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An econometric study of illegal electricity connections in the urban favelas of Belo Horizonte, Brazil

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  • Mimmi, Luisa M.
  • Ecer, Sencer

Abstract

The data from the project "Conviver," launched in 2006 in Belo Horizonte (Brazil), provides a unique opportunity to study illegal electricity connections. Based on an original dataset of 15,279 low-income households, this paper studies the incidence and determinants of illegality in the context of low-income urban favelas. The probability of engaging in illegal behavior is explained not just by low income, but by a combination of concurring factors: sub-standard energy provision and equipment; inefficient/incorrect use of domestic electric appliances and running an informal in-house business. These recurrent issues in the urban favelas aggravate a sense of exclusion from growth, which is generally recognized as a trigger of illegality. The impact of energy demand on energy-related illegality is carefully analyzed, and different empirical strategies adopted to circumvent some simultaneity problem between both decision processes. The effectiveness of consumption-based energy subsidies is also explored. In spite of some contrary arguments in the literature, in the context of peri-urban slums, such measures may exert a positive impact in mitigating illegal access and use of energy. Effectiveness will be enhanced by accompanying measures such as: perceivable improvements of equipment, metering and maintenance, promotion of beneficiaries' awareness of energy usage, and energy-saving behaviors.

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  • Mimmi, Luisa M. & Ecer, Sencer, 2010. "An econometric study of illegal electricity connections in the urban favelas of Belo Horizonte, Brazil," Energy Policy, Elsevier, vol. 38(9), pages 5081-5097, September.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:9:p:5081-5097
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