Averting Expenditures and Willingness to Pay for Electricity Supply Reliability

Naghmeh Niroomand () and Glenn Jenkins ()
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Naghmeh Niroomand: Automotive Powertrain Technologies Laboratory, Empa - Swiss Federal Laboratories for Materials Science and Technology, Switzerland

No 2022-16, Development Discussion Papers from JDI Executive Programs

Abstract: Nepal has suffered from the worst electricity shortages in South Asia. This study is an attempt to measure the willingness to pay for an improved service using a model of revealed preference. Respondents are asked about the actions they are taking to reduce the impact on their household or business of scheduled and unscheduled outages and more stable voltage. We estimate the averting expenditures that were being incurred to compensate for the lack of reliability of the electricity service. The estimated cost of the averting actions as a percentage of the electricity bills is 53 % for households, 47 % for small businesses, 46 % for medium businesses, and 35 % for large businesses. Based on the estimations, we find that in 2017 the annual benefit from improving the reliability of the electricity service would be approximately US$ 188 million with a present value over 20 years of US$ 1.6 billion.

Keywords: averting expenditures; electricity; reliability; revealed preference; willingness to pay (search for similar items in EconPapers)
JEL-codes: D61 Q41 (search for similar items in EconPapers)
Pages: 24 Pages
Date: 2022-12-05
New Economics Papers: this item is included in nep-dcm and nep-ene
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Journal Article: Averting Expenditures and Willingness to Pay for Electricity Supply Reliability (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:qed:dpaper:4597

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