Adding fuel to fire? Social spillovers in the adoption of LPG in India

In many developing countries, many households, especially in rural areas, are still heavily reliant on solid biomass as a cooking fuel, despite its negative health and environmental implications. Liquefied petroleum gas (LPG) is a clean alternative, but its higher cost implies that its use is often limited to the richer, urban areas of a country. This paper focuses on the Indian context and investigates, over a relatively long time-frame, whether social spillover effects might have played a role in a household's decision to use LPG, and how these effects varied across different sub-populations. Using data from several waves of the National Sample Survey (NSS), the recent ACCESS survey, and the India Human Development Survey (IHDS), this paper provides multiple strands of evidence that, taken jointly, suggest that positive social spillovers are present. Spillovers are also found to be stronger for households that belong to social networks, than for households that do not belong to any network. Our results provide partial evidence on convergence in LPG use rates across subgroups of the Indian population, and have strong implications for policy-makers around the world who could leverage lessons from social learning to encourage consumers to switch to cleaner sources of energy

Social Policies and Adaptation to Extreme Weather: Evidence from South Africa

Can social policies assist households in coping with the effects of extreme weather events? We evaluate the role of the Indigent Program, an income-based social assistance program in South Africa that provided free electricity and water to poor households, in helping rural households adapt to drought conditions, using household-level panel data. We first analyse the impact of eligibility for the program on the likelihood of acquiring access to electricity and piped water, as well as on expenditure on these amenities, and find that program eligibility did not have a significant impact on these measures. While eligibility for the program was largely ineffective in increasing appliance adoption, electricity use, or welfare, we find that eligible households were more likely to use a borehole as their main water source, a result primarily driven by drought-affected households, suggesting a possible adaptation response facilitated by the program. In general, the benefits offered by the program may have only been marginal in facilitating significant adaptation responses, exacerbated by the fact that households in droughtaffected areas may not have enough assets/wealth to purchase durables, or to make complementary investments. Policy implications relate to the effective design of policies to enable access and use of amenities such as electricity and water, and easing access to credit to facilitate adaptation responses, as climatic conditions intensify

Adoption of environmental standards and a lack of awareness: evidence from the food and beverage industry in Vietnam

Voluntary approaches to environmental policy can contribute to stemming environmental degradation in developing countries with weak institutions. We evaluate the role of a lack of awareness of a law in explaining the voluntary adoption of environmental certification by small and medium enterprises (SMEs) in the food and beverage industry in Vietnam. We find that firms, where owners or managers were unaware of the law were 38 percentage points less likely to receive environmental certification. Moreover, this effect is larger for firms that exported, had internet access or paid bribes, and it is weaker for household enterprises. Our results suggest that increasing legal awareness can weaken informational constraints for SMEs, where weak institutions and a lack of information often hamper the uptake of environmental policy initiatives.ISSN:1432-847XISSN:1867-383

How Regulation Might Fail to Reduce Energy Consumption While Still Stimulating Total Factor Productivity Growth

This paper evaluates the impact of a policy that was implemented to reduce the energy intensity of firms in some manufacturing sectors in India, on the total factor productivity (TFP) growth of firms and on its components, scale efficiency and technical change. Using plant-level panel data on the cement industry from 2007-2015 and a difference-in-difference methodology, we find that treated plants had higher rates of TFP growth, compared to control plants. This is largely driven by the fact that they expanded their production compared to control plants, even though they experienced lower rates of technical change compared to control plants. To explain this finding, we verify that treated plants attempted to meet the energy-intensity mandate not by reducing their energy consumption, but instead by increasing their output. Our results suggest that energy intensity regulations may not reduce energy consumption, because firms may find other ways to fulfil targets. The policy implications of this study are related to the design of energy-efficiency regulations, particularly in developing countries where firms in some industries may find it difficult to reduce their energy consumption through investment in new energy-efficient technologies or processes

Energy-related financial literacy and bounded rationality in appliance replacement attitudes: Evidence from Nepal

Bounded rationality is an example of an important behavioral failure responsible for the energy-efficiency gap, whereby agents under-invest in energy-efficient technologies. One means of addressing this is by improving the energy-related financial literacy of households, which is defined as the combination of energy knowledge and cognitive abilities that are needed in order for agents to take sound decisions with respect to investment in durables. This has been found to improve the ability of agents to calculate the lifetime costs of technologies. The objective of this paper is to evaluate the determinants of energy-related financial literacy of respondents from about 2000 urban households in the Terai region of Nepal, and to analyze whether this ability has an effect on replacement attitudes of households regarding inefficient technologies. Using a novel household survey data, we find that respondents have low levels of energy-related financial literacy. While we find differences in the role of some socio-economic determinants of energy-related financial literacy compared to previous studies from developed countries, we also find certain common results, such as female respondents having lower scores. Additionally, we find that higher levels of energy-related financial literacy, especially stronger computational abilities, lead to more rational attitudes with regards to replacement of old appliances. As development has brought, and continues to bring, more households in low and middle-income countries (LMICs) closer to technologies of their liking, ensuring the adoption of energy-efficient technologies may be critical for ensuring sustainable development in the decades to come, and higher