Out of the darkness and into the light? Development effects of rural electrification

Abstract

Nearly 1 billion people still lack electricity access. In response, developing countries are investing billions of dollars in “last-mile” electrification, although evidence on its economic impacts is mixed. We estimate the development effects of rural electrification in the context of India’s national electrification program, RGGVY, which reached over 400,000 villages. Using regression discontinuity and difference-in-differences designs, we estimate that RGGVY meaningfully expanded electricity access. However, the program generated limited economic impacts after 3–5 years. Scaling our intent-to-treat estimates using instrumental variables, we find that while “fully electrifying” small villages reduces welfare, electrification likely increases welfare for larger villages. JEL Codes: O13, O18, Q40 ∗We thank Michael Greenstone and several anonymous referees for valuable feedback. We are particularly grateful to Meredith Fowlie and Catherine Wolfram for their support and guidance. We also thank Michael Anderson, Maximilian Auffhammer, Jie Bai, Kendon Bell, Susanna Berkouwer, Joshua Blonz, Fenella Carpena, Steve Cicala, Lucas Davis, Taryn Dinkelman, James Gillan, Solomon Hsiang, Koichiro Ito, Kelsey Jack, Katrina Jessoe, Amir Jina, Erin Kelley, Ryan Kellogg, Aprajit Mahajan, Shaun McRae, Edward Miguel, Brian Min, Paul Novosad, Nicholas Ryan, Elisabeth Sadoulet, Anant Sudarshan, Jacob Shapiro, Andrew Stevens, Adam Storeygard, Matt Woerman, and numerous seminar participants. We benefited from conversations with officials at the Indian Ministry of Power, the Rural Electrification Corporation, and the JVVNL Distribution Company in Jaipur. George Fullerton and Puja Singhal assisted in acquiring data that made this project possible. Yixin Sun and Garrison Schlauch contributed excellent research assistance. We thank UC Berkeley’s Department of Agricultural and Resource Economics and Development Impact Lab for providing travel funds. Burlig was generously supported by the National Science Foundation’s Graduate Research Fellowship Program under grant DGE–1106400. All remaining errors are our own. Our online appendix is available at: https://www.louispreonas.com/s/rggvy_appendix.pdf †Burlig: Harris School of Public Policy and Energy Policy Institute (EPIC), University of Chicago, and NBER. Email: burlig@uchicago.edu. Mailing address: Keller Center, 1307 E 60th St., Chicago, IL 60637. Preonas: Department of Agricultural and Resource Economics, University of Maryland. Email: lpreonas@umd.edu. Mailing address: 2200 Symons Hall, 7998 Regents Drive, College Park, MD 20742.