COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?

This paper investigates the extent of welfare distribution amongst households in Ghana due to the government's subsidies on electricity and water as part of its relief package to households on the fallout of the COVID-19 pandemic. The study seeks to induce policy discussions on effective target...

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Autores principales:	Richard Kwabena Nkrumah, Francis Kwaw Andoh, Joshua Sebu, Samuel Kobina Annim, Peter Yeltume Mwinlaaru
Formato:	article
Lenguaje:	EN
Publicado:	Elsevier 2021
Materias:	H22 H51 H75 I38 Science Q
Acceso en línea:	https://doaj.org/article/435763e0da1948b68b134fd3a5d34300
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spelling	oai:doaj.org-article:435763e0da1948b68b134fd3a5d343002021-11-14T04:34:49ZCOVID-19 water and electricity subsidies in Ghana: How do the poor benefit?2468-227610.1016/j.sciaf.2021.e01038https://doaj.org/article/435763e0da1948b68b134fd3a5d343002021-11-01T00:00:00Zhttp://www.sciencedirect.com/science/article/pii/S2468227621003392https://doaj.org/toc/2468-2276This paper investigates the extent of welfare distribution amongst households in Ghana due to the government's subsidies on electricity and water as part of its relief package to households on the fallout of the COVID-19 pandemic. The study seeks to induce policy discussions on effective targeting and the consequential welfare distribution of subsidy interventions in Ghana. Subsidising the price of basic household necessities is expected to immensely benefit the poor whose expenditure is largely occupied by these necessity goods, but, as pertains in developing countries, schemes for effective targeting of the poor are nearly non-existent. This mostly leads to misalignments in income redistribution that is eventually anti-poor. Data from Ghana Living Standard Survey (seventh wave) which captures household final expenditure on goods and services in 2017, including electricity and water, is used for the analysis. First, we simulate household consumption changes as a result of the pandemic on the 2017 data, using on real-time information in the course of the pandemic on household income and expenditure changes. Next, we estimate a complete demand system for all households, and their elasticities of demand for electricity, water and food using the Quadratic Almost Ideal Demand System model. Using the computed elasticities, Taylor's approximations are then used to simulate consumer welfare in the form of compensating variation (CV) from price changes due to government subsidies. Our results indicate that the imposed subsidies promote consumer welfare of all households, especially, households living in rural areas. The blanket subsidy on water better identified the poor and the lifeline households than the subsidy on electricity which had a yardstick for targeting. However, we find that the subsidies on the household utilities are regressive in the sense that lifeline consumer households and the poorest households in both urban and rural areas are rather less advantaged in welfare redistribution in both subsidies.Richard Kwabena NkrumahFrancis Kwaw AndohJoshua SebuSamuel Kobina AnnimPeter Yeltume MwinlaaruElsevierarticleH22H51H75I38ScienceQENScientific African, Vol 14, Iss , Pp e01038- (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	H22 H51 H75 I38 Science Q
spellingShingle	H22 H51 H75 I38 Science Q Richard Kwabena Nkrumah Francis Kwaw Andoh Joshua Sebu Samuel Kobina Annim Peter Yeltume Mwinlaaru COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?
description	This paper investigates the extent of welfare distribution amongst households in Ghana due to the government's subsidies on electricity and water as part of its relief package to households on the fallout of the COVID-19 pandemic. The study seeks to induce policy discussions on effective targeting and the consequential welfare distribution of subsidy interventions in Ghana. Subsidising the price of basic household necessities is expected to immensely benefit the poor whose expenditure is largely occupied by these necessity goods, but, as pertains in developing countries, schemes for effective targeting of the poor are nearly non-existent. This mostly leads to misalignments in income redistribution that is eventually anti-poor. Data from Ghana Living Standard Survey (seventh wave) which captures household final expenditure on goods and services in 2017, including electricity and water, is used for the analysis. First, we simulate household consumption changes as a result of the pandemic on the 2017 data, using on real-time information in the course of the pandemic on household income and expenditure changes. Next, we estimate a complete demand system for all households, and their elasticities of demand for electricity, water and food using the Quadratic Almost Ideal Demand System model. Using the computed elasticities, Taylor's approximations are then used to simulate consumer welfare in the form of compensating variation (CV) from price changes due to government subsidies. Our results indicate that the imposed subsidies promote consumer welfare of all households, especially, households living in rural areas. The blanket subsidy on water better identified the poor and the lifeline households than the subsidy on electricity which had a yardstick for targeting. However, we find that the subsidies on the household utilities are regressive in the sense that lifeline consumer households and the poorest households in both urban and rural areas are rather less advantaged in welfare redistribution in both subsidies.
format	article
author	Richard Kwabena Nkrumah Francis Kwaw Andoh Joshua Sebu Samuel Kobina Annim Peter Yeltume Mwinlaaru
author_facet	Richard Kwabena Nkrumah Francis Kwaw Andoh Joshua Sebu Samuel Kobina Annim Peter Yeltume Mwinlaaru
author_sort	Richard Kwabena Nkrumah
title	COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?
title_short	COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?
title_full	COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?
title_fullStr	COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?
title_full_unstemmed	COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?
title_sort	covid-19 water and electricity subsidies in ghana: how do the poor benefit?
publisher	Elsevier
publishDate	2021
url	https://doaj.org/article/435763e0da1948b68b134fd3a5d34300
work_keys_str_mv	AT richardkwabenankrumah covid19waterandelectricitysubsidiesinghanahowdothepoorbenefit AT franciskwawandoh covid19waterandelectricitysubsidiesinghanahowdothepoorbenefit AT joshuasebu covid19waterandelectricitysubsidiesinghanahowdothepoorbenefit AT samuelkobinaannim covid19waterandelectricitysubsidiesinghanahowdothepoorbenefit AT peteryeltumemwinlaaru covid19waterandelectricitysubsidiesinghanahowdothepoorbenefit
_version_	1718429892527259648

COVID-19 water and electricity subsidies in Ghana: How do the poor benefit?

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