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close this bookRural Energy and Development: Improving Energy Supply for Two Billion People (WB, 1996, 132 p.)
close this folderChapter three - Emerging practices and policies
View the document(introduction...)
View the documentEnabling people to choose from among alternative forms of energy
View the documentAvoiding unnecessary subsidies
View the documentAddressing market failures
View the documentHigh start-up costs and risks
View the documentExternal costs and benefits
View the documentEmphasizing participation and institutional development
View the documentParticipation?
View the documentLocal institutional development
View the documentDecentralization
View the documentRecognizing the central role of good enabling conditions for development

Decentralization

In a broad sense. participation by local people in choosing and designing local investments is moving countries toward decentralized economic development. Thirty years ago a Nobel Laureate, the late Sir Arthur Lewis, drew attention to the importance both of decentralizing financing and of building up local government units. He also noted that public services (schools. water and electricity supply systems, local roads. and health centers and hospitals), which in mature economies are run by local authorities. were in many countries still being nun by central governments and financed from central revenues, a situation that persists in most developing regions (Lewis 1969). Local participation and the development of local institutions in this broader sense is desirable from both the demand- and supply-side perspectives.

On the demand side, it helps to reveal people's preferences among different services and may also reveal other things. For example, many studies have found that people's willingness to pay for electricity and other services is tar higher than had been assumed (Whittington, Lauria, and Mu 1991; World Bank 1992). Similarly, as noted earlier, rural savings are also often greater than assumed. which makes the problem of people raising enough money for initial connection somewhat less severe. On the supply side, decentralization increases local accountability and provides incentives for more efficient provision of services.

In sum, then, the general aims of seeking greater local participation in rural energy programs are to ensure that such programs are far more responsive to people's needs than they often have been in the past.