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

Author

Listed:
  • 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. 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.
    2. 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).
    3. Majid Hashemi & Glenn Jenkins, 2021. "The Economic Benefits of Mitigating the Risk of Unplanned Power Outages," Working Paper 1468, Economics Department, Queen's University.
    4. 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).
    5. Timilsina, Govinda & Steinbuks, Jevgenijs, 2021. "Economic costs of electricity load shedding in Nepal," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).

    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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