Electrification, Environment, and Economic Development in Developing Countries

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Author(s) :
Alpha Ly

Thesis presented on October, 20, 2023, at the Université Paris sciences et lettres, in association with École doctorale SDOSE (Paris), and Laboratoire d’Economie de Dauphine.

This thesis explores the complex interplay between electrification, deforestation, and economic development in developing countries, with a specific emphasis on Côte d’Ivoire and other African countries. The primary goal is to offer valuable insights into the impacts of electrification on both environmental sustainability and economic growth, identifying policy implications for promoting sustainable development in the context of ongoing electrification efforts.

Chapter 1 develops a theoretical framework based on an agricultural household heterogeneous model to explore the potential link between electrification and arable farm expansion. Empirical analysis using household data from multiple waves of the Côte d’Ivoire Living Standards Measurement Surveys reveals that electricity access significantly reduces average arable farm size and biomass fuel consumption. These findings suggest a potential positive impact of electrification on deforestation mitigation. However, an identified electrification threshold of 80% highlights the need for targeted policies to ensure that electrification does not inadvertently lead to further deforestation.

Chapter 2 investigates the broader relationship between electrification and deforestation rates in Côte d’Ivoire. Using night light intensity data and official electricity coverage statistics, the study reveals a positive link between electrification and deforestation. As electrification programs expand, deforestation continues to advance, raising environmental conservation concerns and underlining the importance of sustainable electrification planning.

Chapter 3 explores the challenges faced by private stakeholders in the power sector in African countries, particularly through independent power producers (IPPs) and public-private partnerships (PPPs). Currency and inflation risks emerge as significant obstacles to private investment in power generation. The chapter identifies measures such as automatic tariff adjustment and cost reflectivity that can mitigate these risks and encourage private sector involvement, ultimately supporting universal access to electricity.

Chapter 4 examines the impact of power constraints on firm-level productivity in developing countries.footnote{Here, the terms “power constraints” and “energy constraints” are used interchangeably. These terms refer to limitations on the total amount of energy (measured in watt-hours or kilowatt-hours) that can be generated, stored, or consumed over a specific period.} The empirical analysis based on the World Bank Enterprise Surveys Dataset for 84 countries during the period 2006-2019 shows that power constraints significantly reduce firm-level revenue-based total factor productivity. This finding underlines the importance of ensuring a stable power supply to foster economic growth and competitiveness, particularly for manufacturing firms. The policy implications drawn from these findings cover sustainable electrification planning, close monitoring of deforestation rates, balanced public-private sector involvement in the power sector, investments in power infrastructure to minimize constraints such as outages, and support for productive industries.

To sum up, this thesis highlights the complex relationships between electrification, deforestation, and economic development in developing countries. By providing empirical evidence and policy recommendations, this research enhances understanding of the complexities and prospects arising from electrification. It offers valuable insights for policymakers striving to achieve sustainable and inclusive economic growth while safeguarding the environment. As electrification efforts continue to shape the development landscape, the findings presented in this thesis could guide decision-makers in crafting policies that promote a harmonious balance between progress and environmental conservation.


Thesis supervised by Anna Creti-Bettoni and Raja Chakir.

Access the thesis online