Electricity Supply Interruptions and Its Impact on Local Economies

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Electricity serves as a crucial input to many businesses and household activities. As such, the government has historically focused its efforts on expanding the populations’ access to electricity. By contrast, electricity reliability has received less attention from policymakers despite the economic disruption caused by electricity supply interruptions. This paper seeks to deepen the discussion on electricity reliability in the Philippines by providing empirical evidence on the impact of electricity supply interruptions on local economies. Our results show that frequent electricity supply interruptions lead to lower local government income due to reductions in receipts from economic enterprises, business taxes, and real estate taxes. We also found that, consequently, the local government’s ability to provide services related to housing and community development, as well as labor and employment, is constrained, placing the local population at a disadvantage.

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