Beneath The Surface
Accessing energy to reduce poverty
MY students of JU recently conducted a survey in some selected villages -- and on 300 households -- with sponsorship from ADB and Techno Consult Ltd. The objective was to evaluate the impacts of access to gas on welfare, especially of the poor. As we all know, only 12% of households for the bottom fifth of income distribution and 21% of the second lowest quintile have access to electricity.
Most of the households in the top quintile have access to electricity. This means that access of the poor to electricity is very poor in a regime of poor national access to electricity (which is 35% of population).
Bangladesh's per capita electricity consumption of 160 kwh in 2005 was among the lowest in the world. The rate of expansion of electricity generation and access, though significant, has proven thoroughly insufficient relative to the country's growing needs.
Moving ahead, the policy priorities of the sector would need to focus on implementing commercial and regulatory reforms, including price adjustments and mobilisation of investment.
It can be observed that in the sample areas as a whole, 35% of the households were found to be poor households. These households earn a monthly income of less than Tk.7000/month and hence fail to meet the minimum requirement of balanced nutrition for household members.
However, a look at the poverty status on the basis of access to public utility services reveals interesting observations. The highest share of poor households is 40%, where the households do not have access to either electricity or gas, in the control areas. On the other hand, the highest share of non-poor households is 77% in areas where the households have access to both gas and electricity. The lowest share of poor households belongs to areas with access to both electricity and gas.
One of the important effects of access to gas and electricity should be the changes in price levels in local markets. With access to gas and electricity the prices of land and labour tend to go up, while the prices of coarse rice tend to go lower than control areas.
The price of coarse rice increased more compared to areas with access to both gas and electricity. Agricultural and non-agricultural wages appears to have increased in areas where both gas and electricity are available. This might be due to the fact that better infrastructural facilities raise the demand for labour, thereby resulting in higher level of wages.
Households' capacity to purchase coarse rice is found to be highest in areas where both gas and electricity are available. Both agricultural and non-agricultural wages are higher in these areas, which in turn increases the purchasing power.
Non-agricultural wages in the control areas increased at a lower rate compared to the areas where both electricity and gas are available. Purchasing power appears to have been reduced in the control areas where there is lack of infrastructural facilities, which leads to lower demand for labour. This in turn also keeps non-agricultural wages down.
Information on the costs of fuel was collected as gas mainly helps in cooking at household level. It appears that fuel cost for the households with access to only electricity is roughly 120% higher compared to costs for the households with access to gas.
If the households do not have access to gas or electricity, the fuel costs seem to be higher by 88% as against the costs incurred by the households with access to gas.
It appears that having access to only electricity increases the probability of being non-poor by almost four times (3.675) compared to households who do not have access to either electricity or gas. When households have access to gas and electricity, the probability of being non-poor is eight times (8.108) as against households without any access to public utility services.
The econometric exercise that has been carried out in establishing a connection between gas and electricity and poverty seems to show that access to gas and electricity could reduce poverty by raising per capita income of households. Taking both gas and electricity, it can perhaps be concluded that access to gas and electricity are required for poverty reduction.
While the gas-growth-poverty connection is well taken by our policy makers, the implementation of projects to this effect is moving at snail's pace. Bangladesh needs to generate power, from gas and coal, at a much faster pace to make a dent in poverty. Energy reserves are like foreign exchanges reserves in the sense that both may cause poverty in plenty unless properly utilised.
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