2 Benefit incidence analysis
2.1 Theoretical background
Accessibility and standards of public services can be explained by three types of
determinants, which vary across (and within) target areas, as follows: (i) valuation
of and willingness to pay (WTP) for services by residents, (ii) distribution weights in
the social welfare function (SWF) of central and local governments, and (iii) costs of
public service delivery. Ex post, the first and third type of determinants can be relied
on to measure the value to beneficiaries of government-subsidised services, based on
virtual prices reflecting individuals’ own valuation of these services and marginal
costs of providing the services, respectively ([12]). Conventional BIA studies typically
focus on the unit costs of provision, but this may seriously understate the value
of the benefits to an individual (e.g. cost of child immunisation campaign compared
with lifelong effects), while the scope for using social indicators and non-monetary
measures of impact is still scarcely investigated ([35]).
Most households will be reluctant to settle in remote areas due to inadequate
access to public utilities. In Tiebout’s seminal contribution ([34]) of a local government
model in a developed country, consumers are assumed to be fully informed
on differences in local public goods and services, and preferences are largely met by
individuals’ free movement within the country. In many developing countries, internal
migration is limited and local communities have only a minor role in design and
planning of public services (on the non-engagement of healthcare ‘teams’ at district
level in Niger, see Meuwissen [28]). Therefore, issues related to distribution weights
and cost of service provision are likely to be more relevant factors, while the WTP
criterion can have an indirect impact with government perceptions of consumer preferences
partly reflected by distribution weights attached to gains/losses of different
social groups.
In an aid-dependent low-income economy as Niger, distribution weights and costs
of public service delivery will also be influenced by donors’ public spending priorities.
The extent to which and likely pro-poor direction which foreign aid can exercise as a
leverage on public sector and regional planning would deserve an accurate analysis,
which could consider the role of sound economic policies and institutions, and effective
interaction and collaboration between donor countries and local government.
High rehabilitation backlogs in some public infrastructure in Africa appear to be the consequence of past misallocations by both recipient and donor countries: for
instance, the earmarking of foreign funds on concessional terms for new road construction
has raised the relative cost of maintenance funds for domestic markets,
with road maintenance tending to be neglected given its less visible immediate impact
and more easily deferred investment ([8]). Even if this topic lies beyond the
scope pursued here, one can assume that donors largely share (or at least they should
share within transparent and sound institutional environments, especially with the
‘new’ conditionality of recent years; Mosley et al. [30]) the same development goals,
namely maximising the shadow-priced net benefits to the recipient country, which
account for distribution and other social welfare objectives.2