What’s it worth?: Utilizing innovative Willingness to Pay methods to empowering local actors in designing stronger, more efficient, more sustainable programs

Abstract Information: 733 million people lack access to electricity worldwide with an estimated $35-40 billion needed annually to achieve universal access by 2030 (UNDP, 2024). In the Global South, an additional 750 million grid-connected customers cope with an unreliable or inadequate power supply (ESMAP, 2022). Lack of access to reliable, clean energy constricts communities’ opportunities and impacts health, education, and well-being. Agencies like the Millennium Challenge Corporation (MCC) recognize that substantial investments are needed to address the infrastructure gap and support utilities and sector institutions. However, important tradeoffs exist between investments aimed at improving electricity access and reliability. One of the best ways to assess tradeoffs and make better program decisions is by speaking directly to impacted communities. Willingness to Pay (WtP) studies empower consumers, giving voice to their priorities to establish or validate which investments deliver the greatest value. WtP estimation follows two approaches: revealed preference (RP) methods which utilize data on actual behavioral decisions and stated preferences (SP) which rely on questions about hypothetical scenarios, usually presented to respondents using some type of experimental design. Both sets of approaches have pros and cons, including required behavioral or identifying assumptions, sensitivity to various biases, degree of useful variation and practicality of implementation. In consideration of these challenges, a team of researchers from Duke University and Social Impact combined RP and SP methods into a single survey instrument in Sierra Leone, leveraging the real-world applicability of RP, while drawing on SP methods to make inferences about situations the study population had limited or no experience with. We also developed new RP methods, proposing a consumer damage function approach not previously applied in lower- or middle-income countries. Throughout, we explored multiple WtP methods as a means of testing for consistency and convergent validity of the estimates, implementing joint estimation where feasible, and triangulating findings to enhance precision and increase confidence in estimates for decision making. Importantly, we apply these methods to derive the first rigorous estimates of the costs of unreliable power in Sierra Leone, an energy-poor country located in Sub-Saharan Africa. Coupled with separate WtP estimations for electricity access, this study supported the MCC and the Government of Sierra Leone (GoSL) in developing a multi-million-dollar Compact aimed at addressing the high cost, poor reliability, and low access to electricity in the country. The panel, moderated by Social Impact, will include a presentation from Duke University discussing selection and adaptation of WtP methods to a given context, and showing the benefits and tradeoffs of using multiple valuations to improve confidence in results. MCC and representatives from the GoSL will discuss how WtP data are used to drive country ownership and make smarter investment decisions. While the panel will focus on the case of the 2023 Sierra Leone study, the panelists have experience applying and utilizing WtP methods in multiple sectors (e.g., water access) and countries. This panel is a great opportunity for anyone hoping to improve program decision making with community input.