THE ECONOMICS OF RENEWABLE ENERGY SYSTEMS FOR DEVELOPING COUNTRIES

In many parts of the Third World, projects are being developed to test such renewable energy systems as biogas plants and solar cell arrays for powering pumps and grinders. Virtually nowhere, however, has adequate work been done to determine if these systems are worth their costs. This paper outlines the cost-benefit techniques which allow systems to be evaluated from the standpoint of individual buyers (financial analysis) and the society as a whole (economic analysis). Special attention is given to problems of particular importance in reviewing energy systems, including local measurement of costs and benefits, determination of investors' discount rates, shadow-pricing and allowance for social costs. Detailed cost-benefit analyses are provided for two representative systems: a family-scale Indian biogas plant and a 5.5 kW solar cell irrigation pump on the borders of Lake Chad. The family-scale biogas plant does not appear to be profitable in either financial or economic terms under any plausible sets of assumptions. The solar cell pump has positive net benefits by economic (if not financial) measures, but is unlikely soon to be competitive with diesel power for most applications. At best, some of these devices might ultimately become competitive with expensive commercial energy. Such devices will therefore be of interest first to people now using substantial amounts of such energy – that is, the relatively wealthy. Only much later might significant benefits begin to filter down to the poor. In the light of these findings renewed attention should be given to meeting basic energy needs through less sophisticated systems. By finding systems whose benefits are commensurate with their costs, and whose costs are within reach of the poor, it may be possible to provide more energy to those most in need of it. Dans de nombreuses parties du Tiers Monde, des projets sont en cours d'exécution en vue d'évaluer des systèmes en matière d'énergie de remplacement, tels que des usines de gaz de fermentation et des assemblages de cellules solaires pour activer pompes et broyeurs. Toutefois, il semblerait qu'il n'y ait eu nulle part aucune étude valable permettant de déterminer si ces systèmes justifient leur coût. Cet article relève les techniques de coût-utilité qui permettent d'évaluer ces systèmes du point de vue des acheteurs individuels (analyse financière) et de la société dans son ensemble (analyse économique). En analysant ces systèmes, l'article souligne des problèmes d'importance particulière, y compris l'évaluation locale des coûts et profits, la détermination des taux d'actualisation d'investissement, l'estimation des prix virtuels et l'établissement de marges de coûts sociaux. Des analyses détaillées de coût-utilité sont présentées pour deux systèmes concrets: une usine de gaz de fermentation indienne à l'échelle de la famille, et une pompe d'irrigation à cellules solaires de 5,5 kW sur les rives du lac Chad. L'usine de gaz de fermentation à l'échelle de la famille ne semble ni financièrement, ni économiquement rentable quelque soient les termes plausibles des hypothèses. La pompe à cellules solaires offre des profits positifs nets selon des critères économiques (sinon financiers) mais, dans la plupart des cas, elle ne semble pas pouvoir concurrencer le moteur diesel dans un proche avenir. Au mieux, quelques-unes de ces installations peuvent à la longue concurrencer l'énergie commerciale à prix élevé. Par conséquent, elles seront d'intérêt particulier tout premièrement aux usagers de grande quantité de cette énergie, c'est-à-dire ceux possédant des moyens relativement élevés. Ce n'est que bien plus tard que les classes défavorisées pourront commencer à bénéficier sensiblement des profits qui en résulteront. Sur la base de ces données, les organisations s'intéressant aux classes défavorisées peuvent se pencher à nouveau sur la manière de répondre aux besoins essentiels en matière d'énergie en utilisant des systèmes plus simples: bois appartenant aux villages, fours à bois améliorés, pompes et broyeurs à pédales ou à bras, pompes foulantes hydrauliques, etc. En conçevant des systèmes dont les profits sont proportionnels aux coûts et dont les coûts sont à la portée des classes défavorisées, il se peut que l'on puisse mettre plus d'énergie à la disposition de ceux qui en ont le plus besoin. En muchas partes del Tercer Mundo se han llevado a cabo proyectos para ensayar sistemas de energía renovables tales como plantas de biogas, y celdas solares para operar bombas y molinos. Sin embargo practicamente en ninguna parte se ha hecho el esfuerzo apropiado para determinar si estos sistemas valen lo que cuestan. Este artículo esboza las técnicas de beneficio-costo para evaluar dichos sistemas desde el punto de vista del usuario individual (análisis financiero) y del de la sociedad como un todo (análisis económico). Se da especial atención a los problemas de importancia particular en el análisis de sistemas de energía, incluyendo mediciónes locales de costos y beneficios, determinación de la tasa de descuento del inversionista, precios-sombra y costos sociales. Detallados análisis de beneficio-costo se proveen para dos sistemas representativos: una planta de biogas en escala familiar y una bomba de agua operada por celadas solares de 5.5 kW al borde del Lago Chad. La planta de biogas a escala familiar parece no ser rentable financieramente ni económicamente bajo ninguna serie de hipótesis realistas. La bomba de celdas solares tiene un benefico económico positivo (aunque no financiero), pero es poco provable que sea competitivo con el motor diesel para la mayoría de las aplicaciones. En el mejor de los casos, alguno de estos sistemas pueden ser competitivos con una energía comercial cara. Estos sistemas en consecuencia serán de gran interés primeramente para las personas que hacen uso intensivo de energía, esto es, las personas relativamente adineradas. Pueda qui solo mucho despues beneficios significativos lleguen a los pobres. A la luz de estos resultados debe ponerse renovada atención a satisfacer las necesidades básicas de energía a través de sistemas menos sofisticados. Pueda que sea posible proveer mas energía a los que más necesitan de ella si se buscan sistemas cuyo beneficios sea proporcionados a sus costos y que dichos costos esten al alcance de los pobres.     

MULTICRITERIA PROGRAMMING OF WATER SUPPLY SYSTEMS FOR RURAL AREAS1

ABSTRACT: The aim of this paper is to present a multicriteria methodology for decision aid at the stage of programming a water supply system (WSS) for a rural area. The programming stage is an intermediate one between planning and designing water supply facilities, and can be decomposed into two problems: (a) setting up a priority order of water users, taking into account socio-economic criteria; and (b) choosing the best technical variant of the WSS. Among the criteria considered for the latter problem, there is a criterion of distance between the socio-economic priorities of users and the precedence orders of users according to the technical programming, which plays a coordinating role between problems (a) and (b). All steps of the presented methodology are illustrated by a real case study.     

RURAL WATER MANAGEMENT IN THE DEVELOPING COUNTRIES

The author focuses on the need in developing countries for an integrated approach to rural water planning and management, advocating that it can and must play a central role in overall rural development and social transformation. He juxtaposes the approaches indicated by the widely differing conditions in developed and developing countries and illustrates, with reference to irrigated agriculture, the appropriate strategies for developing countries to maximize the benefits of water as an input into overall development.     

RURAL WATER SUPPLIES IN DEVELOPING COUNTRIES1

The best available figures indicate that on a global basis only about 10 per cent of the rural populations have a safe source of water, with the Region of the Americas having the highest coverage at 19 per cent. The program of the Second U.N. Decade proposed to supply coverage to about 200 million persons at an estimated cost of 1.6 billion dollars by 1980. The elements of a rural water supply program are presented, then the difference between rural and urban supplies in such areas as community participation, financing, technical assistance, etc., are discussed. The use of revolving funds to help finance this effort, and the use of the mass approach to help the governments increase their program coverage, are also presented. This paper concludes that while much has been done in the 60's, much remains to be done, but that the basic tools for this effort are available.     

PATTERNS OF ENERGY CONSUMPTION BY THE RURAL AND URBAN POOR IN DEVELOPING COUNTRIES

From the rudimentary data available on the domestic energy consumption of the urban and rural poor in developing countries it appears that consumption by the poor in much of the developing world is at bare subsistence levels. Despite generally higher incomes, the domestic energy consumption of the urban poor appears to be no higher in Btu terms than that of the rural poor due to the more thermally efficient fuel supplies used by the urban poor. A further tentative conclusion is that for similar reasons related to the changing efficiency of the fuel supply system, energy consumption measured in quantity terms rises within a given area by less than the rise in income at lower income levels. As incomes rise there is a tendency to switch to more efficient fuels in a manner analogous to the contrast in energy consumption patterns between urban and rural areas. Thus a rising demand for energy services can be accomodated by a less than proportionate gross input. En examinant les données rudimentaires dont on dispose sur la consommation domestique en énergie des classes urbaines et rurales défavorisées des pays en développement, il ressort que la consommation de ces classes dans la plupart de ces pays se situe à des niveaux de simple subsistence. Malgré des revenus généralement plus élevés, la consommation domestique en énergie des classes urbaines défavorisées ne semble pas étre supérieure en termes d'unités thermiques britanniques à celle des classes rurales défavorisées en raison d'approvisionnements en combustibles thermiques à meilleur rendement dans les villes. Une autre conclusion provisoire envisage que pour des raisons similaires ayant trait aux fluctuations de l'efficacité du système d'approvisionnement en combustibles, la consommation énergétique mesurée en termes quantitatifs augments dans une zone donnée moins rapidement que les revenus aux échelons inférieurs. Au fur et à mesure que les revenus progressent, la tendance à utiliser des combustibles a meilleur rendement reflète le même contraste existant dans les modes de consommation en énergie entre les zones urbaines et rurales. On peut donc satisfaire les besoins croissants en matière d'énergie par des coûts de production proportionnellement moins élevés. Por los datos rudimentarios disponibles sobre el consumo doméstico de energía de los estratos probres rural y urbano de los países en desarrollo, parece ser que dicho consumo está en los límites del nivel de subsistencia. A pesar del relativo mayor ingreso de los estratos pobres urbanos, el consumo de energía de éstos no parece ser, en términos fíisicos, mayor que la de los estratos pobres rurales debido a que aquellos emplean combustibles que pueden usarse con mayor eficiencia térmica. Otra conclusión tentativa es que debido a razones similares a esta disparidad de eficiencia, la cantidad de energía consumida en un sector pobre aumenta en una proporción menor que el aumento del ingreso. En forma análoga a la deferencia entre las tendencias de consumo entre grupos ru rales y urbanos, a mayores niveles de ingreso en una misma área hay una tendencia a usar combustibles más eficientes. Como resultado una demanda creciente de energía puede ser satisfecha con un amento proporcionalmente menor de suministrode combustible.     

OIL EXPLORATION STRATEGIES FOR DEVELOPING COUNTRIES

This paper focuses on the roles of governments of developing countries in the oil exploration area; roles ranging from passive tax collectors to production sharers to full State ownership and control. The historical failure of governments to take full control of this key area is seen as partially due to myths: that only the big international oil companies have the necessary technology and capital and can afford the risk of oil exploration and development. Three case studies showing the large benefits to a developing country from full State control are examined: Mexico, India and Vietnam. It is concluded that only full State control can ensure that the riches of oil can be harnessed for a developing country, and governments are urged to develop greater knowledge both about the international oil industry and their country's potential resources.     

A CATALYST FOR REGIONALIZATION OF RURAL WATER SYSTEMS1

ABSTRACT: The National Regulatory Research Institute has recommended the merger of small rural water districts in the United States. Success at bringing about merger of these districts, which contain fewer than 3,500 customers, has been highly limited. The subject of this paper is a demonstration project that may act as a catalyst to achieve the desired goal of regionalization. A computerized hydraulic data management program (CHDMP) was developed for a case study in Nelson County, Kentucky. University professors, graduate students, and two water utilities’ staffs cooperated in network analysis employing computer hardware and software. The utilities’ staffs were taught the science and technology of hydraulic model preparation, simulation, and analysis for the case study distribution systems. As an integrated system, the model contained 294 pipes, 234 nodes, six pumps, and 11 tanks. Each utility's problem areas were identified and some of the individual and mutual benefits of hydraulic planning were illustrated. A dialogue resulted between the managers. Each manager described his goals and agreed that, although political merger was not feasible at the present time, future economic factors could be a definite influence in reversing that decision.     

INCOME AND PRICE ELASTICITIES OF DEMAND FOR WATER IN DEVELOPING COUNTRIES1

ABSTRACT: The income and proce elasticity of demand for domestic water is estimated for Penang Island, Malaysia. A cross-sectional analysis of a random sample of 1400 households indicated an income-elasticity of zero for low-income families (per capita income less than US$300) and an elasticity of 0.2-0.4 for higher-income families. A time-series analysis of a subsample of individuals of varying income levels suggests a short-run price elasticity of -0.1 to -0.2. The implications of these results for demand forecasting are discussed.     

DEVELOPING COMPETITION FOR WATER IN THE URBANIZING AREAS OF COLORADO1

ABSTRACT: Rapid population growth in the metropolitan area of Denver, Colorado, is causing conflicts over water use. Two cities, Thomton and Westminster, have begun condemnation proceedings against three irrigation companies to secure agricultural water rights for municipal use. This is the first condemnation proceeding against irrigation water rights for municipal use. Should the suit succeed, over 30,000 acres of presently irrigated land will lose its water supply. There are about four hundred landowners in the area; two hundred of these are commercial farmers, including truck, dairy and specialty farms. Total agricultural production amounts to about $8 million per year. About 561 jobs related to agriculture will disappear along with about $4 million in not income. Only 6.4 percent of the farmland along the Front Range is irrigated. Continued urban growth will put pressure on the water supply of much of this land. The interested parties of the region should cooperate to lessen the impact of urban growth on agricultural lands and water by forming a metropolitan water district. Such a district could share costs of development of additional municipal water and develop systems where municipalities would recycle waste water back to the irrigated lands.     

ASPECTS OF PETROLEUM TRANSPORT IN DEVELOPING COUNTRIES

Dramatic changes in the institutional structure of the international oil industry in recent years have created new responsibilities and opportunities for developing countries in petroleum transport. The article discusses the prospects for changes in the ownership/control pattern of seaborne oil movements and the need for both oil producing and oil importing developing countries to pursue national plans to acquire shipping tonnage and expertise, without being deterred by the present depressed conditions of the world shipping industry. Drawing from the experience in India, it deals with some features and problems of petroleum transport by sea, pipeline, rail and road. It stresses the importance of co-operation among developing countries through common operation of deep-water terminals and large size tankers to optimise transport costs.     

ASSESSING SOLAR PHOTOVOLTAIC ENERGY SYSTEMS FOR CROP IRRIGATION1

ABSTRACT: An economic analysis of the profitability of adopting solar photovoltaic energy systems for crop irrigation is undertaken. The economic, technological, and political uncertainties surrounding adoption are discussed with reference to their impact on anticipated profitability. On the assumption that the costs of producing photovoltaic modules follows a learning curve characteristic of other inventions, solar systems are likely to be viable for irrigation in some states by mid to late 1980s. A field test in Nebraska is described.     

OIL AND GAS IN DEVELOPING COUNTRIES: PROSPECTS FOR AND PROBLEMS OF THEIR DEVELOPMENT

The real problem of future oil and gas supplies is not the potential physical availability of resources but the accesibility of the existing proven reserves which are concentrated in a small number of countries. Geographical diversification of reserves and production is possible with the most significant potential in the many largely unexplored and unexploited regions of the Third World. Such regions have been ignored by the oil industry either because international companies are unwelcome in many developing countries or because of the too high political risks for the large investments necessary. There is thus a geographical mismatch between oil resource potential and the human, technological and financial resources required for its development. This severe limitation on future oil and gas production is not only bad for the countries concerned but has worldwide politico-economic strategic implications in respect of pressures on OPEC and continued upward pressures on oil prices. New institutional and organizational arrangements are necessary to ensure the funding of oil and gas developments in the Third World. Le problème réel de l'approvisionnement futur en pétrole et en gaz ne réside pas dans la disponibilité potentielle des ressources mais dans l'accessibilité des réserves prouvées existantes qui se trouvent concentrées dans un petit nombre de pays. Dans plusieurs régions du Tiers Monde où l'exploration et l'exploitation ont été relativement minimes, la diversification géographique des réserves et de la production peut avoir un potentiel énorme. Ces régions ont été négligées par l'industrie pétrolière, soit parce que les compagnies pétrolières ne sont pas bien vues dans de nombreux pays en développement, soit parce que ces régions comportent de grands risques politiques vu l'ampleur des investissements requis. II y a donc un décalage géographique entre la ressource pétrolière potentielle et les ressources humaines, technologiques et financières nécessaires à son exploitation. Cette restriction sérieuse de la production de pétrole et de gaz est non seulement néfaste pour les pays en question mais a aussi des implications politico-économiques stratégiques profondes en ce qui a trait aux pressions exercées sur I'OPEP ainsi que sur la montée continue des prix. De nouveaux arrangements institutionnels et administratifs sont donc nécessaires pour assurer le financement de l'exploitation du pétrole et du gaz dans le Tiers Monde. El problema real de la oferta futura de gas y petróleo no consiste en la disponibilidad potencial de recursos sino en la accesibilidad de las reservas probadas existentes que estan concentradas en un número pequeño de países. La diversificación geográfica de las reservas y de producción es posible y el mayor potencial se encuentra en regiones inexploradas e inexplotadas del Tercer Mundo. Estas regiones fueron ignoradas por la industria del petróleo sea porque las compañías internacionales no son bienvenidas en muchos países en desarrollo o porque el riesgo político es muy alto para las inversiones necesarias. Existe pues un desequilibrio geográfico entre el potencial de recursos petroleros y los recursos humanos, tecnológicos y financieros para desarrollarlos. Las limitaciones en la producción futura de hidrocarburos es negativa no solamente para los países que sufren de ellas sino también por las implicancias política-económicas a nivel mundial con respecto a las presiones sobre la OPEP y los precios crecientes del petróleo. Es necesario establecer arreglos institucionales nuevos para asegurar el financiamiento del desarrollo de gas y petróleo en el Tercer Mundo.     

LONG-TERM COPPER PRODUCTION OPTIONS OF THE DEVELOPING COUNTRIES

After petroleum, copper is the most important foreign exchange earner of the developing countries. Supply of copper from developing nations is heavily concentrated in six countries. The production strategies of these countries can, therefore, have a significant impact on world copper trends as well as on their own copper earnings. The author, former Chief Economist of CIPEC, examines the implications of two alternative growth paths for long-term copper production in these countries.     

ECONOMIC CONSIDERATIONS FOR SOLAR AND RENEWABLE ENERGY IN DEVELOPING COUNTRIES

High costs of all commercial (especially imported) fuels have had especially severe impacts on the developing nations and, within these, on the most disadvantaged regions and socio-economic groups. Improving the security of supply while stabilizing prices has become a major energy-economic need. For the less developed nations this particularly calls for greater indigenous energy production and improved regional supply without massive capital commitments. Solar and renewable sources have a critical part to play in this. Certain of these appear promising for immediate development. For the longer term their potentials are far greater — but economic acceptance requires changed evaluation methods. Les pays en développement, et parmi eux les régions et groupes socioéconomiques les plus défavorisés, ont fortement ressenti les incidences particulièrement graves de la hausse des prix des combustibles commerciaux (et plus spécialement, des combustibles importés). S'assurer plus attentivement de l'approvisionnement tout en contenant le niveau des prix est devenu un impératif de leur politique énergético-économique. En ce qui concerne ces pays, cet effort requiert en particulier une production plus abondante d'énergie locale et une amélioration des approvisionnements régionaux sans engagements de capitaux démesurés. Les sources d'énergie solaire et d'énergie de remplacement ont un rôle significatif à jouer dans ce domaine. Quelques-unes d'entre elles destinées à certaines utilisations semblent pouvoir être mises en valeur dans l'immédiat. A longue échéance, leur potentiel est encore d'une plus grande portée. Cependant, pour les rendre rentables, leur méthodes d'évaluation serait à repenser. El alto costo de los combustibles (especialmente los importados) ha tenido un impacto especialmente severo en los paises en desarrollo, particularmente en las regiones y los grupos socioeconómicos que se encuentran en situación desventajosa. Mejorar la seguridad del suministro procurando al mismo tiempo mantener los precios estables se ha convertido en una necesidad importante dentro de la economía de la energía. Para los paises menos desarrollados esto significa especialmente desarrollar recursos energéticos propios y mejorar el suministro regional sin comprometer capital en forma masiva. Los recursos renovables (energiá solar) tienen un rol de importancia crítica y algunos de ellos parecen promisorios para su desarrollo immediato. Para el largo plazo el potencial de estos recursos es mucho mas grande aún — pero su aceptación económica requiere todos de evaluación nuevos.     

LEGAL ASPECTS OF MINING DEVELOPMENT IN DEVELOPING COUNTRIES

This article discusses the legal criteria of a mining investment decision - the legal status of investments, fiscal regime and mining legislation. The importance of the security of tenure of mining titles and of the stability of the terms and conditions, as stated from the inception, is emphasized, and the concepts of state sovereignty, state ownership of mineral deposits and state participation in mining ventures are considered. The preference for legalistic solutions rather than ad hoc contracts is stated, and a brief review of the various types of mining agreements is given. Cet article analyse les critères juridiques de la decision concernant l'investissement minier: statut juridique des investissements, régime fiscal et legislation minière. L'importance de la sécurité de la concession minière et la garantie des clauses de contrats est mise en evidence. L'article considère également les concepts de souveraíneté de l'Etat, la propriété étatique des dépôts minéraux et la participation de l'Etat dans la recherche minérale. L'auteur indique sa préférence pour des solutions juridiques plutôt que des contrats particuliers et passe brièvement en revue les différents types d'accords miniers. Este artículo analiza los criterios legates empleados en la toma de decisiones sobre inversión minera: estado legal de la inversión, régimen fiscal y legislación minera. Se da énfasis a la importancia de la seguridad de posesión de los títulos mineros, la estabilidad de las condiciones iniciales de contrato y se consideran también los conceptos de soveranía del estado, propiedad estatal de los depósitos mineros y la participación del estado en la actividad minera. Se indica la preferencia por las soluciones a través de leyes en vez de contratos ad hoc y se revisan brevemente varios tipos de acuerdos mineros.     

DEVELOPING BIOLOGICAL INFORMATION SYSTEMS FOR WATER QUALITY MANAGEMENT1

ABSTRACT. Management of aquatic ecosystems requires a clear understanding of the goals to be achieved, appropriate information and the means to achieve the goals. Control measures applied to aquatic ecosystems, in the absence of information on the condition of the system, are apt to be inappropriate and thus may overprotect the receiving system at times and underprotect it at other times since the ability of ecosystems to receive wastes is not constant. A major determinant of the effectiveness and efficiency of ecological quality control is the lag time in the feedback of information. If the lag is too great, the control measures may repeatedly overshoot or undershoot the desired goal. Present techniques for measuring the responses of aquatic organisms and communities require days or weeks, whereas information for ecosystem quality control and prevention of ecological crises should be generated in minutes or hours as is the case for other quality control systems. Two biological monitoring systems have been developed to generate information rapidly. One system measures changes in the movement and breathing of fish in order to provide an early warning of developing toxicity in the wastes of an industrial plant. The other system measures changes in the diversity of algal comunities in streams by means of laser holography. The incorporation and use of these systems in industrial plants is discussed.     

CAPITAL COST OF RURAL WATER DISTRIBUTION SYSTEMS1

ABSTRACT: The cost of water service to rural residents is very high compared to urban areas. This is true even after subsidization by Farmers Home Administration (FmHA) loans and grants. Capital cost data on 44 projects financed by the Ohio office of the FmHA during the period August 1968 to January 1977 are used to derive cost equations for 26 components of rural water distribution systems. These components represent 92 percent of the capital cost of the pipeline distribution systems studied. The data can be used to economically design rural water supply systems from a capital cost viewpoint. More data are needed on operation and maintenance costs as well as central and cluster well costs before totally economic system designs can be undertaken.