Results-based aid in the energy sector
Vivid Economics was commissioned by the Energy Sector Management Assistance Program to evaluate whether and how to use results-based aid (RBA) to support development objectives in the energy sector. The objective of the report is to explain the circumstances in which RBA may best be used, as well as to provide practical suggestions to recipients, funders, and development practitioners on how to design an RBA agreement so as to increase the likelihood of success.
RBA works primarily through increasing the visibility of results and providing the financial resources to scale-up interventions. The evidence base is still too weak to make clear statements about RBA’s efficacy, but early signs are positive. Choosing a good RBA result and indicator is a three step process: first, define programme objective; second, determine the result level to measure; third, choose an appropriate indicator. Effective RBA results and indicators balance proximity to impact, ease of measurement and appropriate incentive effects; the use of outcome level results and indicators is becoming increasingly feasible and attractive.
Payment levels need to be negotiated by recipient and funder, but should reflect the relative value of different targeted results RBA payments could be linked to the multi-tier framework for energy access in a variety of ways; one of the most attractive options is to provide different payments for reaching different levels within the framework.
Vivid Economics was also involved in a case study that investigates whether, and how, results-based aid (RBA) could be used to support the implementation of the National Program for Improved Household Biomass Cook Stoves Development and Promotion in Ethiopia. The report is available for download here.
Date: February 2015