Social Aspects

Regulatory Strategies for Promoting Increased Access and Consumption Affordability

[NOTE: Readers should cross-reference this section with Quality of Service and with Tariff Design’s Pricing for the Poor.]

Core References

Regulation of the Quality of Infrastructure Services in Developing Countries
in Infrastructure for Poor People: Public Policy for Private Provision, Penelope J. Brooke and Timothy C. Irwin, eds., Washington, D.C.: The World Bank, 2003, pp. 233-275.
Baker, Bill and Sophie Trémolet

Describes how regulation of service quality can sometimes preclude operators from using low-cost technologies that could make service affordable for the poor. Examines how to use differentiated quality and alternate suppliers for the poor.

Impact of Market Structure on Service Options for the Poor
in Infrastructure for Poor People: Public Policy for Private Provision, Penelope J. Brooke and Timothy C. Irwin, eds., Washington, D.C.: The World Bank, 2003, pp. 179-208.
Ehrhardt, David

Describes how mechanisms to ensure competitive markets improve service provision for the poor.

Accounting for Poverty in Infrastructure Reform: Learning from Latin America’s Experience
Washington, D.C.: The World Bank, 2002.
Estache, Antonio, Vivien Foster, and Quentin Wodon

Examines strategies for serving the poor. Explains macroeconomic and microeconomic linkages between infrastructure reform and the poor and discusses setting priorities. Describes reforms’ impacts on access and affordability for the poor. Describes approaches for improving access for the poor, including operator obligations, connection targets, low-cost technologies, subsidies and cross-subsidies, and open entry. Also describes approaches for improving affordability, including lifeline subsidies, means-tested subsidies, vouchers, balancing connection and usage charges, billing options, and prepaid service.

Water, Electricity, and the Poor : Who Benefits from Utility Subsidies?
Washington, D.C.: The World Bank, 2005.
Komives, Kristin, Vivien Foster, Jonathan Halpren, and Quentin Wodon

Reviews how effective utility subsidies are in reaching the poor. Shows that while subsidies are widespread, their effectiveness in reaching and distributing resources to the poor is questionable.

Scorecard for Subsidies: How Utility Subsidies Perform in Transition Economies
Note no. 218 in Public Policy for the Private Sector. Washington, D.C., October 2000.
Lovei, Laszlo, Eugene Gurenko, Michael Haney, Philip O’Keefe, and Maria Shkaratan

Describes criteria for evaluating various subsidy schemes, including how well the poor are reached, the share of the subsidy that goes to the poor, the predictability of the benefit for the poor, the extent and significance of unintended side effects, and administrative cost and difficulty. States that the main types of utility subsidies in Central and Eastern Europe and the former Soviet Union are analyzed using a scoring system developed by the authors. Instructions on how to apply the scoring system are provided.

Liberalization and Universal Access to Basic Services Telecommunications, Water and Sanitation, Financial Services, and Electricity
Washington, D.C.: The World Bank, 2007.
OECD and The World Bank

Provides a cross sectoral analysis of how infrastructure reforms affect universal access. Finds that efficiency improvements also improve access. Competition is more important than privatization in improving efficiency. Direct command mechanisms, such as direct financing and rollout requirements, and price controls provide poor results.

Sectoral References

ELECTRICITY AND GAS

Auctioning Subsidies for Rural Electrification in Chile
Note no. 214 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 2000.
Jadresic, Alejandro

Explains that in Chile, the central government allocates funds to regional governments on the basis of need and their past performance in meeting needs, while regional governments in turn allocate funds in a form of a one-time direct subsidy to private companies to help cover investment costs. Describes the allocation of these funds.

Does Reform of Energy Sector Networks Improve Access for the Poor?
Note no. 209 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1997, May 2000.
Powell, S., and M. Starks

States that the fundamental cost characteristics of grid provision do not favor the provision of access to rural and poor populations, so grid-based electricity provision will not revolutionize access by the poor, but reductions in the fixed costs of transmission and distribution equipment, and innovations to reduce the costs of supplying remote areas, improve the prospects that grids will be extended to rural areas. However, the fixed costs of transmission and distribution equipment have not fallen enough to make it profitable to extend the grid to some rural populations. Concludes that extensions of the grid to these people must be subsidized.

Better energy services, better energy sectors—and links with the poor
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 26-32.
Price, Catherine Waddams

Examines direct and indirect effects of energy reforms on the poor. Considers effects of prices, quality improvements, access improvement, and environmental policies.

TELECOMMUNICATIONS

Universal Access: How Mobile can bring Communications to All
London, U.K.: GSM Association, 2006.
GSM Association

Examines mobile development around the world. Concludes that governments should rely on market forces as the primary means to extend access and connections, that subsidies should play only a last resort role, and that universal access policies should be transparent and reviewed regularly.

ICT Regulation Toolkit
Washington, D.C.: infoDev and the International Telecommunications Union, 2007, Module 4.

Describes universal service and access mechanisms.

New Models for Universal Access to Telecommunications Services in Latin America
Washington, D.C.: World Bank Group, 2007.
Stern, Peter A, and David N. Townsend

Assesses universal access experiences in Latin America. Finds that telecoms has a significant economic impact, privatization and liberalization make significant improvements in sector performance, universal access programs and funds for community access to phones are quite successful, and subsidies for telecenters give mixed results. Makes policy recommendations.

Extending Telecommunications beyond the Market
Note no. 206 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, March 2000, pp. 1-12.
Wellenius, Björn

Explains that universal service support programs mainly seek to extend service to uneconomic areas and customers. Cost-effective measures to achieve widespread access focus on removing obstacles that prevent the market from working well, offering alternatives to standard service, and using market mechanisms to allocate responsibility for extending service beyond the market and to quantify and allocate any necessary funding.

TRANSPORTATION

Scoping Study – Urban Mobility in Three Cities: Addis Ababa, Dar es Salaam, and Nairobi
Sub-Saharan Africa Transport Program Working Paper, number 70, World Bank, Washington, D.C., 2002.
World Bank

Reports the results of a study of urban mobility in three Sub-Saharan African cities – Addis Ababa, Ethiopia; Nairobi, Kenya; and, Dar-es-Salaam, Tanzania. A major impediment is poor institutional structures and, consequently, a lack of leadership. Concludes that the only way to derive significant improvements in the performance of the urban transport sector, is to reorganize the way in which urban transport is planned, and developed.

Urban Bus Toolkit: Tools and Options for Reforming Urban Bus Systems
Public-Private Infrastructure Advisory Facility, World Bank.
CPCS Transcom

Offers practical advice to enact fundamental system reforms.

WATER

Taking Account of the Poor in Water Sector Regulation
World Bank: Water Supply and Sanitation Sector Board Working Note, Paper No. 11, August 2006.
World Bank

Provides practical guidance on how regulatory frameworks can be designed and implemented in a way that is more conducive to expanding access and improving service to poor customers.

Designing Direct Subsidies for the Poor – A Water and Sanitation Case Study
Note no. 211 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, June 2000.
Vivien Foster, Andres Gómez-Lobo, and Jonathan Halpern

Explains that subsidies directed at public water companies have often benefited the middle class rather than the poor. States that the main advantages of direct subsidies to customers are that they are transparent and explicit, and minimize distortions in the behavior of water utilities ant their customers. The main drawbacks are higher administrative costs and the difficulty of designing suitable eligibility criteria.

Expanding Water and Sanitation Services to Low-Income Households
Note no. 178 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1998.
Komives, Kristin, and Penelope J. Brook Cowen

Describes concession in La Paz and El Alto. Bidders identified the number of water connections they would make in exchange for a pre-specified tariff. Several service quality attributes were specified in the contract regarding water quality, continuity of service, water pressure and flow, and customer service. The contract also mandated that all new water and sewer connections must be in-house connections.

The Design of Manila Concessions and Implications for the Poor
Washington, D.C.: The World Bank, 2002.
Rosenthal, Shane

Examines the experience of Metro Manila’s water and sanitation network. Concludes that the poor can benefit if the concessionaire has flexibility and alternative providers are allowed to serve markets where they have an advantage in doing so.

New Designs for Water and Sanitation Transactions: Making Private Sector Participation Work for the Poor
Washington, D.C.: The World Bank, undated.
World Bank

Considers policies that affect the poor, including tariff reform, governance, sector regulation, legal frameworks, competition, and private sector participation.

Key Words

Costs, Social policy, Distributional justice, Subsidies, Universal service, Contracting out, Franchising

 

Development and Funding of Universal Service Obligations

[NOTE: Readers should cross-reference this subsection with Effect of Competition on Decisions Regarding Tariff Rebalancing, Cross-Subsidization, and Funding of Social Obligations.]

Core References

Access by the Poor in Latin America’s Utility Reform Subsidies and Service Obligations
Discussion Paper No. 2001/75, World Institute for Development Economics Research, United Nations University, Helsinki, September 2001.
Chisari, Omar O., Antonio Estache, and Catherine Waddams Price

Discusses access and affordability for the poor. Cheaper technologies and various financing/lending schemes can lower costs for serving the poor, which increases access and affordability. Examines Latin American experiences.

Price Structures, Cross-Subsidies, and Competition in Infrastructure
Note no. 107 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1997.
Irwin, Timothy

Explains that the government can fund price subsidies from general tax revenue or simply rely on existing social safety nets rather than price subsidies. Criteria for evaluating this option include whether the costs are clear and measurable, whether administrative costs are as low as possible, whether the necessary revenue is raised at least possible cost, and how well the program is targeted toward those the government most wants to help.

Sectoral References

ELECTRICITY AND GAS

Auctioning Subsidies for Rural Electrification in Chile
Note no. 214 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 2000.
Jadresic, Alejandro

Describes the Chilean system.

TELECOMMUNICATIONS

ICT Regulation Toolkit
Washington, D.C.: infoDev and the International Telecommunications Union, 2007, Module 4.

Describes approaches for funding universal service/access subsidies.

Extending Telecommunications beyond the Market
Note no. 206 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, March 2000, pp. 1-12.
Wellenius, Björn

Evaluates approaches for funding universal service.

TRANSPORTATION

Improving Rural Mobility: Options for Developing Motorized and Nonmotorized Transport in Rural Areas
World Bank, Washington, D.C., 2002.
Starkey, Paul, Simon Ellis, John Hine, and Anna Ternell

Focuses on improving rural mobility by facilitating the provision of affordable means of transport and transport services. Concentrates on the many and varied types of transport that provide mobility such as bus service, freight trucks, bush taxis, transport animals, bicycles, and handcarts.

Key Words

Costs, Subsidies, Universal service, Universal access, Competition

 

Connection and Disconnection Policies, Alternative Payment Methods

Core References

Scorecard for Subsidies: How Utility Subsidies Perform in Transition Economies
Note no. 218 in Public Policy for the Private Sector. Washington, D.C., October 2000.
Lovei, Laszlo, Eugene Gurenko, Michael Haney, Philip O’Keefe, and Maria Shkaratan

Explains that not disconnecting households who do not pay is one form of a utility service subsidy. States that this may seem to have no impact on a government’s budget, but in the long run it is costly for utilities, which strains the government’s budget by lowering corporate tax revenues and perhaps forcing the government to assume utility debt to prevent the utility from collapsing.

Sectoral References

WATER

Expanding Water and Sanitation Services to Low-Income Households
Note no. 178 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1998.
Komives, Kristin, and Penelope J. Brook Cowen

Describes features of La Paz and El Alto concession.

Dealing with Customers in Debt – Guidelines
October 2002.
OFWAT

Explains and describes policies for dealing with customer debt. Encourages operators to be proactive in seeking solutions, provide flexible payment policies, be non-threatening in customer interactions, consider customers’ ability to pay, and not discriminate against customers who have debt problems.

Paying for Water Customer Research
Accent Research for WaterVoice and Ofwat September 2003.
OFWAT

Examines customers’ attitudes towards paying their bills. Considers attitudes relative to paying for other services, customer priorities, reasons for water and sewerage debt, importance of water debt, size of debt, and motivations for resolving debt. Also examines what encourages customers to pay bills, including awareness of payment facilities, installment arrangements, billing frequency, prepayment schemes, payment of water charges with rent, trust funds, restart schemes, and customers’ use of consumer assistance services. Also examines operator techniques for managing debt, including water companies’ processes when customers fall behind in their payments, customer communication strategies, debt recovery strategies, and penalties. Lastly considers the water and sewage bill, including awareness of the supplier, the size of the bill, how bills are calculated, and cross subsidies.

Key Words

Poor, Subsidies, Universal service, Universal access, Disconnection, Connection, Prices

 

Options for Pro-Poor Regulatory Strategies, Including Impacts of Competition and Techniques for Subsidizing the Poor

[NOTE: Readers should cross-reference this subsection with Effect of Competition on Decisions Regarding Tariff Rebalancing, Cross-Subsidization, and Funding of Social Obligations.]

Core References

Capitalization, Regulation and the Poor: Access to Basic Services in Bolivia
Discussion Paper No. 2001/34, World Institute for Development Economics Research, United Nations University, Helsinki, July 2001.
Barja, Gover and Miguel Urquiola

Analyzes privatization in Bolivia. Considers how the capitalization mechanism attracted foreign investment for the poor in urban areas, but not appreciably in rural areas.

Access by the Poor in Latin America’s Utility Reform Subsidies and Service Obligations
Discussion Paper No. 2001/75, World Institute for Development Economics Research, United Nations University, Helsinki, September 2001.
Chisari, Omar O., Antonio Estache, and Catherine Waddams Price

Discusses access and affordability for the poor. Cheaper technologies and various financing/lending schemes can lower costs for serving the poor, which increases access and affordability. Examines Latin American experiences.

Accounting for Poverty in Infrastructure Reform: Learning from Latin America’s Experience
Washington, D.C.: The World Bank, 2002.
Estache, Antonio, Vivien Foster, and Quentin Wodon

Examines strategies for serving the poor. Describes approaches for improving access for the poor, including operator obligations, connection targets, low-cost technologies, subsidies and cross-subsidies, and open entry. Also describes approaches for improving affordability, including lifeline subsidies, means-tested subsidies, vouchers, balancing connection and usage charges, billing options, and prepaid service.

Ways Out of Poverty: Diffusing Best Practices and Creating Capabilities – Perspectives on Policies for Poverty Reduction
Policy Research Working Paper No. WPS2990. Washington, D.C.: World Bank Group, March 2003.
Klein, Michael

Explains that the key to poverty reduction is the creation of productive jobs and growth processes in poor areas. Examines importance of rules that respect property rights. Holds that firms are the vehicles that spread best practices and productive jobs to areas where poor people live. Explains importance of competition to ensure that new firms can enter the market, good firms face few barriers to growth, and substandard firms are allowed to fail. Further explains that in spreading best practices and more productive jobs, however, the lives of some people will be disrupted even while in the end raising living standards broadly. Identifies keys to dealing with politically popular programs that protect some groups and may undermine the workings of sound markets and the development of world-class capability in firms.

Sectoral References

ELECTRICITY AND GAS

The role of energy subsidies
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 60-66.
Barnes, Douglas F. and Jonathan Halpern

Examines the role of subsidies in serving the poor. Considers motivation for subsidies, access subsidies, targeting, non-payment of bill, excessive subsidies and technology choices. Reviews policies for deciding who and what to subsidize, where, when, and by how much. Also reviews institutional processes for subsidies.

Measuring the Impact of Energy Reform – Practical Options
Note no. 210 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, May 2000.
Foster, Vivien

Explains that to improve the accuracy in reaching the target population, policymakers should examine the poverty profile of water utility customers and collect evidence on willingness to pay in relation to the true costs of service provision. Argues that full-scale subsidies should be avoided, since they eliminate incentives for the efficient use of water. Furthermore, the subsidy should be capped at some pre-determined subsistence consumption level, to not encourage excessive use of the service. Eligibility for subsidies should not be reassessed too frequently.

Key drivers of improved access—service through networks
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 44-50.
Powell, Stephen and Mary Starks

States that the fundamental cost characteristics of grid provision do not favor the provision of access to rural and poor populations, so grid-based electricity provision will not revolutionize access by the poor, but reductions in the fixed costs of transmission and distribution equipment, and innovations to reduce the costs of supplying remote areas, improve the prospects that grids will be extended to rural areas. However, the fixed costs of transmission and distribution equipment have not fallen enough to make it profitable to extend the grid to some rural populations. Concludes that extensions of the grid to these people must be subsidized.

Key drivers of improved access—off-grid service
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 52-59.
Villagran, Eduardo

Examines off-grid solutions for service to the poor. Considers fuel reliability, cost of doing business, customer information, financing, technological and commercial innovations, and the role of government.

TELECOMMUNICATIONS

ICT Regulation Toolkit
Washington, D.C.: infoDev and the International Telecommunications Union, 2007, Module 4.

Describes universal service/access options and how regulators implement them.

TRANSPORTATION

Cities on the Move: A World Bank Urban Transport Strategy Review
China Financial and Economic Publishing House, Beijing, China, 2002.
World Bank

Connects the urban and transport strategies with a focus on poverty. It concentrates on the problems of the very poor, not only in relation to income, but also in terms of the broader dimensions of social exclusion. Offer a common understanding of urban transportation problems in developing and transitional economies and to identify an urban transport strategy framework for national and city governments.

Sustainable Transport: Priorities for Policy Reform
World Bank, Washington, D.C., 1996.
World Bank

Describes how strategies and programs in the transport sector can be designed to make more efficient use of public resources, facilitate trade and other economic activity, foster competitive markets, and better serve users’ needs–in particular, expanding poor people’s access to services and opportunities. Discussion is organized around the concepts of economic and financial sustainability, environmental and ecological sustainability, and social sustainability.

WATER

Designing Direct Subsidies for the Poor – A Water and Sanitation Case Study
Note no. 211 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, June 2000.
Vivien Foster, Andres Gómez-Lobo, and Jonathan Halpern

Considers direct subsidies for the poor. Examines the Chilean experience where the government paid a portion of the customer bill.

Water for Life: The Impact of the Privatization of Water Services
Center for Research on Economic Development and Policy Reform Working Paper 154, Stanford University, CA, August 2002.
Galiani, Sebastian, Paul Gertler, Ernesto Schargrodsky

Considers impact of privatization on water services for the poor in Argentina. Finds that impacts have been positive. Further found that poor benefited the most from in terms of reductions in child mortality.

Expanding Water and Sanitation Services to Low-Income Households
Note no. 178 in Public Policy for the Private Sector. Washington, D.C.: World Bank Group, 1998.
Komives, Kristin, and Penelope J. Brook Cowen

Describes features of La Paz and El Alto concession.

New Designs for Water and Sanitation Transactions: Making Private Sector Participation Work for the Poor
Washington, D.C.: The World Bank, undated.
World Bank

Discusses the importance of considering the poor in water reforms. Examines various elements of water reforms, including tariff reform, governance, and management changes. Discusses legal issues for helping the poor, including the regulatory framework, using competition, private sector involvement, and methods for addressing legal issues.

Other References

Universal Service: Empirical Evidence on the Provision of Infrastructure Services to Rural and Poor Urban Customers
in Infrastructure for Poor People: Public Policy for Private Provision, Penelope J. Brooke and Timothy C. Irwin, eds., Washington, D.C.: The World Bank, 2003, pp. 21-75.
Clarke, George R. G., and Scott J. Wallsten

Examines subsides in infrastructure services. Finds little evidence that these subsidies benefit the poor.

Key Words

Market reform, Poor, Social policy, Distributional justice, Subsidies, Universal service, Universal access

 

Models of Operator Obligations for Serving the Poor

Core References

Access by the Poor in Latin America’s Utility Reform Subsidies and Service Obligations
Discussion Paper No. 2001/75, World Institute for Development Economics Research, United Nations University, Helsinki, September 2001.
Chisari, Omar O., Antonio Estache, and Catherine Waddams Price

Discusses access and affordability for the poor. Cheaper technologies and various financing/lending schemes can lower costs for serving the poor, which increases access and affordability. Examines Latin American experiences.

Northern Electricity Distribution Service in Northern Namibia: A Case Study in the Private Provision of Rural Infrastructure
July 31, 2002.
Econ One Research, Inc. and EMCON Consulting Group

Examines rural electricity in Namibia. Draws lessons concerning policy preparation, government coordination, timeliness, private sector participation, customer relations, government interference with private operators, and political interference in the process.

Uganda Telecommunications: A Case Study in the Private Provision of Rural Infrastructure
July 30, 2002.
Econ One Research, Inc. and ESG International

Examines rural telecommunications development in Uganda. Draws lessons concerning privatization, competition, application of both commercial interests, subsidies, differences between rural and urban customers, regulation of prices, and regulatory skills.

Key Words

Market reform, Poor, Social policy, Distributional justice, Subsidies, Universal service, Universal access

 

Case Studies

A case study on exclusive concessions for rural off-grid service in Argentina
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 84-90.
Covarrubias, Alvaro J. and Kilian Reiche

Uganda Telecommunications: A Case Study in the Private Provision of Rural Infrastructure
July 30, 2002.
Econ One Research, Inc. and ESG International

Emerging Lessons in Private Provision of Rural Infrastructure Services: Final Report – Guatemala
the World Bank, August 2002.
Economic Consulting Associates and Mercados de Energia S.A.

Does Infrastructure Reform Work for the Poor? A Case Study from Guatemala
The World Bank, December 2001.
Foster, Vivien and Caridad Araujo

Microtelcos in Latin America and the Caribbean
in A.K. Mahon and W.H. Melody, eds. Diversifying Participation in Network Development, Montevideo, Uruguay: World Dialogue on Regulation, 2007, pp. 111-120.
Galperin, Hernan, and Bruce Gerard

A case study on private provision of photovoltaic systems in Kenya
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 92-99.
Hankins, Mark

A case study on subsidizing rural electrification in Chile
in Energy Services for the World’s Poor, Washington, D.C.: The World Bank, 2000, pp. 76-82.
Jadresic, Alejandro

Report on 2002 Universal Service Programs & Collections Performance of the Pennsylvania Electric Distribution Companies & Natural Gas Distribution Companies
2003.
Pennsylvania Public Utilities Commission

Subsidies in Chilean Public Utilities
World Bank Policy Research Working Paper No. 2445, 2000.
Serra, Pablo

Emerging Lessons in Private Provision of Infrastructure Services in Rural Areas: Water and Electricity Services in Gabon
The World Bank, Reference No. 8524, September 2002.
Tremolet, Sophie and Joanna Neale