bottom-up drivers for economic and social development? · energy access and development program ......

Department Energy, Transport, Environment

Decentralised

governance and energy:Bottom-up drivers for economic

and social development?Dawud Ansari

Amman, 21st Aug 2017

1. Yemeni Economics and energy poverty

2. Decentralism in energy and governance – A path to growth?

3. Conclusion and Discussion:

Can bottom-up action outweigh institutional failure?

Dawud Ansari | 8 / 21 / 2017Decentralised governance and energy: Bottom-up drivers for economic and social development?2

DIW Berlin


DIW Berlin: Excellence in (interdisciplinary) economic research

Department: Energy, Transport, Environment

• Focus on studying the background of

how a global energy transition can happen

Research group: Resource & Environmental Markets

• Focus on model-based numerical

research of international resource markets,

the climate, and their interdependencies

Upcoming project: FoReSee (Fossil Resource Markets and Climate Policy: Stranded

Assets, Expectations and the Political Economy of Climate Change)

Aims: Understand, analyse, and model the incentives of owners of fossil resources,

and design policies do decrease resource dependency in spite of institutional

failure or uncertain market dynamics

Energy Access and Development Program


• EADP: Berlin-based start-up NPO in the field energy in the developing world

• Founders: Dawud Ansari and Hashem al-Kuhlani

• Currently supported by three fellows

and numerous partnerships with

the private, public, and academic sector

• Aim: Case-based project work to combat

energy poverty in the Middle East

• Method: Use an interdisciplinary,

multi-stakeholder approach to design

optimal energy solutions under economic, social,

political, and technological constraints.

• Focus: Yemen, Lebanon, Senegal, Turkey

• Examples: Technical proposals, DIY manuals, research, management, training

1 Energy poverty in a global view


1 Energy poverty in a global view (cont’d)


from Pachauri et al. (2013)

1 Energy poverty & Energy access


Energy poverty is the lack of an (expectedly) continuous access to

electricity or non-polluting cooking fuels or stoves.

• “Sustainable Energy Access” as one of the UNDP SDGs

• Energy access has many co-benefits:

• Health, education, gender, economic development, water

• Energy poverty and general poverty are mutually enforcing

• Energy access policies contain numerous pitfalls

Illustrations

from

UNDP

(2015)

1 Energy poverty & Energy access (cont’d)


from Steckel et al. (2013)

1 Yemeni Economics


from Ansari (2016)

1 Yemeni Economics (cont’d)


from Ansari (2016)



from Ansari (2016)



from El-Katiri & Fattouh (2011)

1 Energy in Yemen


1 Energy in Yemen (cont’d)


Data: World bank

1 Energy in Yemen (cont’d)


2010 2009 2008 2007 2006 2005 2004 2003

6.84 6.23 5.92 6.83 5.58 6 6.46 6.80 Power plants generation

loses

3.76 3.03 2.44 2.62 3.95 2.80 4.09 2.85 Transmission lines loses

27.35 26.72 25.98 25.82 25.16 24.57 25.01 26.33 Distribution loses

33.7 32.9 31.09 31.76 32.04 31.1 32.73 33.32 General loses

Data: Government resources

Urban Rural Total Lowest decile Highest decile

Electricity 92 42 53 22 82

PEC Grid 80 23 36 11 62

Non-grid, incl. self-generation 12 19 18 9 19

No access to electricity 8 58 47 78 18

LPG 93 74 78 49 93

Diesel 13 4 11 3 34

Kerosene 46 83 75 92 57

Fuelwood 36 85 74 80 66

Data: ESMAP (2005)

2 Decentralised or centralised energy?


• Classical perspective on power grids:

• Subadditivity and the law of small numbers make national

grids with large-scale power stations favourable

• But:

• Solar energy and hydro energy, in particular, do not

necessarily show this behaviour

• Population scarcity reduces economics of scope

➢ Potentially inferior for rural areas

• What to do if there is no national grid?

2 Decentralised or centralised energy? (cont’d)


NG extension

Central government planning

Transmission costs

Inheriting of (in-)stability

Subject to militant attacks

Economics: near-urban and high-density regions

Off-grid solution

Local decision

Potential undermined by NG extension, competition issues

Financing issues

Self-responsible use

Economics: remote and low-density regions

2 General categorisation


Also: solar-thermal

technologies (such as

solar cookers and water

heaters)

from Groh et al. (2015)

Micro grid

Swarm electrification

2 Rural development


• No blueprint approach

• Needed is a fit between program design, beneficiary needs and the

capacities of the assisting organization

• Learning process approach

➢ Leadership, teamwork

➢ Building a supporting organization around the requirements of the

program, or adapting the capabilities of an existing organization to fit those

requirements

➢ Embracing errors

➢ Planning with the people

➢ Linking knowledge building with action (combining research, planning and

administration)

➢ Stages of the learning process: effectiveness, efficiency, expansion

2 Alternative governance and decentralisation


Bottom-Up Approach

• Everything is managed by the community for the community

• Involvement in the whole decision-making process

• People become independent and empowered

• Development is more sustainable

Decentralisation

• Responsiveness to local needs

• Involvement of the population

• Enhancement of efficiency / local knowledge

• Requires enough authority transferred to work

• Greater representation for minorities

• More flexible and innovative administration

Two main arguments: Increased efficiency & Improved governance

2 Alternative governance and decentralisation (cont’d)


• Impact of decentralization is controversial, studies with mixed results

➢ Iimi (2012): Positive impact of expenditure decentralisation on GDP / cap.

growth (51 developed and developing countries from 1997-2001)

➢ Davoodi & Zou (1998): Negative relationship between fiscal

decentralization and economic growth for developing countries (46

developed and developing countries from 1970-1989)

• Differentiation between developed and developing countries: specific

restraints in developing countries (absorptive constraints)

➢ Mobility / technical and administrative capacities

➢ Information, accounting, monitoring mechanisms

➢ Difficult allocation of funds

➢ Oppression of local elites (holding-together federalism)

➢ Ability to collect taxes

➢ Interaction with private and public partners

2 Alternative governance and decentralisation (cont’d)


Polycentric approach

• Multiple authorities with overlapping jurisdictions

• Specific challenges concerning energy infrastructure

➢ Scale, decentralised energy production, common pool issues, lock-in effect

• Beyond multi-level analyses

• Includes additionally inclusion and learning

➢ Policy experimentation

• Information sharing

• General-purpose governments / highly specialized

➢ Nested in general-purpose governments

• Possible problems:

➢ Slow, not optimal decisions, blame game between jurisdictions

2 Energy and decentralised governance


• Local infrastructure ownership requires but also supports local

governance.

• Power to kick-off projects necessary

• Participatory approach automatically incentivised

• Common responsibility supports community identity

• However: Required equipment, knowledge, and political will

restrict the approach’s capabilities (in addition to economics)

• Missing coordination may lead to purely individual electrification,

that might neglect local economies of scope

• No finished study yet on the efficiency differences

• For cases with economies of scope, decentralised governance will

result in a high degree of coordination or inefficiencies.

3 Conclusion, Advice, Discussion


• Bottom-up electrification: citizens obtain self-responsible energy access

• Bottom-up governance and electrification potentially reciprocal

• Large potential for local economic and social development

• Decentralised energy in urban areas cannot be a long-term solution,

unless there is proper regulation on feed-ins (top-down!)

• Even a peaceful Yemen might not be able to provide energy to its rural

population for a long time, making decentralised energy a long-term

perspective for Yemen.

Advice:

• Funding of training for maintenance, handling, and DIY

• Subsidies on PV exports to Yemen (challenges included!)

• Establish a framework that converges bottom-up and top-down

electrification (long-term)

Vielen Dank für Ihre Aufmerksamkeit.

DIW Berlin — Deutsches Institut

für Wirtschaftsforschung e.V.

Mohrenstraße 58, 10117 Berlin

www.diw.de

RedaktionDawud Ansari [email protected] | [email protected]

Thanks to Svenya Putz (DIW) for her assistance in preparing the slides.

References


Ansari, D. (2016). Resource curse contagion in the case of Yemen. Resources Policy, 49, 444-454.

Davoodi, H., & Zou, H. F. (1998). Fiscal decentralization and economic growth: A cross-country study.

Journal of Urban economics, 43(2), 244-257.

El-Katiri, L., & Fattouh, B. (2011). Energy poverty in the Arab world: the case of Yemen.

ESMAP 2005. Household Energy Supply and Use in Yemen. Volume I: Main Report. Energy Sector

Mangement Assistance Program.

Groh, S., Philipp, D., Lasch, B. E., & Kirchhoff, H. (2015). Swarm Electrification: Investigating a Paradigm

Shift Through the Building of Microgrids Bottom-up. In Decentralized Solutions for Developing

Economies (pp. 3-22). Springer, Cham.

Iimi, A. (2005). Decentralization and economic growth revisited: an empirical note. Journal of Urban

Economics, 57(3), 449-461.

Pachauri, S., van Ruijven, B. J., Nagai, Y., Riahi, K., van Vuuren, D. P., Brew-Hammond, A., & Nakicenovic,

N. (2013). Pathways to achieve universal household access to modern energy by 2030. Environmental

Research Letters, 8(2), 024015.

Steckel, J. C., Brecha, R. J., Jakob, M., Strefler, J., & Luderer, G. (2013). Development without energy?

Assessing future scenarios of energy consumption in developing countries. Ecological Economics, 90,

53-67.

bottom-up drivers for economic and social development? · energy access and development program ......

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