The Impact of Rural Electrification: Challenges and Ways Forward

Rigorous impact evaluation that includes appropriately selected control groups must be a part of rural electrification program designs. Budgeting evaluation activities and engaging with evaluators at an early stage improves to likelihood of having a high quality evaluation design; plus, if deviations occur after the design stage, the evaluators are better prepared to adjust the design so that the impact results remain informative to policy makers and future program designers. Another takeaway is to use unified framework to specify the expected outcomes and the plausible sizes of impacts. If done at the beginning of the program, this will provide context to the kind of discussion that policy makers should engage in (e.g. if they should focus on health benefits or the potential to diffuse information campaigns to rural households). These points focus mostly on internal validity, but we also need to focus on external validity as well. Large scale rural electrification programs will provide an opportunity to test if the results from small scale impact evaluations translate to other settings. Something we have not stressed so far but that is important to keep in mind are the complementarities in the provision of different type of infrastructure. Large projects can provide an opportunity to explore complementarities with other infrastructure programs, such as mobile telephony, road access, and improved water and sanitation access. They can shed light on what are the most welfare-enhancing policy options when deciding what types of infrastructure to provide in rural areas, and especially to poor rural households. Finally, we reiterate the need to use an objective function that casts a wider net when deciding where to place electrification programs. Focusing solely on cost minimization can result in missed opportunities. When deciding where to deploy the electric grid in rural areas it is imperative to take into account the potential profits, specifically the agricultural potential of these areas. By using the isoprofit and cost minimization framework described, rural electrification programs have the opportunity to reach more poor households and have larger impacts in the lives of the rural poor by providing new opportunities and enhancing the synergies between the agricultural and non-agricultural sector. JEL Classification: O13, O38, Q56.