Restoring Balance

WORLD BANK WORKING PAPER NO. 181
Restoring Balance
Bangladesh’s Rural Energy Realities
M. Asaduzzaman
Douglas F. Barnes
Shahidur R. Khandker
THE WORLD BANK11984-00_FM.qxd 3/4/10 12:49 PM Page i
WORLD BANK WORKING PAPER NO. 181
Restoring Balance
Bangladesh’s Rural Energy Realities
M. Asaduzzaman
Douglas F. Barnes
Shahidur R. Khandker
Energy Sector Management Assistance ProgramTHE WORLD BANK
Washington, D.C.11984-00_FM.qxd 3/4/10 12:49 PM Page ii
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ISBN-13: 978-0-8213-7897-7
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Contents
Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xi
Acronyms and Abbreviations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Units of Measure/Currency Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv
Energy Conversion Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xvii
Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
What Is the Knowledge Base? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Study Goal and Objectives2
Principles for a Rural Energy Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Study Method. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Survey Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Structure of This Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2. Household Energy Use11
General Consumption Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Energy for Cooking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Energy for Lighting15
Summing Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3. Household Energy Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Expenditure Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Cooking Energy: Biomass and Its Opportunity Cost. . . . . . . . . . . . . . . . . . . . . . . . . 21
Lighting Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Asset Ownership Patterns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Demand for Other Energy: Quantitative Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Summing Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4. Household Gains from Energy Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Biomass Cooking: From Traditional to Modern Energy . . . . . . . . . . . . . . . . . . . . . . 33
From Kerosene to Electric Lighting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
From Manual to Mechanized Farming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Overall Income Gains: Moving Up the Energy Ladder . . . . . . . . . . . . . . . . . . . . . . . 44
Summing Up48
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iv Contents
5. Energy Consumption and Rural Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Enterprise Types and Distribution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Growth-Center Microenterprises. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Home and Village Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
Enterprise Energy Demand and Profitability: A Quantitative Analysis . . . . . . . . . . 62
Energy for Farming . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Summing Up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
6. Institutional Framework for Rural Energy Supply . . . . . . . . . . . . . . . . . . . . . . . . . 69
Institutional Challenges and Potential. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Building an Integrated Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
7. Policy Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Problems and Potential of Biomass Energy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
Rural Electrification and Rural Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Toward Policies for Household Petroleum Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Enhancing Rural Energy Projects, Policies, and Strategies . . . . . . . . . . . . . . . . . . . . 91
The Way Forward. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
ANNEXES
1 Selected Tables from the Household Survey. . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
2 Statistical Models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
3 Consumer’s Surplus as a Measure of Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . 133
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139
List of Special Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
LIST OF BOXES
1.1 What Are the Benefits of Rural Energy?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Modern Energy Benefits for Rural Families . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
LIST OF FIGURES
ES.1 Energy Use and Expenditures in Rural Bangladesh, 2004 . . . . . . . . . . . . . . . xxiii
1.1 Types and Sources of Energy Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Map of Survey Areas in Bangladesh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1 Rural Household Consumption by Source (percent energy consumption). . . . . 14
3.1 Energy Expenditure Distribution by Energy Source (percent expenditure) . . . . 20
3.2 Household Biomass Collection Time by Income Quin