Household demand and willingness to pay for grid electricity: Evidence from Burkina Faso

More than 600 million people in sub-Saharan Africa lack access to electricity and the demand-side constraints have been recognized as essential factors impeding universal access. Electricity infrastructure planning decisions are often aided by tools designed to predict demand in areas without access, which often do not consider the non-randomness of the roll-out of electricity access. We use survey data from Burkina Faso to consistently estimate the demand for grid electricity and predict it in off-grid areas. We further contrast our estimates with data on stated preferences concerning connection to the network, and we find that households in off-grid areas appear overly optimistic about their willingness to connect. Our results suggest that not accounting for selection might result in significant upward bias. We further find that the willingness to pay for high-quality electricity service among connected households is significantly higher than what households in off-grid areas are willing to pay monthly for access to the grid. Finally, we find that households located in areas with better service quality are more likely to be connected to the grid.