon regulation on three variables through which the effects on firm competitiveness may manifest unit material costs, employment and revenue. Our analysis focuses on three most polluting industries covered under the program- power, cement, and iron and steel. Empirical results indicate that the emissions trading program had different impacts across these three sectors. While no impacts are found on any of the three variables in cement and iron and steel industries, our analysis suggests a positive effect on both material costs and revenue in the power sector: the effect on material costs likely reflects the compliance costs associated with emissions trading or parallel renewable programs while that on revenue may partly due to cost pass-through to consumers. Overall our findings do not substantiate concerns over carbon leakage, job loss and industry competitiveness at least during the study period.
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Journal Article 82838 DEC 12, 2013
(Ron) Chan, Hei Sing; Li, Shanjun; Zhang,FanDisclosed
The aggregate manufacturing energy intensity of 28 countries in Eastern Europe and Central Asia had declined by 35 percent during 1998-2008. This study reveals strong evidence of convergence: less efficient countries improved more rapidly and the cross-country variance in energy productivity narrowed over time.
... See More + An index decomposition analysis indicates that energy intensities declined largely because of more efficient energy use rather than shifts from energy intensive to less intensive manufacturing activities. Income growth and energy price increases were the main drivers of the convergence. They dominated the impact of trade, which led to specialization in energy intensive industries.
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The European Union Emissions Trading Scheme is the first international cap-and-trade program for carbon dioxide and the largest carbon pricing regime in the world.
... See More + A significant concern over the Emissions Trading Scheme has been the potential impact on the competitiveness of industry. Using data on 5,873 firms in ten European countries during 2001-2009, this paper assesses the impact on three variables through which the effects on firm competitiveness may manifest -- unit material costs, employment and revenue. The analysis focuses on the three most heavily-emitting industries under the program -- power, cement, and iron and steel. Empirical results indicate that the Emissions Trading Scheme has had different impacts across these three sectors. Although no impacts are found on any of the three variables in the cement and iron and steel industries, a positive effect is found on both material costs and revenue in the power sector. The effect on material costs likely reflects fuel-switching to reduce carbon dioxide emissions, while that on revenue may be partly due to cost pass-through to consumers in a market that is less exposed to competition outside the Europen Union. Overall the findings do not substantiate concerns over carbon leakage, job loss or industry competitiveness during the study period.
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Policy Research Working Paper WPS6662 OCT 01, 2013
