Abstract
The mountainous hinterland in rural Nepal lacks a fundamental social infrastructure. For example, the lack of electricity causes water provision difficulties, especially in mountainous areas where villagers, especially women and children, often spend a considerable amount of time just conveying water to their homes. To overcome this challenge, a subsidy policy for the installation of a solar-photovoltaic water pumping system (SWPS) has recently been implemented nationwide in Nepal. The Nepali government’s tight financial constraints require that the installation process is both economically and technologically sound. However, the institutional design of the current subsidization policy is price-distortionary and potentially induces the installation of inefficient systems. By collecting original field data from 38 wards in all seven regions of Nepal, this paper measures the SWPS’s technical efficiencies and then identifies relevant economic policies that will enhance the performance of the SWPS. Our results show, inter alia, that a higher dependency on financial support from the government is associated with excessive investment in the SWPS.
Highlights
This paper reports the relationship between the government subsidy program and the technical design and performance of solar water pumping systems that are installed in off-grid rural villages in the mountainous hinterland of Nepal
With respect to whether the resources that are inefficiently allocated to production and subsidy should be spent on building additional solar-photovoltaic water pumping systems (SWPSs), our results indicate that the inefficiently allocated resources for production and subsidy are equivalent to 68% more SWPS water supplied to households or 45% more SWPS installations
Because rural villages face tight financial and resource constraints, identifying efficient SWPS installation methods should be an important item on the policy agenda
Summary
This paper reports the relationship between the government subsidy program and the technical design and performance of solar water pumping systems that are installed in off-grid rural villages in the mountainous hinterland of Nepal. A number of papers investigates the effect of advance technology adoption Among the former, Requate [1] studies the development of advanced environmental technology and the timing of taxation policy implementation. Bhandari and Stadler [3], Nepal [4] and Surendra et al [5] have examined the status of installation; Gurung et al [6] have provided a snapshot of government subsidy policies; and Shrestha [7] has conducted a case study to assess the performance and problems associated with SWPSs in three villages. The current paper fills this gap, albeit not completely, by providing insights for designing polices of renewable energy in the off-grid mountainous hinterland of Nepal
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