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Credit, Attention, and Externalities in the Adoption of Energy Efficient Technologies by Low-Income Households

Susanna B. Berkouwer and Joshua Dean

American Economic Review, 2022, vol. 112, issue 10, 3291-3330

Abstract: We study an energy efficient charcoal cookstove in an experiment with 1,000 households in Nairobi. We estimate a 39 percent reduction in charcoal spending, which matches engineering estimates, generating a 295 percent annual return. Despite fuel savings of $237 over the stove's two-year lifespan—and $295 in emissions reductions—households are only willing to pay $12. Drawing attention to energy savings does not increase demand. However, a loan more than doubles willingness to pay: credit constraints prevent adoption of privately optimal technologies. Energy efficient technologies could drive sustainable development by slowing greenhouse emissions while saving households money.

JEL-codes: D12 D91 G51 O12 O13 O32 Q54 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (9)

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DOI: 10.1257/aer.20210766

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Handle: RePEc:aea:aecrev:v:112:y:2022:i:10:p:3291-3330