RURAL ENERGY IN DEVELOPING COUNTRIES: A Challenge for Economic Development¹

The energy problems of the developing world are both serious and widespread. Lack of access to sufficient and sustainable supplies of energy affects as much as 90% of the population of many developing countries. Some 2 billion people are without electricity; a similar number remain dependent on fuels such as animal dung, crop residues, wood, and charcoal to cook their daily meals. Without efficient, clean energy, people are undermined in their efforts to engage effectively in productive activities or to improve their quality of life. Developing countries are facing two crucial—and related—problems in the energy sector. The first is the widespread inefficient production and use of traditional energy sources, such as fuelwood and agricultural residues, which pose economic, environmental, and health threats. The second is the highly uneven distribution and use of modern energy sources, such as electricity, petroleum products, and liquefied or compressed natural gas, which pose important issues of economics, equity, and quality of life. To address these problems, this paper evaluates some successful programs and recommends that governments support market-oriented approaches that make the energy market equally accessible and attractive to local investors, communities, and consumers. Such approaches ideally improve access to energy for rural and poor people by revising energy pricing and by making the first costs of the transition to modern and more sustainable uses of energy more affordable.