Inequality and Economic Inclusion

Friday, 15 August 2008

Energy-based poverty indicators: Meeting AsgiSA targets

  • Year: 2008
  • Organisation: TIPS
  • Author(s): Claire Vermaak; Marcel Kohler; Dr Bruce Rhodes
  • Countries and Regions: South Africa

Since 1994 the South African government has identified poverty alleviation as a key policy goal. This objective was formulated under the auspices of the Growth, Employment and Redistribution (GEAR) policy which has arguably had limited success (Hassan, 2001). In 2004 the Accelerated and Shared Growth Initiative for South Africa (AsgiSA) was formed to build on previous economic growth initiatives and it set a target of 4.5% mean growth over the 2004-2009 period (AsgiSA, 2007). AsgiSA also has the task of meeting the government’s pledged target of halving both unemployment and poverty by 2014 (HSRC, 2008). The Johannesburg Plan of Implementation’ (JPOI) adopted at the Johannesburg World Summit on Sustainable Development in 2002 (GSSD, 2006) has set its goals in alignment with AsgiSA. The JPOI was tasked with helping developing countries face the challenges of sustainable development, namely poverty, inequality and environmental degradation (JPOI Response Strategy, 2003). It also, “highlights access to energy as central to facilitating poverty eradication.” (Vera, et al., 2005: 156).

The achievement of equity within a generation rather than across generations is an ambitious, but vital component of sustainable development (Hanley, et al., 1997: 425) and Winkler (2006: 9) states that, ‘ecological sustainability [can] not be achieved if poverty was not addressed.’ Although there is no consensus on how to define sustainable development or on how to apply it, there is general agreement that sustainable development has three broad dimensions – economic, social and environmental (Winkler, 2006: 9). Poverty eradication becomes central to sustainable development policies and developing useful and reliable poverty indicators is part of this process.

The lack of energy provision pervades all aspects of poverty: shelter, food, health and health services, education and security, and many other elements of well-being also rely heavily on energy provision (Pauchari, et al., 2004; Kemmler and Spreng, 2007). And whilst, “low energy consumption is not the cause of is an indicator for many of its elements, such as poor education, bad health care, the hardship imposed on women and children” (Goldemberg and Johansson, 1995).

The link between poverty and energy provision seems indisputable as evidence emerges repeatedly from much of the current economic development literature. Amongst others, Toman and Jemelkova (2002) describe, how “…energy availability can augment the productivity of industrial labor in the formal and informal sectors.” (Winkler, et al., 2007: 11).

The Millennium Development Goals (MDGs) as laid out in the United Nation’s Millennium Declaration echoes the same sentiments. However, despite the strong link between energy provision and poverty eradication the United Nation’s Millennium Declaration, does not stipulate specific targets for energy services. Yet it is recognised that “modern energy services are an essential element enabling a country to meet these goals, [although] it has been difficult to establish quantitative causal relationships between energy and progress toward the MDGs.” (Modi, et al., 2006: 38)

The International Energy Agency (IEA) highlights that with prosperity comes demand not only for more, but also for better quality energy (IEA, 2004). It asserts that the absolute amount of energy used per capita and the share of modern energy services (especially electricity) are key contributors to human development and the target of halving the number of people living on less than $1 a day by 2015 is unlikely to be achieved unless access to electricity can be provided to another half-a-billion people. IEA maintains that developing countries need to improve the availability and affordability of commercial energy to especially rural communities in order to alleviate energy poverty and human underdevelopment.

There are a number of reasons for considering commercial energy. Unless the use of natural resources for energy purposes is monitored and curtailed, “there is danger of these resources getting rapidly depleted leading to grave long term consequences” WWF (2003: 2).

Another important aspect regarding the relationship between energy use and poverty is that the real per unit costs of alternative fuels used by poorer households are higher relative to those used in wealthier households that are linked to the national grid (Brook & BesantJones, 2000: 2). Collecting fuel wood generates high opportunity costs through lost education, the high toll on the environment and the health of the poor. “Energy services such as lighting, cooking, refrigeration, and power for electronics and motive force are provided most cheaply and conveniently, and with the least local pollution, when they are derived from electricity or gas delivered through networks. Moving from traditional to modern fuels can thus dramatically raise the effective incomes of low-income households.” (Brook & Besant-Jones, 2000: 3).

South Africa faces similar challenges to many developing countries and given that poverty alleviation is one of the most pressing goals for South Africa, the link between poverty and energy use must be made clearly. Indeed, attention to energy provision, not just in rural communities but also in poverty stricken urban areas is paramount (Parnell, 2004) and results below demonstrate this. Clear and reliable indicators of energy-poverty will facilitate the formulation of energy provision strategies.

In section one we review the current state of poverty measurement in South Africa and the extent to which the authorities acknowledge (or not) the importance of energy provision as a poverty alleviation strategy. This includes examining trends in social development and some notable South African studies on poverty and poverty alleviation. Section two attempts to define good poverty indicators and to pose energy based poverty indicators against these criteria. Section three identifies some of the weaknesses of current money-metric indicators of poverty and examines the case in favour of using energy-based indicators, not necessarily as a replacement but as a complement to current usage and research. Section four outlines our methodology, and section five presents our results.