Estimating demand for utilities in Ghana : an empirical analysis

• Main Author: Amoah, Anthony
• Published: University of East Anglia 2016
• Subjects: 363.6
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.699588

Using a variety of techniques, this doctoral thesis seeks to estimate the demand for key utilities such as electricity and residential water supply in Ghana. This thesis comprises of four chapters that estimate demand for electricity and residential water supply in Ghana. Chapter one is a joint paper published in the Renewable and Sustainable Energy Reviews journal with Justice Tei Mensah and George Marbuah as co-authors. Although we all worked together from the introduction to the end of the paper; my principal role was writing literature review, sections of the data and discussion. The key idea was to disaggregate the energy sector and individually estimate the demand for each type of energy in Ghana. Chapter two estimates household demand for electricity in Ghana. We use the Contingent Valuation Method (CVM) to estimate the demand for a 24-hour electricity service among households in Ghana. In response to the current CVM debate, this study investigates critical issues such as hypothetical bias, WTA&WTP convergence/divergence, and scope sensitivity that can easily invalidate our estimates. Chapter three seeks to estimate demand for piped-water services in urban Ghana. The paper applies three different valuation methods to estimate demand, thus providing validity checks for our estimates using competing methods. Chapter four is a single authored paper published in Water Policy Journal. This chapter seeks to estimate demand for domestic water from an innovative borehole system in rural Ghana using stated and revealed preference approaches. First, the study investigates demand for domestic water supply from an innovative borehole system using the CVM. We further estimate demand for current service of domestic water supply in residences using the Hedonic Pricing Method (HPM). This is achieved through a survey from rural districts in the Greater Accra Region, Ghana. Interval regression and ordinary least squares (OLS) are applied to investigate the determinants of willingness-to-pay (WTP). The main findings of this thesis may be summarised as follows: 1. Our results show that energy prices, income, urbanization and economic structure are significant demand drivers of the different energy types in Ghana with varying estimated elasticities. We find that there is a high degree of responsiveness of electricity demand to income changes by mainly the industrial sector relative to households. 2. Households are willing to pay between 7% and 15% of their income to have a 24hour supply of electricity in the GAR of Ghana. However, our cost & benefit analysis show a net cost of GHS567.52million ($146.97million) per annum. 3. The average amount that a household is willing to pay per month for a reliable piped-water services is GHS 44.73 or US$14.27 (HPM), GHS 22.72 or US$7.25 (TCM) and GHS 47.80 or US$15.25 (CVM) respectively. These amounts are equivalent to 3%-8% of households’ income. We find evidence of a positive net benefit of GHS 486.78million (US$155,49million) per annum. 4. Finally, regarding water supplied from the innovative borehole system and current improved water services, we find evidence that monthly WTP values are GHS35.90 (US$11.45) and GHS17.59 (US$5.61) in the CVM and HPM, respectively. These values represent approximately 3%-6% of household monthly income which is consistent with earlier studies. By way of conclusion, the author follows these empirical findings and prescribe several policy recommendations to inform policy direction in the utility sector(s) in Ghana and other developing countries with similar characteristics.