Energy

Energy and the poor: some key facts:

• Energy can alleviate the drudgery in the lives of millions who today consume insufficient modern energy. They must walk instead of using transport, they live in unlit and unheated homes, they must toil without the benefit of powered machines, and they must cook using traditional fuels.
• Poor people save a lot of time by shifting to modern energy services—making time available for productive pursuits, education, and leisure. This time would otherwise have been required to collect traditional fuels, and in less productive manual effort.
• While poor people may rely in part on self-collected traditional fuels for subsistence cooking and heating needs, they exhibit a strong desire to use more convenient modern energy services and are willing to pay a substantial part of their cash income to obtain it. In doing so they attach a large value to the time saved and the quality of service made available.
• Modern energy services can enable poor households to engage in, and extend, activities that generate income. Electric lighting extends the working day, electric machines (such as sewing machines and looms) increase productivity, cooking fuels like kerosene and liquefied petroleum gas (LPG) enable households to increase the amount of food for sale.
• No one wants energy for itself; people want it for what it can do—energy is in this sense a “derived demand.” People demand energy to cook, provide lighting and refrigeration, drive motors, and obtain services like communications (telephones) and entertainment (televisions, radios).
• Equipment such as light fixtures, stoves, motors, pumps, sewing machines, and so forth are required to convert energy to services that people need. For poor people the initial cost of obtaining such equipment can be a critical factor in determining their ability to benefit from available energy—often more of a constraint than the recurrent costs of the consuming the energy itself.
• All social services are more effectively delivered and benefits are enhanced when modern energy services are also available. Primary and secondary health clinics need energy to store vaccines, operate medical equipment, and function after dark. Educational attainment is greater in households with electricity than in those without. Provision of clean water can depend critically on energy for pumping and treatment.
• Women and children are disproportionately affected by the lack of modern energy services. It is they who collect traditional fuels in remote areas, carry large loads and tend primitive fires. As a result they suffer animal bites, fatigue, smoke inhalation, and burns. The reduction in collection of traditional fuels and the improvements in indoor air quality made possible through the availability of modern cooking fuels have a huge positive impact on the lives of women and children.
• Much economic activity would be impossible without energy, and economic growth that raises incomes (or reduces income poverty) is strongly correlated with increased energy use. Energy is used in the production process of nearly every sector. Adequate quantity and reliability of energy supply are crucial to the ability of countries to compete for new export markets.
• Government borrowing and contingent liabilities of guarantees for investments in energy infrastructure are often a source of macroeconomic and fiscal instability. The poor are most vulnerable to such shocks.
• Well-designed subsidies are often essential to extend energy services to the poor.
• Corruption associated with the exclusive public or monopoly provision of energy services increases energy’s cost. Poor people are disproportionately affected, since they have the least ability to bear the increased cost. Therefore, reform that increases the choice of energy providers for consumers can benefit the poor.

PREVIOUS CHAPTER | NEXT CHAPTER