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How Valuable is the Reliability of Residential Electricity Supply in Low-Income Countries ? Evidence from Nepal

Author

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  • Alberini,Anna
  • Steinbuks,Jevgenijs
  • Timilsina,Govinda R.

Abstract

This study uses a contingent valuation approach to value the willingness-to-pay (WTP) for improved service experienced by households in Nepal following the end of the country's load-shedding crisis of 2008-2016. Using a detailed survey of grid-connected Nepali households, the authors calculate the WTP per outage-day avoided and the residential value of lost (VoLL) and analyze their key drivers. Households are willing to pay, on average, 123.32 NR ($1.11) per month, or 65 percent of the actual average monthly bill for improved quality of power supply. The preferred estimates of the VoLL are in the range of 5 to 15 NR/kWh (¢4.7-¢14/kWh). These estimates are below the marginal cost of avoided load shedding, and virtually the same as valuations at the beginning of the load-shedding crisis.

Suggested Citation

  • Alberini,Anna & Steinbuks,Jevgenijs & Timilsina,Govinda R., 2020. "How Valuable is the Reliability of Residential Electricity Supply in Low-Income Countries ? Evidence from Nepal," Policy Research Working Paper Series 9311, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9311
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    Cited by:

    1. Meeks, Robyn C. & Omuraliev, Arstan & Isaev, Ruslan & Wang, Zhenxuan, 2023. "Impacts of electricity quality improvements: Experimental evidence on infrastructure investments," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    2. Hashemi, Majid & Jenkins, Glenn, 2022. "Can privatization of distribution substations improve electricity reliability for non-residential customers? An application to Nepal," Utilities Policy, Elsevier, vol. 74(C).
    3. Timilsina, Govinda & Steinbuks, Jevgenijs, 2021. "Economic costs of electricity load shedding in Nepal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).
    4. Majid Hashemi, 2021. "The Effect of Reliability Improvements on Household Electricity Consumption and Coping Behavior: A Multi-dimensional Approach," Working Paper 1469, Economics Department, Queen's University.
    5. Majid Hashemi & Glenn Jenkins, 2021. "The Economic Benefits of Mitigating the Risk of Unplanned Power Outages," Working Paper 1468, Economics Department, Queen's University.

    More about this item

    Keywords

    Energy Policies&Economics; Energy Demand; Energy and Mining; Energy and Environment; Educational Sciences; Electric Power;
    All these keywords.

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