Electrification and Cooking Fuel Choice in Rural India

62 Pages Posted: 12 Feb 2020 Last revised: 28 Apr 2021

See all articles by Ridhima Gupta

Ridhima Gupta

South Asian University - Faculty of Economics

Martino Pelli

Université de Sherbrooke; University of Montreal - Center for Interuniversity Research in Econometrics; Center for Interuniversity Research and Analysis on Organization (CIRANO)

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Date Written: April 20, 2021

Abstract

This study investigates the causal link between electrification and the adoption of modern (and cleaner) cooking fuels, more specifically Liquefied Petroleum Gas (LPG). In order to correct for the potential endogeneity in the placement of electrical infrastructure, we exploit an instrumental variable approach. Our instrument interacts state-level supply shifts in hydroelectric power availability with the initial level of electrification of each district. The results are consistent with a choice set expansion under a fixed budget constraint. We find that electrification leads to an increase in the probability of adoption of (free) biomass fuels and a decrease in the probability of adoption of (costly) modern cooking fuels. These results are statistically significant only for the poorest households in our sample, while they become statistically insignificant when we move to richer households. The same is true for the share of expenditure in a specific fuel. These results seem to indicate that electrification, by creating an additional strain on households’ finances, pushes them back on the energy ladder.

Keywords: rural electrification, cooking fuel, energy ladder, fuel stacking

JEL Classification: O12, O13, Q56

Suggested Citation

Gupta, Ridhima and Pelli, Martino, Electrification and Cooking Fuel Choice in Rural India (April 20, 2021). Available at SSRN: https://ssrn.com/abstract=3521473 or http://dx.doi.org/10.2139/ssrn.3521473

Ridhima Gupta

South Asian University - Faculty of Economics ( email )

New Delhi
India

Martino Pelli (Contact Author)

Université de Sherbrooke ( email )

2500, Blvd de l'Université
Sherbrooke, Quebec J1K 2R1
Canada

HOME PAGE: http://sites.google.com/site/martinopelli

University of Montreal - Center for Interuniversity Research in Econometrics ( email )

C.P. 6128, Succursale Centre-ville
Montreal, Quebec H3C 3J7
Canada

Center for Interuniversity Research and Analysis on Organization (CIRANO) ( email )

2020 rue University, 25th floor
Montreal H3C 3J7, Quebec
Canada

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