Energy Efficiency and Local Macro Rebound Effects: Theory and Experimental Evidence from Rwanda

52 Pages Posted: 20 Sep 2023

See all articles by Jörg Ankel-Peters

Jörg Ankel-Peters

RWI - Leibniz Institute for Economic Research; University of Passau - Business Administration and Economics

Maximiliane Sievert

RWI - Leibniz Institute for Economic Research

Anicet Munyehirwe

IB&C (Rwanda)

Erwin H. Bulte

Wageningen University and Research (WUR) - Development Economics Group

Nathan Fiala

University of Connecticut

Date Written: September 15, 2023

Abstract

Energy efficiency is a key component of climate policy. The rebound effect, which refers to increases in demand in response to the efficiency induced price reduction, potentially nullifies some of the energy savings from energy efficiency improvements. We study macro rebound effects after the introduction of energy efficient biomass cookstoves (EEBCs) in rural Sub- Sahara Africa. We develop a theoretical model of biomass supply and demand and empirically evaluate a governmental pilot project in Rwanda that randomly subsidized EEBCs at the village-level, leading to exogenous variation in adoption levels. We explore spillovers in consumption to non-adopters via price reactions on local village markets, which we call the local macro rebound effect. Our theoretical model and our empirical results demonstrate that equilibrium response effects can take different forms – depending on local context. We identify conditions that determine the shape and size of such effects.

Keywords: Energy efficiency, macro rebound effect, technology adoption, improved cooking

JEL Classification: R13, D12, O13, Q28

Suggested Citation

Ankel-Peters, Jörg and Sievert, Maximiliane and Munyehirwe, Anicet and Bulte, Erwin H. and Fiala, Nathan, Energy Efficiency and Local Macro Rebound Effects: Theory and Experimental Evidence from Rwanda (September 15, 2023). USAEE Working Paper No. 23-598, Available at SSRN: https://ssrn.com/abstract=4573089 or http://dx.doi.org/10.2139/ssrn.4573089

Jörg Ankel-Peters (Contact Author)

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
45128 Essen
Germany
0049-201-8149-247 (Phone)

HOME PAGE: http://www.rwi-essen.de

University of Passau - Business Administration and Economics ( email )

Wirtschaftswissenschaftliche Fakultaet
Passau, D-94030
Germany

Maximiliane Sievert

RWI - Leibniz Institute for Economic Research ( email )

Hohenzollernstr. 1-3
Essen, 45128
Germany

Anicet Munyehirwe

IB&C (Rwanda)

Boulevard de Nyabugoro
Kigali
Rwanda

Erwin H. Bulte

Wageningen University and Research (WUR) - Development Economics Group ( email )

Hollandseweg 1
WAGENINGEN, 6706 KN
Netherlands

Nathan Fiala

University of Connecticut ( email )

Storrs, CT 06269-1063
United States

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