Health benefits of electrification in developing countries: a quantitative assessment in South Africa

A major challenge facing developing countries is how to allocate scarce capital, especially public capital, for the provision of basic services. Electrification, as part of an integrated service delivery package, is both a large draw on public funds and also an important catalyst for economic development. One of the major benefits of electrification, but one that is not included in traditional cost-benefit analysis, is the avoided health costs of fuels such as wood, coal and paraffin. This paper looks at the South African electrification programme, and presents estimates for these avoided health costs. The resulting benefits are of the same order of magnitude as earlier estimates of the local air pollution damage from the power stations that produce electricity. This demonstrates the importance of including the benefits of electricity provision - such as avoided health costs - in any discussions of environmental taxes on electricity, or subsidies for electrification, as part of a comprehensive cost-benefit analysis framework.