JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU CASE STUDY Job Creation Potential of the Clean Energy Transition JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU CASE STUDY Job Creation Potential of the Clean Energy Transition ABOUT ESMAP The Energy Sector Management Assistance Program (ESMAP) is a partnership between the World Bank and over 20 partners to help low- and middle-income countries reduce poverty and boost growth through sus- tainable energy solutions. ESMAP’s analytical and advisory services are fully integrated within the World Bank’s country financing and policy dialogue in the energy sector. Through the World Bank, ESMAP works to acceler- ate the energy transition required to achieve Sustainable Development Goal 7 (SDG7), which ensures access to affordable, reliable, sustainable, and modern energy for all. It helps shape World Bank strategies and programs to achieve the World Bank’s Climate Change Action Plan targets. Learn more at: https://www.esmap.org. © November 2023 | International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the World Bank, with contributions given by the staff and consultants listed in the acknowledgments. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of the World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of the World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Contents Acknowledgments v About this Report vi Acronyms vii Key Findings viii 1. Introduction 1 2. Summary of Relevant World Bank Energy Interventions 5 3. Overview of the Labor Market 13 4. Identification and Quantification of Jobs 17 5. Results 21 6. Sustainability of Productive Uses of Electricity 37 7. Barriers and Enablers of Productive Use of Electricity 39 8. Conclusion 43 References 47 JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU iii List of Tables, Figures, and Boxes List of Tables Table 1. Selected Indicators, Targets, and Achievement for the Key Project Development Objective of RE1 5 Table 2. Selected Indicators, Targets, and Achievement for the Key Project Development Objective of RE2 8 Table 3. Characteristics and Achievements of Distribution Companies Under Components 1 and 2 of RE2 9 Table 4. Distribution of Employment Type by Urban and Rural Status (% of Total, Urban or Rural Labor Force) 13 Table 5. Rural Labor Market in the Intervention Areas 14 Table 6. Sectoral Distribution of the Rural Labor Force in the Intervention Regions (%) 15 Table 7. Summary of Interviews by Job Type 18 Table 8a. Direct Jobs: Key Indicators for Electricity Distribution Companies 22 Table 8b. Direct Jobs: Key Indicators for Nongovernmental Organizations 23 Table 9. Induced Jobs 27 Table 10. Innovation Following Connection to the Grid and Employment Results 31 Table 11. Electricity Prices By Region Over Time 40 Table 12. Person-Years of Employment Associated with the Grid Extension and Productive Use of Electricity Components of RE2 in Peru 43 List of Figures Figure 1. Theory of Change for Components 1 and 2 of RE2 in Peru 45 List of Boxes Box 1. Lessons Learned from RE1 7 iv  ONTENTS C Acknowledgments This work was made possible by the Energy Sector Management Assistance Program (ESMAP) with financial support from the Royal Ministry of Foreign Affairs of Denmark. ESMAP is a partnership between the World Bank and 19 donors to help low- and middle-income countries reduce poverty and boost growth through sustainable energy solutions. The report was prepared by a team coordinated by Zuzana Dobrotková (Senior Energy Specialist) and comprising of Sheoli Pargal (Lead Energy Economist), Anna Aghababyan (Senior Operations Officer) and Anders Pedersen (Senior Energy Specialist). The work was initiated under the guidance of Rohit Khanna (Practice Manager, ESMAP) and completed under Gabriela Elizondo Azuela (Practice Manager, ESMAP), with overall strategic direction provided by Demetrios Papathanasiou (Global Director, Energy and Extractives Global Practice). A team from the consulting company Mathematica, consisting of Faraz Usmani, Duncan Chaplin, Patricia Costa, Sarah Leser, and Sara Bryk, collected background material and conducted upstream research for this case study. The team acknowledges the important inputs, insights and assistance received from Janina Franco (Senior Energy Specialist), and Ines Perez Arroyo (Energy Specialist) and World Bank consultants Stephanie Pinnington, Nicolas Fichaux and Kavita Rai. Editor: Fayre Makeig. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU v About this Report This report presents the findings and conclusions of a case study undertaken under a program of analytical work that investigates the impacts of the global transition to clean energy on the quantity and quality of jobs in low- and middle-income countries. Under the program, entitled “Estimating the Job Creation Potential of the Clean Energy Transition,” the World Bank’s Energy Sector Management Assistance Program (ESMAP) undertook multiple streams of analysis: • A review of the literature and commonly used methodologies of investigation • Modeling of economywide job impacts of policies supporting the clean energy transition in selected countries in Sub-Saharan Africa • Case studies of the effects on employment of selected World Bank clean energy projects • Deep dives into the impact on jobs of closure of coal-fired power plants; of productive uses of electricity associated with mini grids in Nigeria; and of the Rusumo Falls Hydropower Project. Building on the above-mentioned steams of analysis, the program has also produced a high- level report summarizing its findings and conclusions “Jobs for a Livable Planet: Job Creation Potential of the Clean Energy Transition” and a discussion paper to support project design “Tracking Jobs in Projects Focused on Clean Energy and Productive Uses of Electricity”, providing strategies for tracking and enhancing job creation that can be used in the clean energy projects. The reports developed under this program together aim to support low- and middle-income countries in reaping greater socioeconomic benefits from the energy transition by supporting them in increasing the number and quality of local jobs generated while implementing clean energy projects. Realizing the benefits of the jobs created by clean energy interventions will depend on effective planning and preparation in the early stages of projects and sustained support during their implementation. The reports target multiple audiences, from policy makers to development practitioners and academics. They also aim to familiarize energy specialists with the effects of energy projects on jobs and give them tools that enable them to take account of—and, where possible, maximize—the socioeconomic benefits of the clean energy transition. The reports can be found at https://www.esmap.org/publications. vi  ABOUT THIS REPORT Acronyms GoP Government of Peru ENAHO Peru’s National Household Survey on Living Conditions and Poverty kWh kilowatt-hour MWh megawatt-hour NGO nongovernmental organization O&M operation and maintenance PV photovoltaics RE1 First Rural Electrification Project RE2 Second Rural Electrification Project TA technical assistance UNALM La Molina National Agricultural University All currency is in United States dollars (US$, USD), unless otherwise indicated. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU vii Key Findings The Second Rural Electrification Project in Peru created direct jobs in rural electrification and promoted productive uses of electricity. While it had a positive impact on income and job quality, gender diversity in the workforce was limited, and the net effect on employment due to electrification was mixed, with some jobs being created and others displaced. Key findings from the case study were: Direct Jobs: Direct employment covered design, management, construction, and operations and maintenance (O&M) roles. A total of 57 person-years of direct employment were reported, with 31 being newly created positions primarily in NGOs and the rest being existing roles in electricity distribution companies. These new jobs would not have existed without the project. Local Workforce: All workers were from Peru, with skilled workers often hired from larger cities like Lima. Most jobs were temporary but included formal contracts. Gender Diversity: The project teams were predominantly male, with very few female workers. Females employed by NGOs were often in the role of promoters, collecting data, and providing marketing and training support. Operations and Maintenance (O&M): O&M likely required additional staff. An estimated 59 person-years of direct employment were allocated for operations and maintenance, bringing the total to 116 person-years. Indirect Jobs: Indirect jobs resulted from the demand for materials in construction and O&M. Most materials were sourced from domestic companies in major Peruvian cities. The estimate of 154 indirect jobs was derived from employment data from similar projects in Brazil. Induced Jobs: Interviews with small businesses connected to the grid showed mixed employment effects due to electrification. While some businesses expanded their services, others automated processes, leading to job displacement. Overall, the net effect on employment was unclear, but improvements in income and job quality were observed. Income Improvement: The project may have increased average incomes, driven by improvements in job quality and wages. Measuring wages alongside employment numbers could provide a more comprehensive understanding of project benefits. viii  KEY FINDINGS ONE INTRODUCTION This case study seeks to shed light on the employment outcomes associated with the World Bank’s investments in rural electrification in Peru as part of the Second Rural Electrification Project (RE2), which was approved in April 2011 and closed in August 2017. Peru implemented broad energy sector reforms in the 1990s that aimed to establish private investors as the principal actors in the power sector and limit the role of the public sector to regulation and supervision. Following the reforms, power shortages and distribution losses declined and electricity tariffs stabilized (World Bank 2006). Yet, while the success of these reforms was primarily concentrated in urban areas, stark disparities between urban and rural electrification remained. In 2005, for instance, electricity coverage in urban areas was nearly universal. By contrast, less than 25 percent of the rural population had electricity access (ESMAP 2021), partly due to the distance to rural communities and their isolation, which result in high installation, operation, and maintenance costs for rural infrastructure (World Bank 2006). Considering the above, the Government of Peru (GoP) made equitable electricity access—especially through investments to close urban-rural infrastructure gaps—a policy priority in the early 2000s. In particular, as part of the 2004 National Plan for Rural Electrification (PNER), the GoP outlined its goal of providing electricity access to 75 percent of the country’s rural population by 2013, more than tripling the rate of rural coverage in 2004. The 2013 PNER expanded this goal to 95 percent rural electrification by 2016 (IRENA 2014). In support of these goals, between 2006 and 2017, the World Bank contributed to two consecutive rural electrification projects in Peru. The first project (RE1), which was approved in March 2006 and closed in June 2013, aimed to increase electricity access in rural areas of Peru through the following three activities: 1. Investing in subprojects to supply electricity to unserved rural households, businesses, and public facilities using conventional grid extension and renewable energy sources; 2. Demonstrating key elements of a rural electricity provision framework, which would promote investments by private and public sector electricity providers, and national, regional, and local governments; and 3. Implementing a pilot program to promote productive uses of electricity, resulting in increased income generation opportunities in rural areas (World Bank 2006).1 RE2 broadly shared RE1’s goals and sought to build on its achievements by operating in “more challenging conditions, providing electricity service in localities that are increasingly distant from the grid with more dispersed populations” (World Bank 2011).2 Specifically, RE2 had three components: 1. Rural electrification, which supported investments in rural electrification subprojects to increase electricity coverage through grid expansion or the installation of individual solar photovoltaics (PV) systems; 2. Technical assistance (TA) for rural electrification to promote productive uses of electricity, build the capacity of key stakeholders (including electricity distribution companies), and improve the regulatory environment for rural electrification; and 3. Project management to evaluate, supervise, manage, and administer subproject investments and TA. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 1 The case study that follows focuses on the World Bank–supported rural electrification investments in Peru as part of Components 1 and 2 of RE2.3 In so doing, it highlights— through interviews with targeted stakeholders—how enhancements in energy infrastructure that improve electricity access are related to formal and informal employment outcomes in Peru. Section 2 describes RE1 and RE2 in more detail. Section 3 describes the labor market conditions in the areas targeted by RE2. Section 4 provides an overview of the objectives, methodology, and data collection approach. Section 5 summarizes the findings from a series of key informant interviews conducted with the RE2 stakeholders and beneficiaries. Section 6 covers sustainability and section 7 covers the barriers and enablers. The last section summarizes the results of this case study and includes a theory of change. Endnotes Additional information about RE1 is available at: https://projects.worldbank.org/en/ 1.  projects-operations/project-detail/P090116. Additional information about RE2 is available at: https://projects.worldbank.org/en/ 2.  projects-operations/project-detail/P117864. The case study focuses only on the grid expansion part of Component 1 given that the 3.  installation of the solar PV systems was not designed to allow for productive uses of electricity. 2 Introduction TWO SUMMARY OF RELEVANT WORLD BANK ENERGY INTERVENTIONS Rural electrification in Peru has faced several challenges. Providing electricity is less profitable in rural than urban areas because (1) the ratio of customers to equipment (lines and transformers) is lower, (2) rural customers tend to consume less electricity, and (3) rural customers are often provided subsidized rates. This results in distribution companies allocating little funding to meeting the off-grid demand, and the resulting scarcity of reliable electricity limits rural development (World Bank 2017). Furthermore, rural areas often lack the necessary prerequisites to use electricity productively and effectively. These prerequisites include factors such as information, access to technology, financial resources, and a sufficient demand for the goods they produce. The activities supported under RE1 and RE2 sought to address some of these constraints. Overview of RE1 RE1 primarily aimed to “increase access to efficient and sustainable electricity services in rural areas of Peru” (World Bank 2006).1 As shown in table 1, progress on this objective was measured based on (1) the number of new electricity connections (with a target of providing electricity services to approximately 160,000 households, businesses, and public facilities) and (2) the increase in megawatt-hours (MWh) of electricity consumed for productive uses in the areas targeted by the intervention (with a target of 18,000 MWh in the first five years of operation). By the end of RE1, infrastructure for approximately 105,000 grid connections had been installed. This was 34 percent below the original target and was primarily due to average costs TABLE 1 Selected Indicators, Targets, and Achievement for the Key Project Development Objective of RE1 OBJECTIVE INDICATOR TARGET ACHIEVEMENT Increase access to efficient Number of new electricity Connect 160,000 rural house- • Infrastructure installed for and sustainable electricity connections holds, businesses, and public 105,000 grid connections (mostly in rural areas of Peru facilities, such as schools and households), representing about health clinics (serving about 450,000 people 800,000 people) • Approximately 2,900 schools, clinics, and community centers also included Increase in megawatt-hours Increase electricity consumption Rural families, producers, and (MWh) of electricity consumed by 18,000 MWh businesses adopted electricity- for productive uses in the powered equipment, resulting in target areas an overall increase in electricity used to 19,107 MWh Source: World Bank 2017. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 5 per connection being considerably higher than the costs estimated prior to implementation due to unforeseen exogeneous factors (World Bank 2017).2 Widespread adoption of electricity-powered equipment, however, resulted in an overall increase in electricity used to 19,107 MWh, exceeding the target in the first five years of operation. Following the completion of RE1, the GoP evaluated the results and socioeconomic impacts of the Pilot Program for Promoting Productive Uses of Electricity; it paid particular focus to the impacts on family-level productive units (unidades productivas familiares) and other actors involved in the intervention (namely, electricity distribution firms) (Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult 2016). Specifically, the stated objective of this evaluation of RE1’s productive use component was to analyze potential quantitative and qualitative changes in the living conditions of the program’s beneficiary households. Quantitatively, this study estimated impacts using a simple pre-post comparison group design. Specifically, it compared the outcomes for a sample of beneficiaries surveyed in 2016 with those of a comparison group in the same districts a decade earlier (2007), using information from other databases (e.g., Peru’s National Household Survey on Living Conditions and Poverty [ENAHO]) but without any adjustments for factors that may have changed over time or differed between the beneficiaries and the comparison group.3 The study found that the rate of employment was 88.4 percent for the project beneficiaries after the intervention (in 2016) but 91 percent for the comparison group (people aged 25 and above in the same districts in 2007), suggesting that electrification did not increase the overall employment.4 This estimate implicitly covers the impacts on project beneficiaries (whose self-employment rates could have been affected) as well as on their employees (since employees were included in both the treatment and comparison groups). While the estimated impact on employment rates was not positive, Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult (2016) did identify related patterns suggesting positive impacts on other labor market outcomes. In particular, the study found that the share of people with independent employment was higher for the beneficiaries than the comparison group (64 percent compared with 56 percent). It also found a lower proportion of beneficiaries than the comparison group involved in unpaid family work (19 percent compared to 28 percent). Additionally, the results also suggest potential benefits of electrification for earnings and electricity use. The beneficiaries were found to have 63 percent higher average monthly income per capita than the individuals in the comparison group after adjusting for inflation.5 Electricity consumption also increased significantly for beneficiaries following RE1’s implementation. It increased by 214 percent and 329 percent for households and businesses, respectively (Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult 2016, 65).6 In sum, while employment was lower for the beneficiaries than for the comparison group, the beneficiaries did have higher average income. 6 Summary of relevant World Bank energy interventions BOX 1 LESSONS LEARNED FROM RE1 The following lessons were learned from RE1: • Technical assistance (to support the development of regulatory/institutional frameworks for rural electrification and capacity building for electricity distribution companies) and investment in electricity-powered equipment are essential to promote productive uses of electricity and make it sustainable. • Greater flexibility from the Government of Peru (e.g., regularly updated tariff regimes) may be required to further facilitate rural electrification and accommodate higher distribution costs in newly electrified areas. • Actions by electricity distribution companies to cater to rural customers’ unique needs and constraints would also support efforts to rapidly expand electricity access. Source: Project Performance Assessment Report prepared by the World Bank Independent Evaluation Group (World Bank 2017) Overview of RE2 RE2 began in 2011 and covered four regions of Peru not covered by RE1: Amazonas, Ayacucho, Moquegua, and Tacna. It aimed to build on the experiences of and the progress made during RE1 by continuing to increase electricity coverage in rural areas, resulting in reduced inequality and improved development and economic growth outcomes. RE2 had three components: 1. Rural electrification: This component supported investments in rural electrification subprojects to increase electricity coverage for 42,500 households, small businesses, and community facilities. Specifically, the financed subprojects relied on both grid extension (through the construction of new low- and medium-voltage transmission lines and substations) and the installation of individual solar PV systems (comprising a mountable module, a controller, a battery, and a set of fluorescent lamps) to achieve this target. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 7 2. Technical assistance for rural electrification: This component focused on (1) promoting productive uses of electricity; (2) assessing national renewable energy resources (through, for instance, supporting feasibility studies); (3) providing assistance to electricity distribution companies and other stakeholders to effectively increase access to electricity services through PV and/or grid extension projects; and (4) improving the regulation and monitoring of rural electrification. In particular, nongovernmental organizations (NGOs) responsible for implementing key elements of the TA component related to productive uses of electricity served as intermediaries between potential productive users of electricity and electricity distribution companies, in turn promoting electricity use in productive processes by the former with the goal of increasing electricity consumption by the latter’s clients. Specifically, NGOs would first work closely with electricity distribution companies to identify potential new areas for expanded electricity access. They would then raise awareness among and build the skills of targeted local businesses to facilitate electricity use for supporting business activities (including identifying new opportunities for expansion along with related technical skills). Finally, NGOs would assist businesses in accessing other complementary services, including in certain cases access to financing opportunities (World Bank 2017). 3. Project management: This component supports project management activities, including the establishment of a technical unit to evaluate and supervise the activities performed under Components 1 and 2.7 Table 2 highlights the targets and achievement levels for three key indicators considered by RE2. RE2 installed grid extension and solar PV infrastructure with the capacity to connect 42,669 rural households, of which 36,518 were connected (World Bank 2018). This increased the country’s rural electricity coverage by 2.1 percent. By the end of the project, there were three contracts with NGOs promoting productive uses of electricity, including small-scale operations in agriculture (e.g., coffee, cacao, dairy) and off-farm activities (e.g., artisanal mining, textiles, metal working) (World Bank 2017). Such activities supported family producers, TABLE 2 Selected Indicators, Targets, and Achievement for the Key Project Development Objective of RE2 OBJECTIVE INDICATOR TARGET (2011) ACHIEVEMENT (2017) To increase electricity access Number of potential connections (i.e., new electricity 42,500 42,669 in rural areas of Peru efficiently infrastructure to increase the capacity to provide and sustainably the service) Number of new connections (i.e., actual connections 34,000 36,518 to the grid) Number of productive units adopting electrical  5,000  4,376 equipment (i.e., adoption of electricity-powered equipment by rural families for productive activities) Source: World Bank 2018. 8 Summary of relevant World Bank energy interventions TABLE 3 Characteristics and Achievements of Distribution Companies Under Components 1 and 2 of RE2 CHARACTERISTIC/ACHIEVEMENT DISTRIBUTION COMPANY TOTAL ELECTROSUR ELECTRO ORIENTE ADINELSA Nongovernmental organization FOVIDA El Taller Swisscontact DESCO Region Moquegua; Tacna Amazonas Ayacucho Productive use by electricity beneficiaries 1,408 1,490 1,478 4,376 Estimated increase in electricity use (MWh per year) 1,604 1,309  272 3,185 Investment commitments (S/. thousands)a 1,246  946  799 2,991 Source: Swisscontact 2015; DESCO 2014; FOVIDA El Taller 2014. a This refers to the beneficiaries’ investment commitments. These investments include the purchase of electricity-powered equipment or material that are used by beneficiaries in their productive activities. small and microenterprises, and cooperatives to adopt electricity and use it for multiple purposes. The program directly benefited approximately 4,376 rural producers, including 1,569 female producers, by supporting productive uses of electricity. Table 3 summarizes how the electricity firms and NGOs worked together to extend electricity access and increase the productive use of electricity among Peru’s rural population. The tasks performed by electricity distribution companies and NGOs were complementary. The distribution companies ensured electricity was available for use and the NGOs helped the beneficiaries to incorporate electricity into their productive processes. Endnotes RE1 also sought to drive a series of intermediate outcomes related to the rural electrification 1.  investment climate (including increased investment by electricity distribution companies in rural electrification projects), the regulatory environment (including adoption of regulations, norms, and guidelines developed with support from the project), and the use of electricity for productive activities by targeted rural populations. Specifically, the increased cost was the result of three factors: (1) the mandated inclusion 2.  of household connection and meter costs as part of the project’s capital costs under the GoP’s Renewable Energy Law; (2) increased inflation of local construction costs due to the high rate of investments made by the GoP in rural areas; and (3) the appreciation of the Peruvian nuevo sol against the US dollar over the period corresponding with the project’s implementation (World Bank 2017). Districts are the smallest administrative jurisdiction in Peru. Specifically, Peru is divided 3.  into 24 regions, which are further divided into 196 provinces, which in turn comprise 1,874 districts. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 9 It is worth noting two key limitations with the empirical strategy used by Consorcio 4.  Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult (2016) to evaluate the impacts. First, the study lacks a credible comparison group. Households that benefited from RE1 may be very different from the typical household in the targeted regions. Any differences in outcomes between beneficiary households and households participating in surveys such as ENAHO may be due simply to this factor. Second, the pre-project– post-project comparison conducted by the study leaves open the possibility that the observed changes before and after RE1 are due to other factors unrelated to the rollout of electrification. For these reasons, the evaluation of RE1 by Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult (2016) may not provide reliable information about RE2’s potential impacts. In comparison, the real gross domestic product per capita increased by only 45 percent 5.  during this period (World Bank 2020). This is based on 240 beneficiaries that the utility was able to identify in 2016. Those not 6.  found in their 2007 data were assumed to have zero consumption at that time. This case study does not consider the employment associated with Component 3. 7.  10 Summary of relevant World Bank energy interventions THREE OVERVIEW OF THE LABOR MARKET Like many of its neighbors in the Latin America and Caribbean Region, Peru’s labor market before the launch of RE2 was characterized by high levels of informality. In 2011, for instance, less than 40 percent of workers nationally were salaried; almost half of them did not have a formal contract (table 4). Informal work was also pervasive among self-employed workers, with estimates suggesting that approximately 95 percent of such workers were informally employed (ILO 2014). Further, these national averages masked large differences in formal employment between urban and rural areas.1 Only about 4 percent of rural workers, for instance, were salaried workers with contracts. The corresponding share in urban areas was over six times as large. Informal employment is a key driver of inequality. For example, informal workers often have considerably lower wages than their formal sector peers, even after accounting for education and work experience, because labor protection legislation (such as minimum wage protections) is more strongly enforced in the formal sector. Recall that RE2 targeted four regions of Peru. These four regions are spread across the north, center, and south of the country. Each region has distinct geographic features—the Amazon rainforest in Amazonas, the Andean slopes in Ayacucho, the Andean Highlands in Moquegua, and the coast for Tacna. Table 5 disaggregates the employment type in the four regions targeted by RE2, shedding light on the labor market structures in these distinct areas prior to RE2’s launch. As shown in the table, the share of rural workers in the total labor force was the highest in Amazonas and Ayacucho. Additionally, across all four regions, the majority of workers were independent or unpaid family workers, consistent with the national trends. Unpaid family workers represented a substantial proportion of workers, between 20 and 35 percent, depending upon the region. TABLE 4 Distribution of Employment Type by Urban and Rural Status (% of Total, Urban or Rural Labor Force) TOTAL URBAN RURAL Labor force 100 100 100 Employers 5.2 5.4 4.4 Salaried workers 39.8 46.0 19.1 With a contract 21.5 26.6 4.3 Without a contract 18.3 19.4 14.9 Self-employed workers 35.1 32.4 44.3 Unpaid family workers 12.3 7.0 30.3 Domestic-service workers 2.7 3.2 1.0 Others 0.9 1.2 0.2 Unemployed 3.9 4.9 0.7 Source: Original calculations based on Peru’s National Household Survey on Living Conditions and Poverty (ENAHO 2011). JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 13 TABLE 5 Rural Labor Market in the Intervention Areas AYACUCHO AMAZONAS MOQUEGUA TACNA Working-age populationa (%) 69.9 65.6 77.1 76.8 Labor force participation rateb (%) 73.3 74.2 70.2 70.0 Rural labor forcec (%) 39.7 48.7 17.4 10.2 Rural labor force 100 100 100 100 Employers 3.1 8.6 4.1 9.4 Salaried workers 14.2 14.9 21.6 29.5 With a contract 1.4 2.7 15.6 19.1 Without a contract 12.8 12.2 6.0 10.4 Independent workers 45.4 42.2 47.9 36.6 Unpaid family workers 35.4 32.1 25.8 21.7 Domestic-service workers 0.8 1.5 0.0 0.4 Others 0.4 0.4 0.3 0.0 Unemployed 0.6 0.3 0.3 2.4 Source: Original calculations based on Peru’s National Household Survey on Living Conditions and Poverty (ENAHO 2011). a Working-age population as a percentage of the total population. b Labor force as a percentage of the working-age population. c Rural labor force as a percentage of the total labor force. The agriculture sector played a dominant role in the rural economies of the four regions targeted by RE2. The vast majority of workers in these regions were engaged in agricultural activities. While Tacna had over 60 percent workers engaged in agriculture, this figure was nearly 85 percent in the case of Amazonas (table 6). This is consistent with the high share of independent and unpaid family workers shown in table 5. The second-most-prevalent sector (commerce) contained less than 10 percent of the rural labor force in each region. It is also worth noting that relatively more-energy-intensive sectors (such as the energy sector itself) employed relatively few people in the rural areas in the targeted regions. This suggests that there was potential for electrification investments to generate direct jobs within rural communities, for example, to maintain newly constructed electricity infrastructure. In addition to direct jobs generated by energy sector investments (including investments to install or upgrade electricity infrastructure in remote, rural settings), previous studies have found positive employment impacts of electricity in Peru for the rural communities receiving electricity access. Dasso and Fernandez (2015), for instance, leverage the staggered nature of the rural electrification rollout across Peruvian districts between 2007 and 2010 as part of the national Programa de Electrificación Rural to show that electrification increased hours of work and 14 Overview of the labor market TABLE 6 Sectoral Distribution of the Rural Labor Force in the Intervention Regions (%) AYACUCHO AMAZONAS MOQUEGUA TACNA Agriculture 83.8 84.3 75.9 62.2 Fishing 0.0 0.0 1.0 2.4 Mining 1.4 0.3 0.7 1.5 Industrial 1.2 2.5 1.6 3.3 Electricity, gas, and water 0.0 0.0 0.0 0.0 Construction 2.5 1.0 1.7 1.9 Commerce 6.0 5.9 3.6 5.7 Hotels and restaurants 1.3 1.1 0.8 1.0 Transport, storage, and communications 1.6 0.5 1.1 2.6 Financial intermediation 0.0 0.0 0.0 0.0 Housing 0.0 0.3 0.0 1.8 Public administration and defense 0.2 0.5 10.7 13.6 Education 0.5 1.4 2.3 0.3 Health and social assistance 0.1 0.1 0.3 0.7 Domestic service 0.8 1.5 0.0 0.4 Other services 0.1 0.4 0.0 1.0 Source: Original calculations based on Peru’s National Household Survey on Living Conditions and Poverty (ENAHO 2011). reduced the likelihood of having a second job among males. For females, electrification increased the employment rate as well as earnings and reduced the probability of working in agriculture (Dasso and Fernandez 2015). Similarly, Alcázar, Nakasone, and Torero Cullen (2007) use a matched-comparison approach to show that improvements in electricity quality (as proxied by lower reported electricity fluctuations and reliance on fewer sources of electrical power) due to electricity sector reforms in Peru resulted in more efficient time allocation to work. Specifically, members of households in parts of the country that were impacted by the reforms were more likely to work in nonfarming jobs, which in turn resulted in higher earnings. These workers also spent more time on leisure activities, which increased the quality of life. Endnote Approximately 80 percent of Peru’s population lives in urban areas (World Bank 2020). 1.  JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 15 FOUR IDENTIFICATION AND QUANTIFICATION OF JOBS Objectives and Overall Methodology This case study aims to assess employment associated with Components 1 and 2 of RE2. Specifically, it estimates the direct, indirect, and induced jobs associated with electricity infrastructure investments and the resulting productive uses of electricity by drawing on insights from a series of interviews with professionals involved in the construction and rollout of the project, as well as the beneficiaries in the project areas: • Direct jobs: Direct jobs are those that are created for carrying out design, management, construction, operation, and maintenance activities. In this case study, this category covers the jobs created by electricity distribution companies and NGOs, which employed workers to carry out project-related activities. Direct employment impacts were assessed through interviews with professionals representing both types of organizations. Although these organizations did not formally track direct jobs during the project, the interviewers asked the respondents to provide an estimate of the number of direct jobs. • Indirect jobs: Indirect jobs are those that result from the demand for the inputs required for design, management, construction, operation, and maintenance. In this case study, indirect jobs were estimated by multiplying the number of direct domestic jobs (gathered during interviews with representatives from electricity distribution companies and NGOs) by the indirect-direct domestic job ratio found in the relevant literature and dividing the result by the fraction of inputs that were domestic as reported in the same literature.1 Specifically, in the absence of analyses that shed light on the magnitude of this ratio in the context of the Peruvian economy, this adjustment uses the indirect-direct domestic job ratio and the fraction of inputs reported as domestic in the literature for comparable grid upgrades in neighboring Brazil (UNIDO and GGGI 2015). Both countries are in the Latin America and Caribbean region, and both are classified as upper-middle-income economies by the World Bank (World Bank 2020). • Induced jobs: This case study looks at “productive use of electricity” jobs within the induced jobs category. These jobs are created as a result of improved electricity access. In this case study, induced jobs in Peru are estimated based on interviews with nine small businesses that were connected to the grid through the project. These interviews focused on the degree to which employment associated with the productive use of electricity at the end of the intervention was sustained during the five years after the project ended. The interviews also inquired about hiring practices, impacts on women and vulnerable populations, and current successes and challenges. The results and the discussion presented below distinguish between skilled and semiskilled jobs. Skilled jobs require university training in industrial or mechanical engineering, economics, communications, or agronomical engineering. Such training is typically required, for instance, for the types of jobs for which the distribution companies and NGOs hired: team leader, electrical engineers, technical-commercial specialist for small businesses, financial specialist, communications specialist, and supply chain specialist. By contrast, semiskilled jobs require certain abilities and/or prior training but not advanced education or specialized skills. In the context of direct jobs created as part of RE2, for example, these include promoters, who were required to have field experience, as well as the field workers who extended transmission lines to new communities.2 JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 17 Data Collection Approach Data on the project’s stakeholders, implementers, and beneficiaries were collected using distinct approaches. Specifically, former officers of the project were interviewed first. In line with a “cascade approach,” these respondents then helped to identify staff from the relevant electricity distribution companies and NGOs associated with the initiative. Representatives from all three NGOs contracted by the project as well as two of the three associated electricity distribution companies were interviewed.3 Finding the project’s beneficiaries proved challenging. While the NGOs did provide lists of beneficiaries across the regions, the lists did not include contact information. The distribution companies and NGOs helped to identify contact information for small businesses that were project beneficiaries. The internet’s help was taken to identify contact information for the businesses for which a name was available, but the contact information was either missing or invalid. Of approximately 20 businesses contacted in this way, 9 eventually participated in interviews. This could signify that such businesses could not sustain over time, that they did not have sufficient incentives to participate in discussions, or simply that accurate contact information was not available. Despite the challenges, the final interview sample covered business owners located in each of the four project regions. It also included beneficiaries operating in a diversity of sectors (including producers of milk, coffee, and other products), as summarized in table 7. TABLE 7 Summary of Interviews by Job Type SOURCE DIRECT INDIRECT INDUCED ENTITIES INTERVIEWED (NUMBER OF INTERVIEWS) Nongovernmental organizations (3)   Electricity distribution companies (2)   Milk producers (4)  Coffee producers (1)  Avocado producers (1)  Olive producers (1)  Guinea pig farmers (1)  Internet center (1)  Source: Data based on completed qualitative interviews. 18 Identification and quantification of jobs Endnotes This method assumes that the fraction of indirect jobs that are domestic is the same 1.  as the fraction of inputs that are domestic. Promoters (promotores) visited potential project beneficiaries to provide an overview 2.  of the project and collect monitoring data. Electro Oriente, the third distribution company, did not respond to requests for 3.  interviews. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 19 FIVE RESULTS Direct Jobs Direct jobs under RE2 were created in the electricity distribution companies and NGOs that built capacity for productive uses of electricity. Electricity distribution companies hired workers with technical expertise (e.g., field technicians, who connected communities to the grid). They also hired professional workers, such as engineers, for oversight. The NGOs mainly hired skilled personnel to work with project beneficiaries. These workers had prior experience in the electricity sector (including skills in project development focusing on productive uses of electricity and operations management, budget development, and commercialization of electric energy in rural areas), marketing, supply-chain management, and other related areas. Semiskilled workers, such as promoters, were also hired to collect monitoring data from beneficiaries and provide support for training and marketing campaigns. Most jobs created for both the NGOs and electricity distribution companies were temporary positions, lasting for the project’s duration. Nevertheless, these jobs included formal contracts. Tables 8a and 8b detail the direct jobs that were created during the project by the electricity distribution companies and NGOs, respectively. Distribution companies provided relatively limited employment-related information, which was primarily on jobs related to technical staff. Each distribution company had two to four technical staff working regularly on the project. In Amazonas, the distribution company employed two to three professional engineers to work on the project. Electrosur, operating in Tacna and Moquegua, had two engineers working on the project. Additionally, approximately 15 percent of the 160 employees in technical positions at Electrosur (such as electricians and supervisors) were involved with the intervention at some point. All workers were company staff prior to working on this project. The distribution company in Ayacucho employed three existing skilled employees, including the firm’s commercial manager. In addition, new jobs were created for the field staff, and a consulting team from La Molina National Agricultural University (UNALM) was hired for fieldwork. However, the precise size of the team was not known. Each firm had between 1,400 and 1,500 productive use of electricity beneficiaries. The ratio of technical staff per thousand of these beneficiaries (excluding those Electrosur staff that were involved only occasionally) ranged from 1.4 to 2.7. NGOs employed teams of 7–13 members, many of whom were semiskilled personnel. In Amazonas, for instance, the Lima-based NGO employed five professionals with expertise in topics such as supply chains, commercial activity, microfinance, marketing, and project management. In addition, they had a team of eight promoters who had fewer technical skills and were more frequently in contact with the beneficiary population. The NGO working in Moquegua and Tacna had its main office in Arequipa. They employed seven semiskilled workers, whose roles included advising the electricity aspects of firms’ operations (i.e., an electrical engineer), product marketing, microfinancing, and monitoring beneficiaries’ progress. These workers were hired specifically for the intervention. Finally, the NGO in Ayacucho JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 21 22 results TABLE 8A Direct Jobs: Key Indicators for Electricity Distribution Companies COMPANY/ QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS LOCATION JOB TYPE NUMBER OF PERSONS % FOREIGN/ % FEMALE % FORMAL/ QUALIFICATIONS WAGES (MONTHLY) BENEFITS EMPLOYED DOMESTIC INFORMAL Electrosur/ • Engineers Prior to intervention 100% domestic 0% 100% formal • No additional • Engineers and • Benefits according to law Moquegua • Supervisors qualification required supervisors: S/. • Safety measures • 2 engineers and Tacna • Technical workers for this project 2,000–5,000 based on guideline • 24 additional workers • Technical knowledge • Technical workers: regulations from working with No disclosure With intervention Electrosur • No change ADINELSA/ • Commercial manager Prior to intervention • Experience in their • Technical consultant: • Benefits according to law Ayacucho • Commercial respective areas, S/. 7,000 • Equipment • 1 commercial manager supervisor judged by resumes • Other jobs: requirements (vehicle, • 1 commercial supervisor • Technical consultant • No training offered No disclosure meals, etc.) met when • 1 technical consultant • Other consultants going to field from UNALMb With intervention • Field staff • 1 consulting team from UNALM • Unspecified field staff a There were no members of disadvantaged populations reported. b UNALM = Universidad Nacional Agraria La Molina. The third distribution firm did not provide data but noted that it hired two to three professional engineers for this project. TABLE 8B Direct Jobs: Key Indicators for Nongovernmental Organizations COMPANY/ QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS LOCATION JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU JOB TYPE NUMBER OF PERSONS % FOREIGN/ % FEMALE % FORMAL/ QUALIFICATIONS WAGES (MONTHLY) BENEFITS EMPLOYED DOMESTIC INFORMAL Swisscontact/ • Coordinator With intervention 100% domestic • Coordinator: 0% 100% formal • Coordinator: Experience • Promoters: Over • Benefits Amazonas • Business development • Specialists: 25% in productive activities S/. 1,000 according to law • 1 coordinator specialists (productive • Promoters: 25% of electricity • Competitive wage • Swisscontact’s • 4 specialists chains, commercial • Specialists: Experience • Other jobs: safety policy • 8 promoters activity, microfinance, in their respective areas No disclosure marketing) • Promoters (unqualified • Promoters jobs): Field experience • Training by Swisscontact FOVIDA • Coordinator With intervention • 0% • Coordinator: Experience • Around S/. 1,500– • Benefits El Taller/ • Specialists (energy in similar activities 1,800 according to law • 1 coordinator Moquegua engineer, financial, • Specialists: Referrals by • There were no similar • Safety • 6 specialists and Tacna marketing, productive coordinator, experience jobs in the area measures chains, monitoring, in their respective areas deemed not productive support) • Training by coordinator appropriate DESCO/ • Coordinator Prior to intervention • Coordinator: 0% • Specialists: Experience • Promoters: S/. 1,500 • Benefits Ayacucho • Specialists (electrical, • Specialists: 0% in their respective areas • Other jobs: according to law • 1 coordinator agrarian promotion) • Journalist: 0% • Journalist: Experience No disclosure • Risk insurance • Journalist • Promoters: 16% in communications and for the people With intervention • Promoters media employed • 2 specialists • Promoters (unqualified • 1 journalist jobs): Field experience • 6 promoters 23 employed a total of ten people for the project, including four semiskilled workers, for example, an agricultural specialist and a journalist, who led communications.1 The other six workers were promoters. Only one of the four semiskilled workers, the project coordinator, was an existing employee, whereas the others were hired specifically for the intervention. The ratio of NGO jobs per thousand productive use of electricity beneficiaries ranged from about five to almost nine. Domestic jobs: No foreign workers were employed on the project. All workers were from Peru (henceforth referred to as “domestic workers”), although not all were from the specific project areas (henceforth referred to as “local workers”). For example, skilled workers were often hired from Lima or other large cities. The semiskilled workers were from a mixed regional background: some were hired from other regions of the country, whereas others were recruited locally. This was the case for the NGO in Amazonas. The skilled workers were domestic, whereas five of the eight promoters were hired locally. Similarly, in Ayacucho, neither the electricity distribution company nor the UNALM consultancy team was hired locally; this was likely due to the university’s location in Lima. However, field staff and some promoters were hired locally. In Moquegua and Tacna, all NGO workers came from neighboring provinces and departments, such as Arequipa. On the other hand,the electricity distribution company did hire all local workers, mainly from Tacna. Gender: All teams were predominantly male. The electricity distribution companies did not report hiring female workers for the project, even though female workers were employed for other activities. All skilled workers in the Ayacucho-based NGO were male. In addition, only one of the six promoters was female. Finally, the UNALM consultancy team (hired by the distribution company) was led by a female engineer from the Faculty of Agronomy, and each trip to the intervention area “had female presence,” although no precise number was provided. In the Amazonas-based consulting firm, only one out of the five skilled jobs employed a female worker. Females accounted for 25 percent of the labor for the eight semiskilled jobs. The NGO in Moquegua and Tacna solely hired male workers. As stated by the consultant head, going to “rural areas . . . would have been problematic for a lady to be surrounded by a group of men,” which suggests that safety and security concerns served as obstacles for greater female employment. Indigenous and vulnerable populations: Indigenous workers were not hired in Amazonas, Moquegua, or Tacna, likely due to the limited indigenous presence in these regions. By contrast, rural Ayacucho is predominantly indigenous and Quechua speaking. Some of the locally hired promotors did come from these communities, although an exact count of the promotors was not available. Further, there is no evidence regarding whether the electricity distribution company employed any members of vulnerable populations. However, given that local rural people likely belong to Quechua-speaking communities, some of the field staff likely also fall within this category. Formal, independent, and dependent contracts: All directly employed workers were formally hired and given contracts. In Peru, there is an important distinction between independent and dependent contractors. Most workers were hired as independent contractors and received service contracts (which stipulate the service that a contractor must provide and the time span within which they must provide it) rather than labor 24 results contracts (which are typically offered to regular employees and stipulate wages, working hours, rules, and other employment details).2 Independent contractors are not registered with the tax authority, and labor benefits sanctioned by legislation do not apply. Social security or pension contributions are optional and left to the workers’ discretion. It is also uncommon to see contracts renewed once a project ends. By contrast, dependent contractors received labor contracts, which typically do not specify an end date for their roles with a company. These workers also receive benefits such as health insurance and pension contributions. The electricity distribution company in Moquegua and Tacna and the NGO in Ayacucho employed all workers as dependent contractors. Training and safety: Training and safety policies varied between organizations. All NGOs had orientation trainings for workers. The NGO in Amazonas had a safety policy for field workers that included, for instance, a limit on the maximum number of travel hours per day. By contrast, the NGO in Tacna and Moquegua did not have specific safety policies. The Ayacucho-based NGO did provide risk insurance for all employees, considering the nature of the intervention and the fact that many rural areas were difficult to access. One electricity distribution company reported providing training to their workers as part of their regular practice and so project-specific training was not necessary. However, both distribution companies interviewed indicated that job safety is crucial and electricity work requires appropriate precautions. Wages: Most firms stated that they pay their employees according to the established market wage conditions based on their qualifications and experience. Wages at the electricity distribution firms varied between S/. 2,000 and 7,000 per month (approximately $514–$1,800). Promoters were paid approximately S/. 1,000–1,500 per month at the NGOs (approximately $257–$286). Total direct jobs: Employers reported a total of 57 person-years of direct employment (excluding operation and maintenance [O&M]): 27 for the distribution companies and 30 for the NGOs.3 All jobs were domestic. No foreign workers were reported. Of the workers employed, 31 were new (almost all for the NGOs) and the rest were existing (almost all for the distribution companies). New jobs can be thought of as jobs that would not exist in the absence of this project. Existing jobs would have still existed, but the workers would have likely been engaged in other tasks and perhaps for fewer hours. It should also be noted that Peru had a relatively low unemployment rate (below 5 percent) during the intervention period. That these direct employees were hired by the project-related organizations during a period of low unemployment suggests that these jobs were attractive relative to other available alternatives—in terms of pay, job security, on-the-job safety standards, or other job characteristics. O&M work likely required additional staff. Datta et al. (2012) report a ratio of 1.25 person- years between direct O&M jobs and direct non-O&M jobs.4 Applying this ratio to the direct employment in the distribution companies suggests an additional 34 person-years of direct employment for O&M for a total of 91 person-years.5 JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 25 Indirect Jobs The majority of the material (such as transmission wires, transformers, and other electrical equipment) was produced by companies based in Lima and other major Peruvian cities. As such, all indirect jobs were domestic, even though the project has largely generated employment outside specific project sites. In the absence of Peru-specific metrics, the number of indirect jobs was estimated using data reported in the literature for energy efficiency grid upgrades in neighboring Brazil. Specifically, in the Brazilian grid upgrade context, the ratio of indirect-to-direct domestic jobs was 1.02. About 77 percent of the inputs there were domestic. This suggests that the ratio of total indirect jobs (foreign and domestic) to total direct jobs was 1.32.6 In other words, each direct job was associated with 1.32 corresponding indirect jobs (UNIDO and GGGI 2015, 145–47).7 Given that there were 91 direct jobs associated with this project, the ratio yields a total of 120 indirect jobs.8 Induced Jobs RE2 focused on extending electrification to rural parts of Peru efficiently and sustainably. This was to be accomplished in part by encouraging productive uses of electricity, which in turn have the potential to improve labor market outcomes. This case study focuses on the potential employment impacts associated with improved electricity access. According to Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult’s (2016) evaluation of RE1’s productive use of electricity components, the employment rates for beneficiaries were lower than those for the comparison group they identified. Since RE1 and RE2 were implementing similar activities, the results from RE1 provide suggestive evidence on the direction of the short-term employment trends associated with RE2. That said, the interviews conducted for this case study focused on the changes in employment during the five years after the end of RE2, which followed RE1. Thus, the qualitative data enable a study of the potential for longer- term employment trends after the end of RE2. Table 9 gives an overview of the results of qualitative interviews and is immediately followed by a summary of key insights. The majority of the businesses interviewed were small. Some only employed family members, while others had as many as 40 employees. Most beneficiaries acknowledged that electrification had transformed their businesses, although employment changes were mixed. For example, the internet center previously operated as a phone booth, but now provides additional services by functioning as a full internet center with photocopying capabilities. Providing internet and photocopying services may also allow other local entrepreneurs to grow their businesses or make them more efficient. Similarly, the guinea pig farmer reported that the introduction of electrical light enabled him to perform more tasks at night, such as feeding the animals, which provided more flexibility. 26 results TABLE 9 Induced Jobs PRODUCER/ QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS LOCATION JOB TYPE NUMBER OF PEOPLE % FOREIGN/ % FEMALE AND % FORMAL/ QUALIFICATIONS WAGES BENEFITS EMPLOYED (BEFORE AND DOMESTIC DISADVANTAGED INFORMAL JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU AFTER INTERVENTION) POPULATIONS Milk producer/ • Irrigation Prior to intervention 100% domestic 16% female, Informal No disclosure • S/. None Ayacucho • Milk production 0% Quechua 1,100–1,200 • 7–8 (FT) • Dairy processing Agricultural (e.g., cheese) worker wage Post intervention • Veterinarian care • 1 person in irrigation (FT) • 2 persons in milking (FT) • 1 person in dairy production (FT) • 2 persons in veterinarian care (when required) Milk producer/ • Irrigation Prior to intervention 25% female, No disclosure • S/. 1,500 Housing and Ayacucho • Cattle raising 100% Quechua • Above meals • 4 workers (FT) • Dairy production competitive (cheese) wage Post intervention • 4 workers (FT) Guinea pig producer/ • Guinea pig raising Prior to intervention 50% female, Family labor None N/A None Ayacucho unspecified • 2 family workers (when Quechua required) Post intervention • 2 family workers (when required) (continues) 27 28 TABLE 9 Induced jobs (Continued) results PRODUCER/ QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS LOCATION JOB TYPE NUMBER OF PEOPLE % FOREIGN/ % FEMALE AND % FORMAL/ QUALIFICATIONS WAGES BENEFITS EMPLOYED (BEFORE AND DOMESTIC DISADVANTAGED INFORMAL AFTER INTERVENTION) POPULATIONS Avocado producers’ • Agricultural Prior to intervention 36% female, Informal No disclosure • Men: S/. 80 association/ workers and 16% Quechua per day • 25 agricultural producersa Ayacucho producers • Women: S/. • Variable agricultural workers • Calibration of 60 per day (PT) avocado selection machinery Post intervention • 25 agricultural producers • Variable agricultural workers (PT) • 6 workers in calibrating avocado selection Internet center/ • Administration of Prior to intervention 50% female, Family labor None N/A Ayacucho internet center unspecified • 2 family workers (when required) Post intervention • 2 family workers (when required) Coffee cooperative/ • Processing Prior to intervention • 60–70% from 50% female, Formal Operations: • S/. 2,000 on • Benefits Amazonas operations local province 0% unspecified average according to • 2–3 workers (FT) • Prior expertise in • Fieldwork • 30–40% from • Above law machinery operation • Desk jobs neighboring competitive • Productivity Post intervention provinces wage bonuses Entry jobs: • 15–18 workers (FT) • Little expertise required • Loyalty Overall: • Constant training provided by the business (continues) TABLE 9 Induced jobs (Continued) PRODUCER/ QUANTIFYING JOB TYPES JOB QUALITY AND BENEFITS LOCATION JOB TYPE NUMBER OF PEOPLE % FOREIGN/ % FEMALE AND % FORMAL/ QUALIFICATIONS WAGES BENEFITS EMPLOYED (BEFORE AND DOMESTIC DISADVANTAGED INFORMAL AFTER INTERVENTION) POPULATIONS Milk producer/ • Dairy production Prior to intervention • 100% Unspecified female, Family labor None N/A None Amazonas domestic 0% Quechua • Family workers (when required) Post intervention JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU • Nonexistent (project was not completed and producer is yet to use electricity) Olive producers’ • Agricultural Prior to intervention Unspecified female, Informal No disclosure • S/. 70 per association/ workers and 0% Quechua day • 20 agricultural producers Moquegua and producers • Doubled • 10–15 agricultural workers (PT) Tacna • Olive selection since arrival hired by interviewee (1 of the of electricity 20 producers) • 15–20 workers in olive selection (PT), hired by the association Post intervention • 20 agricultural producers • 2 agricultural workers (PT) hired by interviewee • 6 workers in olive selection (PT) Milk producers’ • Agricultural Prior to intervention Unspecified female, None • S/. 50 per association/ workers and 0% Quechua day • 40 agricultural producers Moquegua and producers • 66% increase • 3 agricultural workers (PT) hired Tacna • Family workers since arrival by interviewee of electricity • Family workers (when required) Post intervention • 40 agricultural producers • 1 agricultural worker (PT) hired by interviewee • Family workers (when required) 29 Note: FT = full-time; PT = part-time. a The term “agricultural producer” refers to a person who owns land. By contrast, a “worker” may work on the land, but does not own it. In some cases, electrification associated with the use of new technologies displaced labor. For example, the introduction of mechanical milking and machinery to harvest and sort olives replaced work that was previously done manually. This resulted in an employment reduction for both types of businesses. The olive association previously employed 25–35 employees and employs only 8 now. In some cases, the reduction in employment was sustained over time. In other cases, after the initial displacement of labor, businesses expanded their operations and employment. Prior to the intervention, single-phase electrical power was available for domestic use, and the Amazonian coffee producer employed two to three workers and produced coffee for local consumption. After the intervention, the producer received three-phase electrical power, which allowed the processing plants to operate and select higher-quality coffee beans more efficiently. Access to better electricity partly enabled the producer to export their coffee internationally. To do so, the business hired additional workers for export-related roles, which were not needed previously. These workers are responsible for updating certification requirements, record keeping, and marketing. In total, the business currently employs 15–18 full-time workers, including those in desk jobs, as well as those in field jobs and coffee-processing roles. The coffee cooperative is also considering starting a coffee shop, which would employ 10 additional workers. Other beneficiaries had not yet expanded their businesses but shared their plans to do so. The guinea pig farmer, for example, was considering opening a specialty restaurant serving roasted guinea pigs. Given that he now has electricity, he could serve customers in the evenings and have music. Similarly, one of the milk producers hopes to expand if given access to three-phase electricity. His plans involve employing more workers in milk provision, dairy processing, and commercialization. Finally, electrification had unclear linkages with employment in some cases.9 For example, the guinea pig farm was still a small-scale family-run business and did not change its employment practices after the intervention. In summary, these results point to mixed associations with employment, which are summarized in table 10. In the two cases where the provision of new products or services can be identified, one (the coffee cooperative in Amazonas) experienced expanded employment whereas the other (the internet center in Ayacucho) did not.10 Likewise, improvements in production and service quality were associated with declining employment (potentially due to technological innovation), increasing employment (the avocado or coffee production), or no change in employment (the guinea pig farmer and two milk producers). Indeed, in theory, a reduction in production costs can lead to increased labor hiring (as was found for the avocado and coffee production), while an increase in productivity can decrease the labor demand (as was found for the olive production and one of the milk producers), pointing to the need for comprehensive empirical assessments of employment outcomes to assess the final impacts. Finally, output expansion associated with electrification can lead to no change in hiring (as was the case for the milk production and guinea pig farming businesses), as well as increased (electrification coffee cooperative) or reduced employment (milk production). Associated factors 30 results TABLE 10 Innovation Following Connection to the Grid and Employment Results NEW PRODUCT PRODUCTION OUTPUT EMPLOYMENT PRODUCTS/ QUALITY COSTS EXPANSION RESULT SERVICES Milk producer 1/Ayacucho  Decrease Milk producer 2/Ayacucho a  No change Guinea pig farmer/Ayacucho a  No change Avocado producers’ association/Ayacucho   Increase Internet center/Ayacucho   No change Coffee cooperative/Amazonas     Increase Milk producer/Amazonas a No change Olive producers’ association/Moquegua and   Decrease Tacna Milk producers’ association/Moquegua and   Decrease Tacna Note: a This expansion/upgrade is planned but has not yet been undertaken by the respective businesses. include the characteristics of the firm (e.g., a family venture versus a more entrepreneurial structure) and the nature of the technological change implemented. Local workers: The beneficiaries interviewed employ only Peruvian workers, regardless of location. Further, they mainly hire local workers to the implementation sites. The exception to this is the coffee cooperative: only 60–70 percent of their workers are native to Rodriguez de Mendoza, the province where the cooperative operates. They also require professionals and workers with technical and specialized skills, which can still be sought domestically. They tend to hire workers from neighboring provinces or other regions, such as Bagua, Cajamarca, and Lima. They also bring specialized consultants from outside the region to train their personnel. Gender: Most businesses have a predominantly male labor force, although female employees can have roles that are equivalent to men’s. Both milk producers in Ayacucho reported employing one woman (out of six and four employees, respectively). In one case, the female employee runs milk operations, while in the other, she milks cows alongside her husband. Meanwhile, women constitute just over a third of the avocado farm’s 25 agricultural workers. Further, the Ayacucho-based internet center is run by a woman, while the guinea pig farm is run by a married couple. The coffee producer in Amazonas was the only firm that made a deliberate effort to employ women, and roughly half of their workers are female. Quechua-speaking communities:11 In Ayacucho, rural workers tend to belong to Quechua- speaking communities. Meanwhile, the manager of the Amazonas-based coffee cooperative JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 31 shared that they do employ members of disadvantaged populations, although no further detail was provided. There is no evidence of the employment of any disadvantaged person in Moquegua and Tacna. Formal employment: The businesses that participated in interviews had implemented a range of formal and informal hiring practices. The coffee cooperative was the only business to state that all hires were employed under formal contracts. Meanwhile, some businesses have indefinite-term contracts, whereas some are independent providers performing specific, short-term tasks. The family-run businesses, such as the guinea pig farm and the internet center, have no formal contracts or hiring practices. The other producers did not report informal hiring practices, but such can be inferred given Peruvian legislation and the payment structure for reported wages. Most agrarian workers are paid daily and do not have social benefits such as social security affiliation, paid holiday leave, compensation for time of service, family allowance, or bonus payments for holidays. Job qualifications: Most business owners indicated that their workers did not need prior qualifications to be hired, although they value relevant prior experience. Once again, the exception was the Amazonas-based coffee cooperative, which did not require qualifications for entry-level jobs, but required a good “work attitude” and loyalty to the firm and offered training and growth opportunities for workers in the organization. However, they did require prior experience for operational jobs associated with using machinery. Wages: One milk producer in Ayacucho reported paying a competitive wage for agricultural workers, whereas the other reported paying above-the-market wage. The avocado producers’ association pays different wages based on gender, with women receiving S/. 20 less per day than their male counterparts. No explanation for this was provided. Meanwhile, the arrival of electricity in the Amazonas-based coffee cooperative has led to a wage increase. The cooperative pays an average wage of S/. 2,000 per month, which is above the average for the region. They also offer productivity bonuses and provide labor benefits required by the law: social security affiliation, holiday and sick leave, compensation for time of service (an extra monthly wage a year), bonus payments for holidays (one extra monthly wage each for Christmas and the Fiestas Patrias, which is celebrated in July), maternity leave, life and accident insurance, and a family allowance of 10 percent of a minimum wage per month. Finally, although jobs have been lost in Moquegua and Tacna, wages have increased since the arrival of electricity. Wages for olive workers have gradually doubled, and wages for milk workers have increased more than 50 percent relative to the wages immediately before RE2. Wages are not applicable for family- owned businesses given that family members are usually unpaid or paid irregularly. Quality of life: All producers agreed that the arrival of electricity increased the quality of life. As stated by one milk producer, “giving people access to electricity is giving them quality of life. Through light, children have the possibility to study.” He claimed that the “quality of life has increased in towns” due to the arrival of electricity. Total induced jobs: The evaluation by Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult (2016) points to negative employment impacts of RE1 in Peru. This suggests that RE2’s short-term employment impacts may also have been negative. 32 results The interviews conducted as part of this case study on RE2, which included a closely related set of activities, suggest that changes in employment since the end of the project were mixed. In combination, these findings suggest that this project may have created some new jobs but also eliminated others, with the net effect being unclear. That said, the combined evidence does suggest that the project may have increased incomes on average. Changes in income may have been driven by improvements in the quality of jobs as measured by wages. This suggests that it might be more sensible to focus on measures such as wages, in addition to employment, given that employment figures may exclude important project benefits. Endnotes A “semiskilled” job does not necessarily require a university degree. Prior technical  1.  training combined with work experience may be sufficient to serve as a specialist. An “agricultural specialist,” for example, may be an individual with practical sectoral experience but no formal training. This case study uses these classifications based on the responses of the interview participants. Service contracts are commonly used for working conditions in which there is a set  2.  termination date and tasks can be easily linked to a specific product. This estimate is based on the assumption that each of the three firms employed  3.  24 temporary staff at a quarter time (25 percent of fulltime) for a year and that the remaining staff worked for a full calendar year each. Only Electrosur reported hiring temporary staff. Thus, this estimate is based on the assumption that the other two firms hired similar numbers of temporary staff. The ratio of 1.25 direct O&M jobs per direct non-O&M job was obtained based on the  4.  results reported by Datta et al. (2012). This report covers a power project in a low-/ middle-income setting (namely, India and Bhutan). Figure 2 of the report presents estimates of the number of O&M jobs by type. It indicates a total of 18,657 person- years of direct employment during the project’s construction phase and a total of about 23,321 direct jobs during the 20-year O&M phase, giving a ratio of 1.25. This assumes that there is no O&M work associated with the direct employment at NGOs.  5.  The ratio 1.32 is computed by dividing the ratio of indirect to direct jobs (1.02) by the  6.  share of inputs that was domestic (0.77). This implicitly means that the share of inputs that was domestic is being used to estimate the share of indirect jobs that was domestic. Estimating indirect jobs in this manner is nonstandard in this literature and may not be accurate, especially if the wage rates of relevant workers in the countries from which imports were sourced and those of similar workers hired domestically differ substantially. This is because the share of domestic inputs is based on the inputs’ cost, while inputs purchased from countries with higher wages (e.g., the United States) will likely generate far fewer jobs per dollar than inputs purchased from countries with lower wages (e.g., Peru). All these inputs were purchased in Peru. However, the companies that produced these  7.  inputs may have needed to import some inputs themselves. The estimate of indirect to direct domestic jobs used in this case study is based on data from Brazil, where about JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 33 77 percent of the inputs needed to create these inputs were produced domestically (UNIDO and GGGI 2015). These estimates may be imprecise for several reasons. For example, while all inputs  8.  were purchased locally, the inputs used by the firms that manufactured the abovementioned inputs may have been imported. It is also worth noting that the results from Brazil may not be applicable to Peru, which is a much smaller country. Like the coffee producer, the milk producer in Amazonas was supposed to receive  9.  three-phase electrical power. However, due to a bureaucratic entanglement between the electricity distribution company and the local government, they still do not have access to the electricity required for productive uses. Single-phase electrical power is insufficient for a dairy processing plant. As such, an analysis of the employment impacts of electricity for this case study is infeasible, although it does provide some insights to evaluate the factors that may act as obstacles to an effective intervention. In the two other cases (marked with  in table 10), the entrepreneurs have plans to 10.  add new products or services but they have yet to implement them. This case study uses “Quechua-speaking” as a proxy for disadvantaged populations, 11.  though it is important to note that not all Quechua-speaking people may belong to disadvantaged populations and not all disadvantaged populations necessarily speak Quechua. 34 results SIX SUSTAINABILITY OF PRODUCTIVE USES OF ELECTRICITY The Implementation Completion and Results report for RE2 suggests that increased electricity access in combination with the promotion of productive uses of electricity directly benefitted 4,376 rural producers, including 1,569 women (World Bank 2018). Considering the data collection associated with this case study took place about five years after the project closed, there is an opportunity to examine whether the activities aligned with the productive use of electricity, as well as the associated induced jobs, have been sustained. Insights from interviews with beneficiaries point to three common trends that may account for their longer-term sustainability: 1. Family-owned businesses (such as the guinea pig farm, the internet center, and the milk producer) continued to employ family members, as had been the case prior to the project. Although electrification and machinery helped increase their productivity and allowed for more flexibility (i.e., working in the evenings), it did not drastically change their business model. 2. Some slightly larger businesses (such as the Ayacucho-based milk farmer or the olive grower) implemented technological innovations after receiving electricity access. This may have allowed them to expand their businesses. 3. Businesses such as the coffee cooperatives attempted to export their products after receiving electricity access. Efficiency gains likely allowed them to improve productivity and scale their businesses. It is important to note that the study sample includes only 9 beneficiaries, even though attempts were made to contact over 20. It is unclear whether the unreachable businesses simply changed their contact information or whether they were no longer operating. In a broader sense, the inclusion of an emphasis on productive uses of electricity in the country’s National Rural Electrification Plan combined with increased availability of funds from Peru’s Rural Electrification Fund to support complementary capacity-building initiatives indicates a sustained interest in promoting electricity-related productive use activities following RE2 (World Bank 2017). These policy efforts have the potential to further enhance the employment impacts associated with improved access to electricity in rural areas. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 37 SEVEN BARRIERS AND ENABLERS OF PRODUCTIVE USE OF ELECTRICITY Insights from stakeholders’ and beneficiaries’ interviews indicate several barriers and enablers affecting the sustainability of small businesses in the newly electrified areas of rural Peru. These factors include economic growth, electricity prices, lack of credit, and the institutional and political environment. Economic growth facilitates electricity adoption. General economic growth may have facilitated successful electricity adoption for productive processes in the Peruvian context— and, of course, electricity adoption may have helped improve economic growth (see, for example, Esso 2010; Saidi, Rahman, and Amamri 2017).1 Investments in rural areas can connect formerly isolated areas to other areas, enable travel and trade between these areas, and contribute to increased economic growth. Such growth, and the related business opportunities, was in the background of many of the decisions taken by the entrepreneurs regarding the implementation of new technologies or regarding the expansion of their activities. Other public investments were made possible by the increased resources that became available over the past two decades and may also have facilitated growth. For instance, in Ayacucho—the project site worst impacted by poverty and an area affected by terrorism in the 1980s—informants noted that the construction of new roads dramatically improved communication in previously isolated districts. This was likely less of a factor in Tacna and Moquegua, which already had better communication infrastructure. Electricity prices are a barrier to further expansion. Electricity prices have been increasing significantly in Peru, as shown in table 11. Although there are no studies detailing the impacts of this price change, it may have discouraged demand and use in rural areas. While this was not mentioned by the beneficiaries in Amazonas, Tacna, and Moquegua, all five producers interviewed in Ayacucho complained about high electricity costs and noted that it limits business growth and expansion. Electricity prices are regulated, yet they do vary by location. Interestingly, although Ayacucho is the worst impacted by poverty among all four regions, it has always had significantly higher electricity rates than the others, as evidenced in table 11. One respondent reported that such prices “daunt producers from becoming entrepreneurs.” A milk producer shared that he was considering opening a plant to process grains to produce flour but was discouraged by high electricity prices. Another milk producer went so far as to discontinue using electricity given its share in business costs. The distribution company also acknowledged that high electricity costs may have been an impediment to the development of economic activities and the creation of jobs. Lack of credit is a barrier to business expansion. Electricity connection costs (including acquisition of the required electrical equipment, for example, a three-phase transformer, by many businesses) can be considerable. While these costs were partly covered by the relevant distribution company during the pilots linked to RE2, going forward, producers aiming to expand productive activities are likely to be constrained by the absence of credit. One of the milk producers in Ayacucho, for instance, wanted to expand his business to produce mature cheeses (after the completion of RE2), which he could sell at higher prices than milk. He reported not having sufficient savings or credit to purchase the machinery to expand activities on his own, and that there are no specialized credit institutions working with local producers in the area. Respondents in the other regions also shared this concern about lack of credit. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 39 TABLE 11 Electricity Prices by Region Over Time YEAR CHARGE AMAZONASa AYACUCHOb MOQUEGUAc TACNAd 2014 Fixed 1.91 5.18 2.09 2.09 Variable per kWh 49.67 153.85 56.40 55.76 2015 Fixed 1.96 5.21 2.11 2.11 Variable per kWh 64.52 163.99 61.35 60.81 2016 Fixed 2.01 5.36 2.16 2.16 Variable per kWh 49.84 185.40 71.73 72.12 2017 Fixed 3.77 5.37 4.02 4.02 Variable per kWh 58.37 187.09 73.90 74.60 2018 Fixed 3.80 5.44 4.07 4.07 Variable per kWh 61.60 184.62 74.09 75.33 2019 Fixed 4.05 5.62 4.20 4.20 Variable per kWh 79.80 189.47 75.51 76.68 2020 Fixed 3.87 5.78 3.34 3.34 Variable per kWh 81.06 185.45 62.23 62.98 2021 Fixed 3.90 5.82 3.36 3.36 Variable per kWh 86.41 192.99 65.63 67.18 2022 Fixed 4.45 6.66 3.84 3.84 Variable per kWh 93.96 217.32 73.11 75.11 Source: Osinergmin website (https://www.osinergmin.gob.pe/seccion/institucional/regulacion-tarifaria/ pliegos-tarifarios/electricidad/pliegos-tarifiarios-cliente-final). Note: All fixed charges are in soles and all variable charges are in cents (1/100 of sol) per kWh. kWh = kilowatt-hour. a Rodriguez de Mendoza electrical grid system. b Cora Cora–Ayacucho Sur electrical grid system. c Moquegua Rural electrical grid system. d Tarata electrical grid system. 40 Barriers and Enablers of Productive Use of Electricity The institutional and political environment has varied impacts on the productive use of electricity. In Moquegua and Tacna, respondents noted that the local policy was neither a barrier to nor an enabler of job creation. One respondent said that “the regional government does not help much; the help from the municipality also is not much.” Another producer reported that there were “neither barriers nor enablers.” By contrast, the Ayacucho-based avocado producer noted that the physical location used for their plant was provided by the district municipality. During the project’s implementation, the distribution company realized that they may be losing opportunities to expand the use of electricity for productive purposes. After the project closed, they created a subdivision responsible for promoting productive uses of electricity. This new subdivision identifies producers that are close to the grid or already connected to it and offers them technical advice and training on ways to use electricity better for productive purposes and expand their productive potential. The coffee producer in Amazonas reported that regional authorities were actively organizing fairs and other events to showcase regional products. The NGO also indicated that the regional government organized events to promote electricity use in productive processes. One milk producer reported having asked the electricity distribution company to expand their electricity access from single-phase to three-phase power. However, he received no response and holds the bureaucracy of both the Provincial Municipality of Bagua and the electricity distribution company responsible for this lack of action, which is likely hindering his ability to expand production. While the interviews reported mixed information on the extent to which productive uses of electricity are being encouraged, it is worth highlighting that the national electrification plan now puts greater emphasis on such uses (World Bank 2017). This suggests continued support in this area within the GoP. Endnote Although data on local economic growth are unavailable, the local economy grew at 1.  a sustained rate of 5 percent per year nationally between 2001 and 2018. This led to a decline in rural poverty rates from approximately 78 percent in 2001 to 42 percent in 2018. Declines in rural poverty rates were especially substantial in the four focus regions of our study. By 2018, rural poverty had reduced to less than half the 2001 levels in three of the four targeted regions and close to half in the other (ENAHO 2017). JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 41 EIGHT CONCLUSION Summary of Findings This case study sought to assess the employment impacts associated with RE2 in Peru, which was funded by the World Bank. It focused solely on the project components that involved grid extension and training of beneficiaries on the productive use of electricity. The case study found mixed evidence regarding the number of jobs associated with the project, but positive evidence that the project may have led to an improvement in other related outcomes (such as income). Table 12 presents estimates of person-years of direct, indirect, and induced employment associated with the project. All jobs were reported to be domestic (within Peru). The mixed impacts in terms of employment are plausible. On the one hand, improved electricity access can result in a reduction of production costs, which could enable a firm to lower its products’ prices, in turn increasing their demand. Employment could increase if the increase in demand is sufficient. However, the opposite is also possible, that is, an increase in productivity means a firm can produce a given amount of output with fewer workers. A firm may need fewer workers unless there is a sufficient increase in a product’s demand to offset the increase in productivity. The findings of this case study have one key implication: • The project’s ambiguous job creation impacts suggest that future efforts to identify ways that rural electricity projects may improve local labor market outcomes could benefit from considering a broader set of these outcomes. While there may be positive impacts on job creation in certain situations, these are not guaranteed, and positive impacts may be substantial for other outcomes. In the case of RE2, for instance, the interviews provide some suggestive evidence that the project may have increased incomes. In addition, available evidence for RE1—a previous project that was quite similar—also indicates possible positive benefits in terms of income. That said, it is worth noting that impacts on income may also be ambiguous within a competitive economy. Specifically, electrification can improve the productivity of enterprises, but TABLE 12 Person-Years of Employment Associated with the Grid Extension and Productive Use of Electricity Components of RE2 in Peru JOB TYPE OUTCOME DIRECT INDIRECT INDUCED Person-years 91 120 01 Source: Interviews with key informants. Includes foreign and domestic employment as well as O&M. Note: The actual estimate was slightly negative. JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU 43 they may not reap the associated income benefits if they are competing. Rather, the ultimate beneficiaries might be consumers of the goods produced by newly electrified enterprises. In the case of RE2, for example, data from the interviews conducted as part of this case study point to significant changes in the number of businesses that conducted their activities, indicating the potential for downstream effects on consumers. Theory of Change Figure 1 presents a theory of change (TOC) for Components 1 and 2 of RE2. The TOC delineates the causal pathways between the activities undertaken as part of these components and the impacts on the creation of direct, indirect, and induced domestic jobs. It does so by drawing on the findings of this case study as well as the key objectives of RE2, as outlined in its Project Appraisal Document (World Bank 2011).1 The TOC indicates that World Bank financing for RE2 supported key activities related to the financing of infrastructure capital costs as well as the provision of TA to promote productive use of electricity. These activities were complementary to each other: support for training on productive uses of electricity helped prepare project beneficiaries to take greater advantage of potential economic opportunities arising from increased or improved electricity access. Within the employment categories listed as part of labor inputs and outcomes, the TOC also highlights those where increased opportunities for marginalized populations (namely, females and indigenous populations) were observed. As can be seen in figure 1, the interviews conducted as part of this study provide evidence that female workers were hired as semiskilled direct workers over the course of implementation of project activities. The interviews also indicate increased opportunities for productive employment for female and indigenous workers (e.g., within the information technology sector). These induced domestic jobs are partly a result of investments in the complementary services that promoted productive uses of electricity. Specifically, as part of Component 2, NGOs hired to raise awareness among and build the skills of the targeted local businesses facilitated the use of electricity to support business activities (including identifying new opportunities for expansion as well as the related technical skills). These NGOs also partly supported businesses’ access to other complementary services, including access to financing opportunities to purchase the items needed to implement productive uses of electricity. The activities performed under Component 2 learned from and built on the success of similar activities delivered under RE1, as part of which a pilot-scale productive-use promotion activity aimed at working with the target communities to identify relevant opportunities, increase awareness and skills, and ease financing constraints helped 1,500 families in Cuzco to adopt electricity-powered appliances and equipment to process cereals, coffee, cocoa, baked goods, meat products, milk, wood 44 conclusion FIGURE 1 Theory of Change for Components 1 and 2 of RE2 in Peru Activities Outputs Outcomes Long-term outcomes Component 1: Rural electrification Electricity supply is reliable and affordable Increased access to efficient and sustainable electricity in rural Subsidies provided to partially finance Extension of electricity grid to serve areas of Peru capital costs of electricity access projects over 42,000 households and small in rural areas enterprises in rural areas Small rural households & MSMEs Households, small enterprises, and experience: community facilities • Improved lighting quality Distribution companies provide additional Availability of skilled (leading to greater number of connected to funding for investment in electricity and semiskilled labor productive hours) electricity grid access projects to work on energy • Increased productivity access projects JOBS GENERATED BY THE SECOND RURAL ELECTRIFICATION PROJECT IN PERU Component 2: Technical assistance for rural Direct and indirect jobs F V Electric appliances and Lack of access to reliable, electrification machinery available in • Skilled labor affordable electricity is (i.e., engineers, • Semiskilled labor local markets key constraint facing HHs (i.e., jobs and MSMEs (e.g., no supervisors, TA to promote productive uses of manufacturing goods outstanding constraints Productive use of consultants) electricity in local inesses, including: and materials such as related to infrastructure electricity jobs (e.g., phone • Semiskilled labor wires, transformers, or access to finance) booth expands to computer (i.e., construction, and electrical • NGOs contracted to raise awareness/skills services, avocado producer wiring, electricians, equipment) among targeted local businesses to facilitate and coffee cooperative field staff) F use of electricity expand scale of operations) V • NGOs work with electricity distribution • New areas for expanded access identified (including semiarid companies to identify areas for expanded coastal communities, Amazonian rainforests and Andean highlands) electricity access. • Increased disposable • Three NGOs contracted to promote use of electricity for business income of households activities (such as milling) in rural areas Increased use and NGOs support businesses access to (due to potentially lower • NGO workers received orientation training and safety-policy training sustained demand energy costs) complementary services (e.g., financing) • Approximately 9,000 beneficiaries received training on topics such for electricity as efficient use of electricity and electric appliances, and over 4,000 among local • Improved access to news, • Efforts to strengthen capacity of electricity rural producers (36% women) adopted electricity equipment households and information, and distribution companies and authorities in businesses entertainment • Businesses provided access to complementary services (such as planning/design of grid extension projects finance) to engage in productive uses of electricity and renewable energy (e.g., enhancing Improved financial viability monitoring of infrastructure) Availability of skilled of rural electrification and semiskilled labor investments • Assessment of socioeconomic impact, • Skilled labor (i.e., project F to provide TA Increased number quality of service delivery, and tariff issues development specialists, V of skilled and associated with rural electricity to develop supply-chain managers) semiskilled workers profitability/sustainability recommendations • Semiskilled labor (i.e., with training related pormoters) to providing TA Direct jobs Indirect jobs V = vulnerable (indigenous) Legend Induced jobs WB-supported activity F = females employed Assumptions (input) (input) populations employed 45 Source: Original assessment based on the case study’s findings and World Bank (2011). Note: HH = household; MSME = micro, small, and medium enterprise; NGO = nongovernmental organization; TA = technical assistance; WB = World Bank. and metal products, and handicrafts, resulting in additional electricity sales of 470 MWh per year (World Bank 2011). Related complementary services—including sensitization campaigns to increase households’ and enterprises’ awareness of the advantages of electricity use, business development services to enhance the capacity of local entrepreneurs, provision of financing to ease finance-related binding constraints, and skill training for working-age beneficiaries to enhance employability—can be considered for inclusion in the design of clean energy interventions based on a careful assessment of context-specific needs, constraints, and potential. Endnote The Project Appraisal Document for RE2 did not contain a formal TOC for the project. 1.  46 conclusion References Alcázar, Lorena, Eduardo Nakasone, and Máximo Torero Cullen. 2007. “Provision of Public Services and Welfare of the Poor: Learning from an Incomplete Electricity Privatization Process in Rural Peru.” Research Network Working Paper R-526, Inter-American Development Bank, Washington, DC. Consorcio Asociación Benéfica Prisma, Instituto Cuánto, and Macroconsult. 2016. “Servicio de Consultoría para la Evaluación de los Resultados e Impacto del Componente 3: Promoción de Usos Productivos de la Electricidad.” Ministerio de Energía y Minas, Lima, Peru. Dasso, Rosamaría, and Fernando Fernandez. 2015. “The Effects of Electrification on Employment in Rural Peru.” IZA Journal of Labor & Development 4: 6. https://izajold. springeropen.com/articles/10.1186/s40175-015-0028-4. 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