ABOUT THIS BRIEF

This brief disseminates the findings of a study that sought to understand which three basic public services benefit the
poor most: public transport, grid electricity or water? Using three waves of nationwide household living standard
survey and the conceptual arguments of the Augmented Sustainable Livelihood Framework (aSLF), the study reveals
that access to public transport generate overwhelming impact on economic welfare of all rural households, rich or
poor. Whereas access to electricity alone also generates some positive benefit, access to water generates negative
economic returns. However, all three strongly complement private assets. Indeed, in their absence, households make
negative economic returns on their private assets. Development policy must prioritize the provision of public
transport, electricity and water, in that order.
Which Basic Public Service Benefits the Poor Most:
Transport, Electricity or Water?
Policy Brief No.ODG 14-02
Emmanuel Joseph Mensah, l'Oasis Development Group |GYA, P.O. Box LG 977, Legon, Accra
Email: ejmensah@gmail.com, Phone: +233244485721, +233265449955
BACKGROUND
All managers of economies of the world face one
common and fundamental question: how best can we
apply available but highly limited budgets to realize our
unlimited needs? Among southern developing
economies such as Ghana, this question is made even
more crucial by the sheer inadequacy of budgeted funds
to address basic needs like better access to public
services.
Traditionally, policy and development managers have
responded to this challenge by prioritizing the needs of
individuals (or households). The available resources are
then allocated accordingly. However, the decision on
which service to prioritize over which one is usually not
obvious. In fact, in many instances, such decisions
become subjects for much politicization and influence
peddling, leading to many failed or under-performing
projects.
To help advance knowledge and aid decisions on such
major policy issue, the study underlining this brief
investigated whether access to public transport, grid
electricity and water benefit households equally, rich or
poor? If no, which of these services benefit the poor most
and what is the scale of such benefits?
Aside the critical importance of access to transport,
electricity and water in fostering wealth creation and
economic development, the choice of these three services
was also informed by the sheer volume of public
resources required to realize such projects. Thus, a failure
of any investment to deliver such service implies the loss
of considerable public funds and economic opportunities.
Under the UN MDGs and its post-2015 agenda, these
services are considered basic and essential for human
development.
THE RESEARCH APPROACH
The research technique involved the use of the
Augmented Sustainable Livelihood (aSLF). The aSLF
is provided by Mensah (2012). It is an advanced version
of the Sustainable Livelihood Framework, which
hitherto had been used by DfID and many other
international development organizations. One utility of
the aSLF is its ability to help separate the role of private
and public assets in these kinds of analysis, thereby
helping to more correctly conceptualize the relationship
between assets and livelihood.
Data was drawn from the Ghana Living Standard
measurement, for the years 1991/92, 1998/99 and
2005/06. Using information on the year of birth of
household head and the agroecological zone in which
the household reside, generations/cohorts of households
dating back to 1931 (and earlier) to 1970 (and
afterwards) were constructed. This data was then piled
on each other, cohort by cohort, and structured like a
panel but involving summaries of those cohorts of
households in rural Ghana for the three survey years.

The generalized method of moment (GMM) was then
used to provide quantitative estimate of the relationship
between livelihood outcomes (measured as household
economic welfare) and different kinds and levels of
assets. The assets used in the model included private
assets, access to public transport, electricity and water.
Other factors considered in the model include past level
of welfare, household size, gender, age, educational
attainment and migrant status of the head.
1
Mensah, EJ, et al. 2014. Infrastructure Access and Household Welfare in Rural Ghana.
African Development Review, Vol. 26, No. 3, p. 508-519.
2
Mensah, EJ. 2012. The Sustainable Livelihood Framework: A Reconstruction.
The Development Review, Vol. 1, Issue 1, p. 5-25.
1.082*** 0.273
-9.998*** 0.719
-7.175*** 0.756
5.324*** 0.316
1.591*** 0.129
0.479*** 0.092
Number of observations 24
Number of groups 24
F(21, 24) 1191.90 ***
Dependent variable:
CURRENT ECONOMIC WELFARE
Coefficient &
Significance
Robust
Standard
Error
0.482*** 0.079
0.515** 0.241
-0.396* 0.212
2.117*** 0.190
-4.251*** 0.409
0.557*** 0.039
0.788*** 0.084
4.052*** 0.401
0.451*** 0.139
-0.050** 0.019
0.001*** 0.000
-0.209*** 0.029
0.038*** 0.003
0.381** 0.144
D (public sector)
D (private formal)
D (private informal)
D (cash crop sector)
D (food crop sector)
period
Past Economic Welfare
Electricity
Water
Transport
Private Assets
Electricity & Private assets
Transport & Private assets
Water & Private assets
Household size
Age of Head
2
Age of Head
Educational Attainment
2
Educational Attainment
Male Head
Migrant Household 1.397*** 0.192
KEY FINDINGS
Key findings of the principal quantitative model are
summarized below:
Table 1: Result of GMM Estimate -Rural Ghana
*, ** and *** indicate result is significant, very significant and highly significant, respectively.
D indicates Dummy Variable, representing the respective sector of work of the head of household.
The results suggest that in the absence of access to public
infrastructure, private capital in rural Ghana yields
negative and significant effect on welfare. In the absence
of private capital, households with access to water show
negative and significant effect on welfare. On the other
hand, the individual impacts of access to electricity and
public transport are positive and statistically significant.
This suggests that whether rich or poor, access to public
transport and electricity in rural Ghana generate
important economic benefits for all households.
Further, combined with household's own assets, access to
all three public services has positive and statistically
significant impact on welfare. This suggests strong
complementarity between public services and household
assets. This result is novel in contemporary literature. It
suggests that the impact of access to water on economic
welfare depends on the level of the household's private
assets, contrary to the findings on public transport and
electricity, which benefits all, rich or poor.
Thus, based on our data, the average Ghanaian rural
household makes more economic benefit from public
transport, then electricity before public water.
These results are not surprising as improved access to
public transport also implies enhanced connectivity to
local and regional markets. This would also imply
reduced transaction cost and competitive prices on both
the supply and demand sides of any market.
Access to electricity also implies greater opportunity for
value addition and new jobs, especially in cottage
industries. The extent of impact is however limited by
the scale of the household's participation in off-farm
activities.
For water, the most important source of impact is the
opportunity cost of time and energy spent scouting for
this resource. Generally, this is known to be higher for
the rich than poor households.
CONCLUSIONS & POLICY ADVICE
The study concludes that access to public transport
alone benefits all rural households, rich or poor. Access
to electricity also has positive but smaller benefit for all.
However, access to water alone generates negative
benefits, except for the rich.
Considered alongside other results of the study, the
findings indicate that public investment in functional
rural transport benefit the poor most. Development
policy must prioritize this service.
To maximize the economic impact of investments in
grid electricity and water, it is highly recommended that
these services be targeted at rural communities with
existing access to public transport systems.
Finally, policy must note the strong complementarities
between these three public services and private assets.
Indeed, in the absence of all three, households make
negative returns on their private assets, whereas with
private assets, households are able to make better
economic use of any of the three public services.