Electric Power For Rural Growth

How Electricity Affects Rural Life In Developing Countries

Douglas F. Barnes

• Publisher: Routledge
• Year: 2019
• Print ISBN: 9780367012236
• eBook ISBN: 9780429713309
• Edition: 1
• Topic: Social Sciences
• Subtopic: Sociology
• Index: Social Sciences

This book offers important historical information on the state of rural electrification in the 1980s. It also summarizes the development of benefit evaluation methods, along with findings from recent research on the impact of rural electrification for development.

1. Historical Public Policy Controversy

The blind faith placed in rural electrification during the 1960s and early 1970s as being a key to energy development policy bears resemblance to more recent calls by international organizations of Sustainable Energy for All (UN 2012). During those times, rural electrification was perceived almost as a magical force that would transform poor areas into highly productive regions. Advancing power lines into poor rural areas was synonymous with providing the necessary infrastructure for quickly bringing them into the 20th century. Communication, lighting, productivity increases, reduction in birth rates, the elimination of traditional customs blocking modernization and many other benefits would flow from a reliable supply of electricity to rural areas.

Electricity obviously plays an indispensable role in modern society and modern life; that a society could progress without a substantial commitment to rural electrification seemed almost incomprehensible to early planners, as it does even today. Certainly, electricity is a prerequisite for attaining the level of productivity and quality of life experienced in developed countries. However, this historical optimism contained within it the seeds of overselling a good policy, which perhaps provides cautionary lessons for today's energy policy makers.

If all these positive aspects concerning rural electrification were true, then why was there a controversy? Why were there questions about the priority rural electrification should have in development? The early optimism was clouded by reports in the 1980s from a number of countries indicating that the anticipated development effect of rural electrification had been slow to materialize. Prospective customers in villages and communities with new electricity service did not adopt it at the rate envisioned. When fewer people in rural communities took advantage of available electrical service, there was less chance that electrification programs would have an impact on rural productivity and quality of life. And since most rural electrification projects in developing countries were subsidized, lagging demand for electricity may have translated into a substantial financial strain on the power distribution companies, whether public or private. Also, concerns were raised regarding the equity of rural electrification investments and subsidies. Since mainly better-off villagers could afford to adopt electrification initially, there was the risk of worsening the gap between rich and poor.

The relevance of the historical debate for today is that the criticisms of rural electrification and lessons learned from poorly implemented past programs seem to have been forgotten. The required subsidies for reaching the poorest people in the world's most remote locations can be quite high. The agencies promoting electricity to those without it need to be financially sustainable to provide the type of service that can have significant socioeconomic impacts. For new advocates of rural electrification, the historical debate offers forgotten lessons.

The Historical Debate

Energy policy for developing nations before 1975 basically was rural electrification policy. Before the early 1970s, interest in rural electrification for developing nations had been stimulated by the tremendously successful programs implemented in the United States. The creation of the Rural Electrification Administration (REA) in the mid-1930s had led to enormous growth in rural electrification, a burst of rural productivity and dramatic improvement in the quality of rural life in the U.S. Rural electrification was administered through a separate government agency providing subsidized loans to rural cooperatives. These cooperatives constructed the distribution systems and administered the consumer billing and collection activities, but were seldom involved in the actual generation of electricity. The cooperatives generally were consumer oriented companies with the political ideals that electrical energy should be available to consumers at reasonable rates. Based on the experience of the cooperatives, the U.S. Agency for International Development (USAID) became the first donor agency with major involvement in rural electrification.

In the early U.S. programs, the rural electric cooperatives and commercial power companies were in conflict with one another. The early literature published by the REA contains many accounts of public power companies "skimming the cream." That is, the commercial companies would attempt to connect the most densely populated rural communities, leaving the expensive scattered consumers to the cooperatives. The advantage of establishing rural electric cooperatives was that they advocated the adoption of electricity by all rural consumers, and also promoted the purchase of appliances available in urban areas. The cooperatives had an institutional interest in connecting all rural consumers rather than just those most profitable to them.

Through the cooperatives, the REA was quite successful in extending electricity to rural areas. But owing to its success, many early problems encountered by the rural electrification programs have been forgotten. For instance, Muller (1944) assessed the state of U.S. rural electrification as follows:

Generally speaking, three factors influence the rural use of energy. There is little of the high industrial load and none of the dense residential load, which have made utility operation profitable in urban areas. Second, farmers and other rural residents are new, naturally conservative consumers. The purchase of electric energy becomes for most of them a considered alternative to other possible uses of their income. Rural consumers generally are still in the stage of exploring the economy and convenience of electric light and power, and they still hesitate to use these facilities in large quantities. Rural communities have not come to the realization of the advantages of electrification with respect to local industries. The third factor is the economic status of most rural residents. They have not found it easy to pay for wiring, equipment, or energy. In 1935, ...42.1 percent of the country's farms were operated by tenants; 34.5 percent were mortgaged, rendering it somewhat difficult for operators to make extensive improvements. Finally, of course, a fairly high percentage of farms are submarginal and not profitable even if electrified. These factors have worked together to keep rural loads and consumption per consumer low. (Frederick William Muller, Public Rural Electrification [Washington, DC: American Council on Public Affairs, 1944], paraphrased)

These same issues concerning rural electrification have been raised in developing countries today. Farmers in most developing countries lack the income or purchasing power of U.S. farmers of the 1930s and 1940s, yet the expectation for developing countries was framed on the U.S. experience. The early projects in such countries as Colombia, Ecuador, and the Philippines were expected to promote development like that which had occurred in the U.S. in the 1940s and 1950s. However, these early expectations were not realized.

The oil crisis in 1974 was followed by sharp increases in the price of commercial energy, which led to increased energy research and a movement to examine alternative forms of energy. The unrealistic expectations for rural electrification, along with increased emphasis on alternative forms of energy, led to a debate over rural electrification policy in the 1980s.

The reports on rural electrification generally can be classified into three time periods spanning from the early 1970s to the 1980s. In the early 1970s, several reports were favorable to rural electrification, giving optimistic assessments of the socioeconomic impacts. In the mid-1970s, a stream of reports criticized the then current rural electrification policy. As mentioned above...

Table of contents

• Cover
• Series page
• Half Title
• Title
• Copyright
• Dedication
• Contents
• Preface
• 1. Historical Public Policy Controversy
• 2. Impact Evaluation Study Design
• 3. Agricultural Development in India
• 4. Small-Scale Industry and Commerce
• 5. Rural Social Change
• 6. Equity and Poverty
• 7. Economics of Village Line Extension
• 8. The Continuing Debate
• 9. New Approaches in the 21st Century
• Appendix: Research Methodology