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Measuring welfare gains from better quality infrastructure (English)

Projects and reforms targeting infrastructure services can affect consumer welfare through changes in the price, coverage, or quality of the services provided. The benefits of improved service quality-while significant-are often overlooked because they are difficult to quantify. This paper reviews methods of evaluating the welfare implications of changes in the quality of infrastructure services within the broader theoretical perspective of welfare measurement. The study outlines the theoretical assumptions and data requirements involved, illustrating each method with examples that highlight common methodological features and differences. The paper also presents the theoretical underpinnings and potential applications of a new approach to analyzing the effects of interruptions in the supply of infrastructure services on household welfare.


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    Klytchnikova,Irina I., Lokshin,Michael M.

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    Policy Research Working Paper

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    The World Region,

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    Measuring welfare gains from better quality infrastructure

  • Keywords

    quality of infrastructure;change in consumer surplus;indirect utility function;quality of drinking water;marginal utility of income;level of service quality;water supply and sewerage;empirical method;improvements in service quality;alternative sources of energy;household production function approach;millennium development goal;marginal utility of consumption;welfare impact;Electricity;price and quality;infrastructure service;stated preference methods;quality of public;drinking water supply;contingent valuation survey;demand curve;electricity and gas;flexible functional form;linear demand function;water treatment system;change in welfare;measures of welfare;drinking water contamination;public water supply;Access to Electricity;price of fuel;indoor air pollution;gap in access;piped water supply;gas and electricity;bottled water;access to water;municipal water supply;data on consumption;choice of service;change in prices;price or quality;safe drinking water;high quality water;availability of energy;water and wastewater;expenditures on health;information on expenditures;intermittent water supply;availability of fuel;fixed monthly fee;sources of water;term of data;radio and television;water supply interruption;frequency of service;risk of illness;investment in rehabilitation;provision of water;water supply reliability;provision water;risk of exposure;Electricity Sector Reform;modern energy service;estimation of equation;cost of electricity;household energy use;price of energy;choice of fuel;reform household;demand for electricity;infrastructure service provider;estimated welfare measures;level of consumption;source of energy;price of gas;source of fuel;impacts of infrastructure;availability of data;welfare effect;estimation method;reveal preference;improved service;overhead tank;Health Service;welfare gains;behavior model;price change;household behavior;budget share;conjoint analysi;perfect substitute;weak complementarity;fuel wood;price variation;perfect substitutability;compensating variation;expenditure function;random utility;fuel availability;household utility;boil water;energy source;welfare change;marginal price;choke price;purchased commodity;organic chemical;welfare implication;household income;demand system;welfare measurement;welfare analysis;household services;data requirement;quantity demand;advance warning;budget constraint;consumer welfare;energy conversion;demand estimates;nature reserve;household consumption;residential electricity;unknown parameter;ground water;household budget;benefit analysis;water source;poor household;experimental data;cost models;initial price;choice model;water quality;electricity service;sunk cost;consumption pattern;welfare economics;increased competition;hedonic pricing;cash outlays;soft drink;consumption bundle;household level;social assistance;affected households;vulnerable household;pricing reform;reform scenario;electricity range;infrastructure reform;connection charge;hypothetical bias;survey design;survey area;Durable goods;quality improvement;policy simulation;choice experiments;horizontal axis;equivalent variation;urban household;rural area;household survey;substitute fuel;future investment;volumetric charge;marginal tariff;harmful bacteria;quantity combination;water consumption;implicit price;behavioral change;water tank;receiving water;hypothetical scenario;supply constraint;household appliance;survey questions;energy availability;subsequent section;service consumption;kerosene lamp;health problem;kerosene consumption;primarily use;fuel use;input use;welfare level;price level;market good;lower demand;average consumption;solid line;income elasticity;consumption expenditure;welfare costs;improved sanitation;electricity outages;welfare improvement;Learning and Innovation Credit;infrastructure spending;high reliability;demand equation;household welfare;household use;sustainable energy;sustainable access;econometric model;infrastructure availability;client household



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Klytchnikova,Irina I. Lokshin,Michael M.

Measuring welfare gains from better quality infrastructure (English). Policy, Research working paper ; no. WPS 4217 Washington, D.C. : World Bank Group.