Using contingent behavior analysis to measure benefits from rural electrification in developing countries: an example from Rwanda

Hundreds of millions of people in Sub-Saharan Africa do not have access to electricity and will not receive it from national grids in the next few decades. Electricity makes up an important component of rural development and so increasing access can have positive socioeconomic benefits. In this study, we use contingent behavior analysis to quantify the potential benefits of electricity in rural Rwandan villages which currently do not have electricity. The proposed method allows for calculation of net benefits as well as electricity bills. We find that even relatively poor, isolated households would pay for electricity, though amounts vary across households and this affects the financial viability of electrification. Common uses for electricity include lighting, battery charging, and agricultural processing. Despite heterogeneity, opportunities exist to improve rural economic welfare through increased electricity access. - Highlights: • A lack of electricity slows economic growth in rural villages of Sub-Saharan Africa. • Household survey provides data on potential electricity use in Rwandan villages. • Contingent behavior analysis estimates total economic surplus from electricity. • Household electricity bills estimated to calculate investment returns. • Investment in rural electrification likely to bring positive benefits to rural Rwanda.