Trade reforms, farm productivity, and poverty in Bangladesh

This paper analyzes the distributional impacts of trade reforms in rural areas of Bangladesh. The liberalization of trade in irrigation equipment and fertilizer markets during the early 1990s has led to structural changes in the agricultural sector and a significant increase in rice productivity. A resulting increase in output has been associated with a decline in producer and consumer rice prices of approximately 25 percent. Using a combination of ex-post and ex-ante approaches, the authors investigate the implications of the changes in rice productivity and prices for the welfare of households. They find that the net effects of increased rice productivity and lower rice prices have benefited the poor. Regardless of the particular category analyzed, the poorest households emerged as being particularly positively affected by reforms in the 1990s. This mainly reflects the fact that they are predominantly net rice buyers in both urban and rural markets. In contrast, large net sellers of rice, among the better-off households in the rural areas, were the main losers. Since net buyers in rural areas tend to be poorer than net sellers, trade liberalization has benefited the poor. Although the authors are not able to test empirically what has happened to the welfare level of agricultural wage earners, secondary evidence suggests that they have gained from trade liberalization.Rural Poverty Reduction,Economic Theory&Research,Markets and Market Access,Crops&Crop Management Systems

Measuring welfare gains from better quality infrastructure

Projects and reforms targeting infrastructure services can affect consumer welfare through changes in the price, coverage, or quality of the services provided. The benefits of improved service quality-while significant-are often overlooked because they are difficult to quantify. This paper reviews methods of evaluating the welfare implications of changes in the quality of infrastructure services within the broader theoretical perspective of welfare measurement. The study outlines the theoretical assumptions and data requirements involved, illustrating each method with examples that highlight common methodological features and differences. The paper also presents the theoretical underpinnings and potential applications of a new approach to analyzing the effects of interruptions in the supply of infrastructure services on household welfare.Energy Production and Transportation,Town Water Supply and Sanitation,Markets and Market Access,Economic Theory&Research,Water and Industry

Poverty and environmental impacts of electricity price reforms in Montenegro

The Government of Montenegro is preparing an electricity tariff reform due to recent developments in the national and regional electricity markets. Electricity tariffs for residential consumers in Montenegro are likely to gradually increase by anywhere from 40 to over 100 percent. This significant price rise will impose a heavy burden on poor households and it may adversely affect the environment. In an ex-ante investigation of the welfare impact of this price increase on households in Montenegro, the authors show that the anticipated price increase will result in a significant increase in households'energy expenditures. A simulation of alternative policy measures analyzes the impact of different tariff levels and structures on the poor and vulnerable households in particular. Higher electricity prices could also significantly increase the proportion of households using fuelwood for space heating.Energy Production and Transportation,Electric Power,Environment and Energy Efficiency,Energy and Environment,Engineering

Methodology and Estimation of the Welfare Impact of Energy Reforms on Households in Azerbaijan

This dissertation develops a new approach that enables policy-makers to analyze welfare gains from improvements in the quality of infrastructure services in developing countries where data are limited and supply is subject to interruptions. With the tight budgetary constraints that usually exist, it is important to be able to prioritize public sector investments on the basis of expected benefits. However, policy analysts are rarely able to measure the benefits of improving the quality of infrastructure services, even though they may yield large welfare benefits. The most frequently cited reason for failures to carry out such welfare analysis is the scarcity of data on service quality. The main contribution of this dissertation is a new model of welfare evaluation of changes in the quality of infrastructure services. This model is estimated using the existing data from household energy surveys or data from the energy sections of multi-purpose household surveys. Potential applications of this model range from ex-ante reform evaluation to ex-post monitoring of policy outcomes, which makes this approach a useful contribution to policy analysis and to the literature on welfare evaluation of quality changes in infrastructure. An application of the proposed model in the former Soviet Republic of Azerbaijan demonstrates how this approach can be used in welfare assessment of energy sector reforms. The planned reforms in Azerbaijan include a set of measures that will result in a significant improvement in supply reliability, accompanied by a significant increase in the prices of energy services so that they reach the cost recovery level. Currently, households in rural areas receive electricity and gas for only a few hours a day because of a severe deterioration of the energy infrastructure following the collapse of the Soviet Union. The reforms that have recently been initiated will have far-reaching poverty and distributional consequences for the country as they result in an improvement in supply reliability and an increase in energy prices. The new model of intermittent supply developed in this dissertation is based on the household production function approach and draws on previous research in the energy reliability literature. Since modern energy sources (network gas and electricity) in Azerbaijan are cleaner and cheaper than the traditional fuels (fuel wood, etc.), households choose modern fuels whenever they are available. During outages, they rely on traditional fuels. Theoretical welfare measures are derived from a system of fuel demands that takes into account the intermittent availability of energy sources. The model is estimated with the data from the Azerbaijan Household Energy Survey, implemented by the World Bank in December 2003/January 2004. This survey includes an innovative contingent behavior module in which the respondents were asked about their energy consumption patterns in specified reform scenarios. Estimation results strongly indicate that households in the areas with poor supply quality have a high willingness to pay for reliability improvements. However, a relatively small group of households may incur substantial welfare losses from an electricity price increase even when it is combined with a partial reliability improvement. Unlike an earlier assessment of the same reforms in Azerbaijan, analysis in this dissertation clearly shows that targeted investments in improving service reliability may be the best way to mitigate adverse welfare consequences of electricity price increases. Hence, policymakers should focus their attention on ensuring that quality improvements are a central component of power sector reforms. Survey evidence also shows that, although households may incur sizable welfare losses from indoor air pollution when they rely on traditional fuels, they do not recognize indoor air pollution as a factor contributing to the high incidence of respiratory illness among fuel wood users. Therefore, benefits may be greater if policy interventions that improve the reliability of modern energy sources are combined with an information campaign about the adverse health effects of fuel wood use

The Profile of Poverty in Tajikistan: an update 1999 to 2003

Tajikistan is one of the poorest countries in the world and ranks 113th among 175 countries according to the UNDP’s Human Development Report 2003. This paper uses data from the Tajikistan Living Standards Survey (TLSS) conducted in May-June 2003 to examine the level and composition of poverty within the country. It compares the results with those derived from analysis of the 1999 TLSS to look at changes over the previous four years. The findings indicate that there has been a significant reduction in the proportion of households living in poverty in Tajikistan over the period 1999 to 2003. In 2003, 64 percent of the population was poor compared with just over 80 percent in 1999. Nevertheless Tajikistan remains the poorest country in the CIS-7 region, with poverty rates of 54 percent in Kyrgyz Republic (2001) and 45 percent in Moldova (2002). The gains in living standards have not been equally distributed across the county, with virtually no improvement in poverty rates between 1999 and 2003 in Dushanbe, urban RRS and Sugd. Moreover, although poverty rates have fallen, inequality appears to have widened between 1999 and 2003. While there has been growth in per capita expenditures across the distribution, growth has generally been higher in the top half of the distribution. Other indicators of welfare, including subjective measures, indicate increasing levels of stress and social exclusion. Thus urgent reforms are necessary to improve governance and so foster private sector development and to complete the process land reform which has been delayed in cotton growing areas such as Khatlon. Only then will the poorest be able to benefit from the peace.<br/

Banking crises in transition economies : fiscal costs and related issues

Helena Tang; Edda Zoli; Irina Klytchnikov

Poverty and environmental impacts of electricity price reforms in Montenegro

The creation of the Energy Community of South Eastern Europe in 2005 committed countries in South Eastern Europe to liberalize their energy markets in accordance to EU regulations. The Government of Montenegro is thus in the process of reforming its energy sector, which includes an electricity tariff reform. This paper analyzes the environmental and social impacts of an increase in residential electricity tariffs contemplated - which is expected to range anywhere from 40 to over 100% increase. As this analysis shows, such a significant price rise will impose a heavy burden on the poor households and it may adversely affect the environment. In an ex ante investigation of the welfare impact of this price increase on households in Montenegro, we show that the anticipated price increase will result in a very significant increase in households' energy expenditures. A simulation of alternative policy measures analyzes the impact of different tariff levels and structures, focusing on the poor and vulnerable households. Higher electricity prices could also significantly increase the proportion of households using fuelwood for space heating. Thus the level of fuelwood consumption should be carefully monitored under the electricity tariff reforms and the Government of Montenegro should combine the tariff reforms with a carefully evaluated set of policy measures to mitigate the effect of the electricity price increase on the poor.Electricity price reform Poverty Environment

Regional economic impacts and the potential to benefit the poor

PRIFPRI3; ISIDSG

Does Quality of Electricity Matter? Household-Level Evidence From the Philippines

The Philippines is a country that faces many development challenges, including providing reliable and good quality electricity. Access to good quality electricity connection matters because it affects many aspects that increase productivity (e.g. education, health and business) and can make lives easier and more comfortable. While access has improved over time, many households still suffer from poor quality of their connection brought about by incidents of power outages, fluctuations and low voltage. This article attempts to examine whether better electricity quality improves household welfare. We apply a two-stage probit-ordered probit model to overcome endogeneity caused by reverse causation between electricity quality and household income. We find that households experiencing better electricity quality decrease the probability of remaining in the lowest income category by 23%