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Utility Subsidies as Social Transfers: An Empirical Evaluation of Targeting Performance

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  • Kristin Komives
  • Jon Halpern
  • Vivien Foster
  • Quentin Wodon
  • Roohi Abdullah

Abstract

Subsidies to residential utility customers are important in-kind transfer mechanisms in developing countries. Do these subsidies reach the poor? This article finds the average targeting performance of water and electricity subsidies to be similar to that of other social-transfer mechanisms using the same targeting method. The most common form - a quantity-based consumption subsidy aiming to subsidise low-volume customers - is highly regressive. Many geographically-targeted and most means-tested utility subsidies are progressive, but still exclude many poor households. Connection subsidies are an attractive alternative in low coverage areas, but they will only reach the poor if utilities extend network access to poor households and if households choose to connect. Copyright 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Kristin Komives & Jon Halpern & Vivien Foster & Quentin Wodon & Roohi Abdullah, 2007. "Utility Subsidies as Social Transfers: An Empirical Evaluation of Targeting Performance," Development Policy Review, Overseas Development Institute, vol. 25(6), pages 659-679, November.
  • Handle: RePEc:bla:devpol:v:25:y:2007:i:6:p:659-679
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    Cited by:

    1. Olfert, R. & Berdegué, J. & Escobal, J. & Jara, B. & Modrego, F., 2011. "Places for Place-Based Policies," Working papers 079, Rimisp Latin American Center for Rural Development.
    2. repec:eee:enepol:v:109:y:2017:i:c:p:782-793 is not listed on IDEAS
    3. Jiang, Zhujun & Lin, Boqiang, 2014. "The perverse fossil fuel subsidies in China—The scale and effects," Energy, Elsevier, vol. 70(C), pages 411-419.
    4. Whittington, Dale & Nauges, Céline & Fuente, David & Wu, Xun, 2015. "A diagnostic tool for estimating the incidence of subsidies delivered by water utilities in low- and medium-income countries, with illustrative simulations," Utilities Policy, Elsevier, vol. 34(C), pages 70-81.
    5. John Baffes & M. Ayhan Kose & Franziska Ohnsorge & Marc Stocker, 2015. "The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses," Koç University-TUSIAD Economic Research Forum Working Papers 1504, Koc University-TUSIAD Economic Research Forum.
    6. repec:dau:papers:123456789/4713 is not listed on IDEAS
    7. Charles E. McLure, 2014. "Reforming subsidies for fossil fuel consumption: Killing several birds with one stone," Chapters,in: Taxation and Development: The Weakest Link?, chapter 8, pages 238-284 Edward Elgar Publishing.
    8. Vagliasindi, Maria, 2012. "Implementing energy subsidy reforms : an overview of the key issues," Policy Research Working Paper Series 6122, The World Bank.
    9. Barde, Julia Alexa & Lehmann, Paul, 2013. "Distributional effects of water tariff reforms: An empirical study for Lima, Peru," UFZ Discussion Papers 14/2013, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).

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