Water, Electricity, and the Poor

“This book is an extremely thorough and readable review of how effective utility subsidies are in reaching the poor. It makes sobering reading for policy makers who have implemented such subsidy programmes, who are looking for ways to ameliorate heavy price increases, or who believed that these subsidies were useful instruments for alleviating poverty.” - Catherine Waddams, Director, Center for Competition Policy School of Management, University of East Anglia, United Kingdom “This study makes a fine contribution, theoretical and empirical, in an area where much nonsense has been preached, and many misconceptions have long been accepted as gospel. Analyzing a mass of material, the authors quantify the extent to which the most commonly applied forms of utility subsidies are regressive. And they then offer a range of practical measures that can be taken to correct the problem.” - John Nellis, Senior Fellow Center for Global Development, Washington, DC While consumer utility subsidies are widespread in both the water and electricity sectors, their effectiveness in reaching and distributing resources to the poor is the subject of much debate. Water, Electricity, and the Poor brings together empirical evidence on subsidy performance across a wide range of countries. It documents the prevalence of consumer subsidies, provides a typology of the many variants found in the developing world, and presents a number of indicators useful in assessing the degree to which such subsidies benefit the poor, focusing on three key concepts: beneficiary incidence, benefit incidence, and materiality. The findings on subsidy performance will be useful to policy makers, utility regulators, and sector practitioners who are contemplating introducing, eliminating, or modifying utility subsidies, and to those who view consumer utility subsidies as a social protection instrument. With contributions by Roohi Abdullah