2025/02/01 by Tensay Hadush Meles, Alemu Mekonnen, Marc Jeuland +5
Economics, Econometrics and Finance · Energy · Environmental Science · #Economic and Environmental Valuation #Energy and Environment Impacts #Energy, Environment, and Transportation Policies
paper · doi:10.1016/j.jup.2025.101893
openalex publication_date 2025/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/23
Frequent and prolonged power outages severely impede business operations in many developing countries. Given resource constraints, estimating the value of improved electricity reliability in such contexts is crucial for justifying related investments. This analysis uses a split-sample design to examine whether business enterprises in Addis Ababa, Ethiopia, have different valuations for improved power supply reliability under two payment vehicles (electricity bill increases and tax revenue allocation). Results show that these businesses are willing to pay (WTP) an average of US33 per year for a 1-h monthly reduction in outages and US24 per year for one less outage per month. These amounts represent approximately 11% and 8% of the typical annual electricity bill of 10,615 Birr (US295), respectively, highlighting that businesses place substantial value on electricity reliability. We find no significant differences in preferences or WTP estimates between the bill and tax payment vehicle sub-samples, suggesting that tax payment vehicles are as credible as bill increases in stated preference studies and that multiple mechanisms for financing power reliability investments may be feasible in practice. Highlights • Used a split sample design to elicit WTP for improved electricity reliability in Ethiopia. • Business enterprises are WTP more for a better quality of electricity supply. • No significant difference between bill and tax payment vehicles.