Socio-Economic Impacts of Rural Electrification in Bhutan

Abstract

The study focuses on the impact of electricity on the income, health and education of the rural Bhutanese. The results are based on a with-without study from a survey carried out in four electrified villages and another four non-electrified villages in central Bhutan. Electrification, is seen to make overall energy costs in rural Bhutan cheaper by 33%. The shift from kerosene to electricity for lighting alone results in a consumers surplus of about Nu. 29,700 per household. Use of domestic electrical appliances have improved the living conditions of the rural Bhutanese. Each household, upon electrification, reduces 1.23 tons of CO2 emission in a year. Electrification alone may not be enough for rural development as regression analysis shows other socio-economic factors to be significant. Electrified households were found to have a 24% higher annual cash income. Poverty is less prevalent in electrified villages, but the disparity in income is not different than in non-electrified villages. The probability that households engage themselves in income generating activities upon electrification is found to be low. Health in electrified villages appears to improve through better living conditions at home and through the use of electricity in hospitals. There are more students studying for longer duration, and higher enrollment in non formal education in the electrified villages. Overall, the human development is better in electrified villages as evidenced by their higher, but partial, HDI.