A contingent valuation model for assessing electricity demand

Abstract

Purpose

The purpose of this paper is to focus on households' willingness to pay for electricity consumption and mitigation expenditure due to poor electricity infrastructure as a measure of demand and tariff setting.

Design/methodology/approach

In this paper, the demand side management (DSM) approach was adopted in establishing user demand for electricity in the study area.

Findings

Based on the high cost (averting expenditure) of providing alternative power supply, households are willing to pay extra for more reliable and regular power supply.

Practical implications

The study is a deviation from the usual command or supply side management approach to infrastructure provision and management.

Originality/value

There is limited research on DSM approach to electricity infrastructure provision in Nigeria. The study will enhance the chances of cost recovery under private‐public partnership arrangement. The paper identifies that a reliable and reasonable priced electricity supply is essential for a developing country.

Citation

Otegbulu, A.C. (2011), "A contingent valuation model for assessing electricity demand", Journal of Financial Management of Property and Construction, Vol. 16 No. 2, pp. 126-146. https://doi.org/10.1108/13664381111153114