Journal of
Development and Agricultural Economics

  • Abbreviation: J. Dev. Agric. Econ.
  • Language: English
  • ISSN: 2006-9774
  • DOI: 10.5897/JDAE
  • Start Year: 2009
  • Published Articles: 530

Full Length Research Paper

The welfare costs of electricity outages: A contingent valuation analysis of households in the suburbs of Kampala, Jinja and Entebbe

Eseza Kateregga
Makerere University Faculty of Economics and Management, Department of Economic Policy and Planning, P.O. Box 7062 Kampala, Uganda.
Email: [email protected]

  •  Accepted: 19 March 2009
  •  Published: 30 April 2009

Abstract

Electricity power outages have been quite rampant in Uganda since the early 1990s.The water hyacinth, faults in the transmission and distribution systems, other generation related faults and the ever increasing demand for electric energy in the face of a given load capacity, are factors that have been responsible for the numerous outages experienced by both commercial and domestic power consumers. Inconveniences that result from such power cuts are likely to differ across consumers depending on the types of consumption requiring power in different time periods. In this study, we use the contingent valuation method to elicit outage costs for electric energy consumers in 3 Ugandan suburbs. We subjected respondents to 8 descriptions of outage scenarios. We used payment cards and open-ended questions to elicit outage costs that accrue from each type of outage. Willingness to pay (WTP) means and medians for each outage type was estimated following the Ayer et al. (1955) estimation procedure and the implied aggregate outage costs calculated. The effects of socio-economic factors on responses from the open-ended questions were explored using Tobit model with sample selection effects. We find that electric energy as the main source of cooking fuel in the household, income and substitution costs were significant determinants of open-ended WTP.

 

Key words: Willingness to pay, electricity outage costs.