Bolivia’s domestic electricity cost supporting scheme during COVID-19: Changes in electricity consumption and household welfare

ABSTRACT

In Autumn 2020, the Bolivian government introduced a scheme to support electricity costs, aiming to alleviate the financial strain of a nationwide lockdown on households. Our study delves into the effects of this policy on electricity consumption and its monetary implications for recipients. Focusing on six major Bolivian cities, we analyze a comprehensive dataset comprising monthly electricity usage records from all meters within these urban centers. Additionally, we examine the distribution of consumption changes and monetary benefits across different demographic segments within each city. Our findings reveal that while absolute reductions in bills predominantly favor households with higher incomes, education levels, and smaller sizes, relative reductions, adjusted for income per capita, favor households with lower incomes, education levels, and larger sizes. From a policy perspective, we emphasize the need for targeted assistance for low-income households to uphold the implicit pro-poor objectives of similar emergency subsidy programs.

KEYWORDS:

• Bolivia
• COVID-19
• emergency energy subsidies
• welfare distribution
• electricity consumption

Acknowledgements

We thank Zarela Soria Galvarro and Laura Pelaez for their competent and valuable research assistance. We also thank Mauricio Chumacero and Santiago Albarracín for their comments and suggestions to improve the manuscript. We also thank the participants of the 14th Bolivian Conference on Development Economics, as well as the IDB Brown Bag Research Workshop for their comments and suggestions. The views expressed in this paper are those of the authors and do not necessarily represent the views of the Inter-American Development Bank, their Executive Boards, or the governments it represents.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

¹ DELAPAZ in La Paz and El Alto, ELFEC in Cochabamba, CRE in Santa Cruz, SETAR in Tarija, and CESSA in Sucre.

² One meter usually corresponds to one household.

³ This dataset is publicly available at.

https://www.ine.gob.bo/index.php/censos-y-banco-de-datos/censos/bases-de-datos-encuestas-sociales/.

⁴ See http://senamhi.gob.bo/index.php/sismet.

⁵ See https://www.ine.gob.bo/index.php/estadisticas-economicas/indice-global-de-actividad-economica-igae/#1559000613762-93bd70cb-ae37.

⁶ See https://www.lostiempos.com/actualidad/economia/20200421/elfec-80-usuarios-se-beneficiara-descuento-del-100-su-factura.

⁷ Results for the other cities are presented in the online Appendix.

⁸ Results for the other cities are presented in the online Appendix.

⁹ In most cities, the average adjustment in the tenth decile is around 80–90 kWh, but in Santa Cruz it is over 145 kWh.