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The Response of Consumption to Fuel Switching : Panel Data Estimates

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  • Imelda, Imelda

Abstract

This paper investigates on the extent to which the switching improves households' standard of living. Using a nationwide transition from kerosene to cleaner burning propane in Indonesia, I explore households' consumption response to fuel switching from a nation wide kerosene to liquid petroleum gas conversion program in Indonesia. Based on combustion efficiency and end-use energy equivalence, LPG is cleaner and more efficient than kerosene. Using variation in the timing of the implementation on four waves of the Indonesia longitudinal survey, I compare changes in expenditure within households of targeted districts with changes in expenditure within households of untargeted districts. I find that households reduce their kerosene consumption up to 100% and their fuel expenses are reduced by 40%, or 1.19 USD per month on average. These effects are higher among poor households. I do not find any response to other nondurable expenditures which provides some evidence of consumption smoothing. This is as expected considering the size of the effect is only about a 2% reduction from total monthly expenditure.

Suggested Citation

  • Imelda, Imelda, 2018. "The Response of Consumption to Fuel Switching : Panel Data Estimates," UC3M Working papers. Economics 27653, Universidad Carlos III de Madrid. Departamento de Economía.
    • Handle: RePEc:cte:werepe:27653
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    3. Andadari, Roos Kities & Mulder, Peter & Rietveld, Piet, 2014. "Energy poverty reduction by fuel switching. Impact evaluation of the LPG conversion program in Indonesia," Energy Policy, Elsevier, vol. 66(C), pages 436-449.
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    Cited by:

    1. Verma, Anjali P. & Imelda, Imelda, 2019. "Clean Energy Access : Gender Disparity, Health, and Labor Supply," UC3M Working papers. Economics 29397, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Imelda,, 2020. "Cooking that kills: Cleaner energy access, indoor air pollution, and health," Journal of Development Economics, Elsevier, vol. 147(C).

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