IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v149y2021ics0301421520307837.html
   My bibliography  Save this article

How to get rural households out of energy poverty in Nigeria: A contingent valuation

Author

Listed:
  • Nduka, Eleanya

Abstract

Although Nigeria is endowed with plenty of sustainable energy resources, most rural households still rely heavily on conventional energy. Nigerians want to transition to clean energy but cannot afford the upfront costs. Households have long waited for the government to solve energy problems, to no avail. Rural households’ welfare can be improved if investors adopt an installment plan. However, businesses are concerned about economic gains. Thus, it is vital to investigate how much money rural households can afford every month, how long it would take them to complete the payment, and whether it is feasible for investors. In light of this, this study employs the contingent valuation method (CVM) to elicit responses and estimate the willingness to pay (WTP) for a pico-photovoltaic (pico-PV) system and improved cookstove (ICS). The results show that rural households have strong preferences for sustainable energy. Energy transition would save each household $60 annually. Furthermore, the cost-benefit analysis shows that it is viable to invest in the business. Thus, policymakers need to focus on attracting investors to rural areas, providing a conducive environment, and helping businesses keep track of people who sign up for the program.

Suggested Citation

  • Nduka, Eleanya, 2021. "How to get rural households out of energy poverty in Nigeria: A contingent valuation," Energy Policy, Elsevier, vol. 149(C).
    • Handle: RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520307837
    DOI: 10.1016/j.enpol.2020.112072
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421520307837
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2020.112072?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Danny Campbell & W George Hutchinson & Riccardo Scarpa, 2009. "Using Choice Experiments to Explore the Spatial Distribution of Willingness to Pay for Rural Landscape Improvements," Environment and Planning A, , vol. 41(1), pages 97-111, January.
    2. Haab, Timothy C. & McConnell, Kenneth E., 1997. "Referendum Models and Negative Willingness to Pay: Alternative Solutions," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 251-270, February.
    3. David I Levine & Theresa Beltramo & Garrick Blalock & Carolyn Cotterman & Andrew M Simons, 2018. "What Impedes Efficient Adoption of Products? Evidence from Randomized Sales Offers for Fuel-Efficient Cookstoves in Uganda," Journal of the European Economic Association, European Economic Association, vol. 16(6), pages 1850-1880.
    4. John W. Duffield & David A. Patterson, 1991. "Inference and Optimal Design for a Welfare Measure in Dichotomous Choice Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 67(2), pages 225-239.
    5. Zorić, Jelena & Hrovatin, Nevenka, 2012. "Household willingness to pay for green electricity in Slovenia," Energy Policy, Elsevier, vol. 47(C), pages 180-187.
    6. Bensch, Gunther & Grimm, Michael & Peters, Jörg, 2015. "Why do households forego high returns from technology adoption? Evidence from improved cooking stoves in Burkina Faso," Journal of Economic Behavior & Organization, Elsevier, vol. 116(C), pages 187-205.
    7. Michael Grimm & Luciane Lenz & Jörg Peters & Maximiliane Sievert, 2020. "Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 417-454.
    8. Barry, Mamadou Saliou & Creti, Anna, 2020. "Pay-as-you-go contracts for electricity access: Bridging the “last mile” gap? A case study in Benin," Energy Economics, Elsevier, vol. 90(C).
    9. Michael Grimm & Anicet Munyehirwe & Jörg Peters & Maximiliane Sievert, 2017. "A First Step up the Energy Ladder? Low Cost Solar Kits and Household’s Welfare in Rural Rwanda," The World Bank Economic Review, World Bank, vol. 31(3), pages 631-649.
    10. Jeuland, M.A. & Bhojvaid, V. & Kar, A. & Lewis, J.J. & Patange, O. & Pattanayak, S.K. & Ramanathan, N. & Rehman, I.H. & Tan Soo, J.S. & Ramanathan, V., 2015. "Preferences for improved cook stoves: Evidence from rural villages in north India," Energy Economics, Elsevier, vol. 52(PB), pages 287-298.
    11. Kosenius, Anna-Kaisa & Ollikainen, Markku, 2013. "Valuation of environmental and societal trade-offs of renewable energy sources," Energy Policy, Elsevier, vol. 62(C), pages 1148-1156.
    12. Adegbulugbe, Anthony O., 1991. "Energy demand and CO2 emissions reduction options in Nigeria," Energy Policy, Elsevier, vol. 19(10), pages 940-945, December.
    13. Ajayi, Oluseyi O., 2009. "Assessment of utilization of wind energy resources in Nigeria," Energy Policy, Elsevier, vol. 37(2), pages 750-753, February.
    14. Louviere,Jordan J. & Hensher,David A. & Swait,Joffre D., 2000. "Stated Choice Methods," Cambridge Books, Cambridge University Press, number 9780521788304, September.
    15. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    16. Aklin, M. & Bayer, P. & Harish, S.P. & Urpelainen, J., 2018. "Economics of household technology adoption in developing countries: Evidence from solar technology adoption in rural India," Energy Economics, Elsevier, vol. 72(C), pages 35-46.
    17. Ajayi, Oluseyi O. & Ajayi, Oluwatoyin O., 2013. "Nigeria's energy policy: Inferences, analysis and legal ethics toward RE development," Energy Policy, Elsevier, vol. 60(C), pages 61-67.
    18. Pollak, Robert A, 1976. "Interdependent Preferences," American Economic Review, American Economic Association, vol. 66(3), pages 309-320, June.
    19. Urpelainen, Johannes & Yoon, Semee, 2017. "Can product demonstrations create markets for sustainable energy technology? A randomized controlled trial in rural India," Energy Policy, Elsevier, vol. 109(C), pages 666-675.
    20. Bauchet, Jonathan & Morduch, Jonathan, 2019. "Paying in pieces: A natural experiment on demand for life insurance under different payment schemes," Journal of Development Economics, Elsevier, vol. 139(C), pages 69-77.
    21. Danny Campbell & Riccardo Scarpa & W. Hutchinson, 2008. "Assessing the spatial dependence of welfare estimates obtained from discrete choice experiments," Letters in Spatial and Resource Sciences, Springer, vol. 1(2), pages 117-126, December.
    22. Grieshop, Andrew P. & Marshall, Julian D. & Kandlikar, Milind, 2011. "Health and climate benefits of cookstove replacement options," Energy Policy, Elsevier, vol. 39(12), pages 7530-7542.
    23. Bensch, Gunther & Peters, Jörg, 2015. "The intensive margin of technology adoption – Experimental evidence on improved cooking stoves in rural Senegal," Journal of Health Economics, Elsevier, vol. 42(C), pages 44-63.
    24. Abdul-Salam, Yakubu & Phimister, Euan, 2019. "Modelling the impact of market imperfections on farm household investment in stand-alone solar PV systems," World Development, Elsevier, vol. 116(C), pages 66-76.
    25. Pate, Jennifer & Loomis, John, 1997. "The effect of distance on willingness to pay values: a case study of wetlands and salmon in California," Ecological Economics, Elsevier, vol. 20(3), pages 199-207, March.
    26. Aliyu, Abubakar Sadiq & Ramli, Ahmad Termizi & Saleh, Muneer Aziz, 2013. "Nigeria electricity crisis: Power generation capacity expansion and environmental ramifications," Energy, Elsevier, vol. 61(C), pages 354-367.
    27. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr, March.
    28. Larson, Bruce A. & Rosen, Sydney, 2002. "Understanding household demand for indoor air pollution control in developing countries," Social Science & Medicine, Elsevier, vol. 55(4), pages 571-584, August.
    29. Roy, Joyashree & Jana, Sebak, 1998. "Solar lanterns for rural households," Energy, Elsevier, vol. 23(1), pages 67-68.
    30. Mohammed, Y.S. & Mustafa, M.W. & Bashir, N. & Mokhtar, A.S., 2013. "Renewable energy resources for distributed power generation in Nigeria: A review of the potential," Renewable and Sustainable Energy Reviews, Elsevier, vol. 22(C), pages 257-268.
    31. Beltramo, Theresa & Blalock, Garrick & Levine, David I. & Simons, Andrew M., 2015. "The effect of marketing messages and payment over time on willingness to pay for fuel-efficient cookstoves," Journal of Economic Behavior & Organization, Elsevier, vol. 118(C), pages 333-345.
    32. Case, Anne C, 1991. "Spatial Patterns in Household Demand," Econometrica, Econometric Society, vol. 59(4), pages 953-965, July.
    33. Adaramola, M.S. & Oyewola, O.M., 2011. "On wind speed pattern and energy potential in Nigeria," Energy Policy, Elsevier, vol. 39(5), pages 2501-2506, May.
    34. Mamadou Saliou Barry & Anna Creti, 2020. "Pay-as-you-go contracts for electricity access: bridging the « last mile » gap? A case study in Benin," Working Papers 2006, Chaire Economie du climat.
    35. Timothy C. Haab & Kenneth E. McConnell, 1998. "Referendum Models and Economic Values: Theoretical, Intuitive, and Practical Bounds on Willingness to Pay," Land Economics, University of Wisconsin Press, vol. 74(2), pages 216-229.
    36. Timothy C. Haab & Kenneth E. McConnell, 2002. "Valuing Environmental and Natural Resources," Books, Edward Elgar Publishing, number 2427.
    37. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    38. Harrington, Elise & Athavankar, Ameya & Hsu, David, 2020. "Variation in rural household energy transitions for basic lighting in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    39. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74(2), pages 132-132.
    40. Monyei, Chukwuka G. & Adewumi, Aderemi O. & Obolo, Michael O. & Sajou, Barka, 2018. "Nigeria's energy poverty: Insights and implications for smart policies and framework towards a smart Nigeria electricity network," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 1582-1601.
    41. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
    42. Chishio Furukawa, 2014. "Do Solar Lamps Help Children Study? Contrary Evidence from a Pilot Study in Uganda," Journal of Development Studies, Taylor & Francis Journals, vol. 50(2), pages 319-341, February.
    43. Bergmann, Ariel & Colombo, Sergio & Hanley, Nick, 2008. "Rural versus urban preferences for renewable energy developments," Ecological Economics, Elsevier, vol. 65(3), pages 616-625, April.
    44. Semee Yoon & Johannes Urpelainen & Milind Kandlikar, 2016. "Willingness to Pay for Solar Lanterns: Does the Trial Period Play a Role?," Review of Policy Research, Policy Studies Organization, vol. 33(3), pages 291-315, May.
    45. Ian J. Bateman & Richard T. Carson & Brett Day & Michael Hanemann & Nick Hanley & Tannis Hett & Michael Jones-Lee & Graham Loomes, 2002. "Economic Valuation with Stated Preference Techniques," Books, Edward Elgar Publishing, number 2639.
    46. Kersten, I & Baumbach, G & Oluwole, A.F & Obioh, I.B & Ogunsola, O.J, 1998. "Urban and rural fuelwood situation in the tropical rain-forest area of south-west Nigeria," Energy, Elsevier, vol. 23(10), pages 887-898.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Leonarda F. C. Castro & Paulo C. M. Carvalho & João P. T. Saraiva & José Nuno Fidalgo, 2024. "Photovoltaic Projects for Multidimensional Poverty Alleviation: Bibliometric Analysis and State of the Art," International Journal of Energy Economics and Policy, Econjournals, vol. 14(2), pages 507-522, March.
    2. Huang, Yatao & Jiao, Wenxian & Wang, Kang & Li, Erling & Yan, Yutong & Chen, Jingyang & Guo, Xuanxuan, 2022. "Examining the multidimensional energy poverty trap and its determinants: An empirical analysis at household and community levels in six provinces of China," Energy Policy, Elsevier, vol. 169(C).
    3. Jie Dong & Yanjun Ren & Thomas Glauben, 2024. "Gospel or curse: the impact of religious beliefs on energy poverty in rural China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.
    4. Xintao Li & Xue’er Xu & Diyi Liu & Mengqiao Han & Siqi Li, 2022. "Consumers’ Willingness to Pay for the Solar Photovoltaic System in the Post-Subsidy Era: A Comparative Analysis under an Urban-Rural Divide," Energies, MDPI, vol. 15(23), pages 1-22, November.
    5. Ma, Rufei & Deng, Liqian & Ji, Qiang & Zhai, Pengxiang, 2022. "Environmental regulations, clean energy access, and household energy poverty: Evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 182(C).
    6. Huan Wang, 2022. "Knowledge or Responsibility? The Role of Media Use on Citizens’ Willingness to Pay for Environment Governance," Sustainability, MDPI, vol. 14(21), pages 1-15, November.
    7. Yuxiang Xie & E. Xie, 2023. "Measuring and Analyzing the Welfare Effects of Energy Poverty in Rural China Based on a Multi-Dimensional Energy Poverty Index," Sustainability, MDPI, vol. 15(18), pages 1-21, September.
    8. Gui, Xuechen & Gou, Zhonghua, 2022. "Household energy technologies in New South Wales, Australia: Regional differences and renewables adoption rates," Renewable and Sustainable Energy Reviews, Elsevier, vol. 160(C).
    9. Dalia Streimikiene & Grigorios L. Kyriakopoulos, 2023. "Energy Poverty and Low Carbon Energy Transition," Energies, MDPI, vol. 16(2), pages 1-15, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gunther Bensch & Jörg Peters, 2020. "One‐Off Subsidies and Long‐Run Adoption—Experimental Evidence on Improved Cooking Stoves in Senegal," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(1), pages 72-90, January.
    2. Bensch, Gunther & Grimm, Michael, 2024. "Behavioural constraints in energy technology uptake: Evidence from real-purchase offers in rural Rwanda and Senegal," Ruhr Economic Papers 1081, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    4. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    5. Jeuland, M.A. & Bhojvaid, V. & Kar, A. & Lewis, J.J. & Patange, O. & Pattanayak, S.K. & Ramanathan, N. & Rehman, I.H. & Tan Soo, J.S. & Ramanathan, V., 2015. "Preferences for improved cook stoves: Evidence from rural villages in north India," Energy Economics, Elsevier, vol. 52(PB), pages 287-298.
    6. Michael Grimm & Luciane Lenz & Jörg Peters & Maximiliane Sievert, 2020. "Demand for Off-Grid Solar Electricity: Experimental Evidence from Rwanda," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 7(3), pages 417-454.
    7. Choi, Andy S., 2013. "Nonmarket values of major resources in the Korean DMZ areas: A test of distance decay," Ecological Economics, Elsevier, vol. 88(C), pages 97-107.
    8. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    9. Domínguez-Torreiro, Marcos & Soliño, Mario, 2011. "Provided and perceived status quo in choice experiments: Implications for valuing the outputs of multifunctional rural areas," Ecological Economics, Elsevier, vol. 70(12), pages 2523-2531.
    10. Aliyu, Abubakar Sadiq & Dada, Joseph O. & Adam, Ibrahim Khalil, 2015. "Current status and future prospects of renewable energy in Nigeria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 48(C), pages 336-346.
    11. Gebreegziabher, Z. & Mekonnen, A. & Beyene, A.D. & Hagos, F., 2018. "Valuation of access to irrigation water in rural Ethiopia: application of choice experiment and contingent valuation methods," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277168, International Association of Agricultural Economists.
    12. Helen Scarborough & Jeff Bennett, 2012. "Cost–Benefit Analysis and Distributional Preferences," Books, Edward Elgar Publishing, number 14376.
    13. Andy S. Choi & Kelly S. Fielding, 2016. "Cultural Attitudes as WTP Determinants: A Revised Cultural Worldview Scale," Sustainability, MDPI, vol. 8(6), pages 1-18, June.
    14. Anthony PARIS & Pascal GASTINEAU & Pierre-Alexandre MAHIEU & Benoît CHEZE, 2020. "Citizen involvement in the energy transition: Highlighting the role played by the spatial heterogeneity of preferences in the public acceptance of biofuels," LEO Working Papers / DR LEO 2828, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    15. Jae Kim & Seung-Nam Kim & Soogwan Doh, 2015. "The distance decay of willingness to pay and the spatial distribution of benefits and costs for the ecological restoration of an urban branch stream in Ulsan, South Korea," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 835-853, May.
    16. Persson, Mattias & Svensson, Mikael, 2013. "The willingness to pay to reduce school bullying," Economics of Education Review, Elsevier, vol. 35(C), pages 1-11.
    17. Henry-Osorio, Miguel & Mittelhammer, Ronald C., 2012. "An Information-Theoretic Approach to Modeling Binary Choices: Estimating Willingness to Pay for Recreation Site Attributes," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123432, Agricultural and Applied Economics Association.
    18. Richard Yao & Pamela Kaval, 2008. "Valuing Biodiversity Enhancement in New Zealand," Working Papers in Economics 08/07, University of Waikato.
    19. Klaus Glenk & Robert J. Johnston & Jürgen Meyerhoff & Julian Sagebiel, 2020. "Spatial Dimensions of Stated Preference Valuation in Environmental and Resource Economics: Methods, Trends and Challenges," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 215-242, February.
    20. Zhao, Xiaoli & Cai, Qiong & Ma, Chunbo & Hu, Yanan & Luo, Kaiyan & Li, William, 2017. "Economic evaluation of environmental externalities in China’s coal-fired power generation," Energy Policy, Elsevier, vol. 102(C), pages 307-317.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:149:y:2021:i:c:s0301421520307837. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.