Welfare Impacts of Rural Electrification: A Case Study from Bangladesh

Using a 2005 cross-sectional survey conducted of approximately 20,000 households in rural Bangladesh, this paper studies the welfare impacts of households’ grid connectivity. Based on rigorous econometric estimation techniques, this study finds that grid electrification has significant positive impacts on households’ income, expenditure, and educational outcomes. For example, the gain in total income due to electrification can be as much as 30% and as low as 9%. Benefits increase steadily as household exposure to grid electrification (measured by duration) increases, and it eventually reach a plateau. This paper also finds that rich households benefit more from electrification than poor households do. Finally, estimates also show that income benefits of electrification on an average exceed cost by a wide margin.