Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model
This paper provides an analytical discussion of several interconnected resource allocation problems from under-pricing of electricity used by farmers for groundwater extraction. In these situations, groundwater extraction is inefficiently high eve...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120119134026 http://hdl.handle.net/10986/3240 |
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okr-10986-32402021-04-23T14:02:08Z Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model Strand, Jon ADVERSE EFFECTS AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION AGRICULTURAL WATER AGRICULTURE AQUIFER AQUIFERS AVAILABILITY BALANCE BENCHMARK BENCHMARKS BOTTOM LINE CONSTRUCTION CONSUMER GROUPS CONSUMERS CONSUMPTION LEVELS DECENTRALIZATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISTRIBUTION OF ELECTRICITY ECONOMIC EFFICIENCY EFFICIENCY IMPROVEMENT EFFICIENCY IMPROVEMENTS ELECTRIC POWER ELECTRICAL ENERGY ELECTRICAL POWER ELECTRICITY ELECTRICITY CONSUMERS ELECTRICITY CONSUMPTION ELECTRICITY COSTS ELECTRICITY DELIVERY ELECTRICITY OUTPUT ELECTRICITY PRICE ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SHARE ELECTRICITY SUPPLIER ELECTRICITY SUPPLY ELECTRICITY USE ENDOGENOUS VARIABLES ENERGY CONSUMPTION EXTERNALITY EXTRA PUMPING FORMAL ANALYSIS FUTURE RESEARCH GROSS VALUE GROUNDWATER GROUNDWATER PUMPING GROUNDWATER RESOURCES GROUNDWATER TABLE INEFFICIENCY IRRIGATION IRRIGATION WATER MARGINAL COST MARGINAL COST OF ELECTRICITY MARGINAL COSTS MARGINAL PRODUCT MARGINAL UTILITY MARGINAL VALUE NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPPORTUNITY COST OPTIMIZATION POLITICAL ECONOMY POWER CONSUMPTION POWER SECTOR POWER UTILITIES POWER UTILITY PRICE OF ELECTRICITY PUMP EFFICIENCY PUMPING EQUIPMENT PUMPS RENT SEEKING SUGAR CANE SUPPLY OF ELECTRICITY SURFACE WATER UTILITIES UTILITY FUNCTION UTILITY FUNCTIONS VOLTAGE WATER METERS WATER SUPPLY WELLS This paper provides an analytical discussion of several interconnected resource allocation problems from under-pricing of electricity used by farmers for groundwater extraction. In these situations, groundwater extraction is inefficiently high even without electricity under-pricing. Moreover, part of the electric power supply intended for farmers is often diverted to other unauthorized uses (notably illicit consumption). The paper demonstrates that unless non-price electricity rationing imposes severe constraints on demand, the range of resource allocation problems includes insufficient incentives to provide high-level service by the power utility, insufficient incentives for farmers to install and operate efficient equipment, and losses due to political "rent seeking" activities to influence water allocations. It also shows that diversion of electricity to illicit uses can increase overall economic efficiency when this leads to less electricity use by farmers, thus somewhat ameliorating the problem of excessive groundwater extraction as well as the inefficiencies related to under-pricing of electricity. Systemic reforms for overcoming these problems may face severe political obstacles. 2012-03-19T17:28:56Z 2012-03-19T17:28:56Z 2012-01-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120119134026 http://hdl.handle.net/10986/3240 English Paper is funded by the Knowledge for Change Program (KCP),Policy Research working paper ; no. WPS 5955 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ADVERSE EFFECTS AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION AGRICULTURAL WATER AGRICULTURE AQUIFER AQUIFERS AVAILABILITY BALANCE BENCHMARK BENCHMARKS BOTTOM LINE CONSTRUCTION CONSUMER GROUPS CONSUMERS CONSUMPTION LEVELS DECENTRALIZATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISTRIBUTION OF ELECTRICITY ECONOMIC EFFICIENCY EFFICIENCY IMPROVEMENT EFFICIENCY IMPROVEMENTS ELECTRIC POWER ELECTRICAL ENERGY ELECTRICAL POWER ELECTRICITY ELECTRICITY CONSUMERS ELECTRICITY CONSUMPTION ELECTRICITY COSTS ELECTRICITY DELIVERY ELECTRICITY OUTPUT ELECTRICITY PRICE ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SHARE ELECTRICITY SUPPLIER ELECTRICITY SUPPLY ELECTRICITY USE ENDOGENOUS VARIABLES ENERGY CONSUMPTION EXTERNALITY EXTRA PUMPING FORMAL ANALYSIS FUTURE RESEARCH GROSS VALUE GROUNDWATER GROUNDWATER PUMPING GROUNDWATER RESOURCES GROUNDWATER TABLE INEFFICIENCY IRRIGATION IRRIGATION WATER MARGINAL COST MARGINAL COST OF ELECTRICITY MARGINAL COSTS MARGINAL PRODUCT MARGINAL UTILITY MARGINAL VALUE NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPPORTUNITY COST OPTIMIZATION POLITICAL ECONOMY POWER CONSUMPTION POWER SECTOR POWER UTILITIES POWER UTILITY PRICE OF ELECTRICITY PUMP EFFICIENCY PUMPING EQUIPMENT PUMPS RENT SEEKING SUGAR CANE SUPPLY OF ELECTRICITY SURFACE WATER UTILITIES UTILITY FUNCTION UTILITY FUNCTIONS VOLTAGE WATER METERS WATER SUPPLY WELLS |
| spellingShingle |
ADVERSE EFFECTS AGRICULTURAL OUTPUT AGRICULTURAL PRODUCTION AGRICULTURAL WATER AGRICULTURE AQUIFER AQUIFERS AVAILABILITY BALANCE BENCHMARK BENCHMARKS BOTTOM LINE CONSTRUCTION CONSUMER GROUPS CONSUMERS CONSUMPTION LEVELS DECENTRALIZATION DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DISTRIBUTION OF ELECTRICITY ECONOMIC EFFICIENCY EFFICIENCY IMPROVEMENT EFFICIENCY IMPROVEMENTS ELECTRIC POWER ELECTRICAL ENERGY ELECTRICAL POWER ELECTRICITY ELECTRICITY CONSUMERS ELECTRICITY CONSUMPTION ELECTRICITY COSTS ELECTRICITY DELIVERY ELECTRICITY OUTPUT ELECTRICITY PRICE ELECTRICITY PRICES ELECTRICITY PRICING ELECTRICITY SHARE ELECTRICITY SUPPLIER ELECTRICITY SUPPLY ELECTRICITY USE ENDOGENOUS VARIABLES ENERGY CONSUMPTION EXTERNALITY EXTRA PUMPING FORMAL ANALYSIS FUTURE RESEARCH GROSS VALUE GROUNDWATER GROUNDWATER PUMPING GROUNDWATER RESOURCES GROUNDWATER TABLE INEFFICIENCY IRRIGATION IRRIGATION WATER MARGINAL COST MARGINAL COST OF ELECTRICITY MARGINAL COSTS MARGINAL PRODUCT MARGINAL UTILITY MARGINAL VALUE NEGATIVE EXTERNALITIES NEGATIVE EXTERNALITY OPPORTUNITY COST OPTIMIZATION POLITICAL ECONOMY POWER CONSUMPTION POWER SECTOR POWER UTILITIES POWER UTILITY PRICE OF ELECTRICITY PUMP EFFICIENCY PUMPING EQUIPMENT PUMPS RENT SEEKING SUGAR CANE SUPPLY OF ELECTRICITY SURFACE WATER UTILITIES UTILITY FUNCTION UTILITY FUNCTIONS VOLTAGE WATER METERS WATER SUPPLY WELLS Strand, Jon Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model |
| geographic_facet |
The World Region The World Region |
| relation |
Paper is funded by the Knowledge for Change
Program (KCP),Policy Research working paper ; no. WPS 5955 |
| description |
This paper provides an analytical
discussion of several interconnected resource allocation
problems from under-pricing of electricity used by farmers
for groundwater extraction. In these situations,
groundwater extraction is inefficiently high even without
electricity under-pricing. Moreover, part of the electric
power supply intended for farmers is often diverted to other
unauthorized uses (notably illicit consumption). The paper
demonstrates that unless non-price electricity rationing
imposes severe constraints on demand, the range of resource
allocation problems includes insufficient incentives to
provide high-level service by the power utility,
insufficient incentives for farmers to install and operate
efficient equipment, and losses due to political "rent
seeking" activities to influence water allocations. It
also shows that diversion of electricity to illicit uses can
increase overall economic efficiency when this leads to less
electricity use by farmers, thus somewhat ameliorating the
problem of excessive groundwater extraction as well as the
inefficiencies related to under-pricing of electricity.
Systemic reforms for overcoming these problems may face
severe political obstacles. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Strand, Jon |
| author_facet |
Strand, Jon |
| author_sort |
Strand, Jon |
| title |
Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model |
| title_short |
Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model |
| title_full |
Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model |
| title_fullStr |
Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model |
| title_full_unstemmed |
Allocative Inefficiencies Resulting from Subsidies to Agricultural Electricity Use : An Illustrative Model |
| title_sort |
allocative inefficiencies resulting from subsidies to agricultural electricity use : an illustrative model |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120119134026 http://hdl.handle.net/10986/3240 |
| _version_ |
1764386661017321472 |