Returns to Grid Electricity: Mechanism of Causal Conservation and Household Technology
Posted: 8 Jul 2019 Last revised: 18 Mar 2020
Date Written: July 4, 2019
The unprecedented stock of greenhouse gases in the atmosphere is changing the traditional role of the forest to one of the carbon sinking and carbon sequestration. However, the dependence on firewood for household energy is ubiquitous in developing countries, thus undermining the ecosystem services that the forest provides. One of the options to address this problem is to provide access to alternatives, such as electricity. This study examines the effect of grid electricity on firewood consumption using an instrumental variable estimation strategy, and it examines the mechanisms of the causal effect. I use three waves of large sample household surveys from Bhutan and other administrative data to complement the main results. The results show that grid electricity reduces firewood consumption by approximately 1.51 cubic metres per month. The households respond to electricity provision by making adjustment in household technology, particularly in terms of shifting to newly available source of household fuels and adopting basic electrical appliances.
Keywords: electricity, firewood, household technology, carbondioxide, electrical appliances
JEL Classification: O12, Q5
Suggested Citation: Suggested Citation