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How Pro-Poor Growth Affects the Demand for Energy

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  • Paul Gertler
  • Orie Shelef
  • Catherine Wolfram
  • Alan Fuchs

Abstract

Most of the future growth in energy use is forecast to come from the developing world. Understanding the likely pace and specific location of this growth is essential to inform decisions about energy infrastructure investments and to improve greenhouse gas emissions forecasts. We argue that countries with pro-poor economic growth will experience larger increases in energy demand than countries where growth is more regressive. When poor households' incomes go up, their energy demand increases along the extensive margin as they buy energy-using assets for the first time. We also argue that the speed at which households come out of poverty affects their asset purchase decisions. We provide empirical support for these hypotheses by examining the causal impact of increases in household income on asset accumulation and energy use in the context of Mexico's conditional cash transfer program. We find that transfers had a large effect on asset accumulation among the low-income program beneficiaries, and the effect is greater when the cash is transferred over a shorter time period. We apply lessons from the household analysis to aggregate energy forecast models using country-level panel data. Our results suggest that existing forecasts could grossly underestimate future energy use in the developing world.

Suggested Citation

  • Paul Gertler & Orie Shelef & Catherine Wolfram & Alan Fuchs, 2013. "How Pro-Poor Growth Affects the Demand for Energy," NBER Working Papers 19092, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:19092
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    1. Barham, Tania & Lipscomb, Molly & Mobarak, Ahmed Mushfiq, 2011. "Development Effects of Electrification: Evidence from the Geologic Placement of Hydropower Plants in Brazil," CEPR Discussion Papers 8427, C.E.P.R. Discussion Papers.
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    1. repec:eee:renene:v:113:y:2017:i:c:p:52-63 is not listed on IDEAS
    2. Lin, Boqiang & Omoju, Oluwasola E. & Okonkwo, Jennifer U., 2015. "Impact of industrialisation on CO2 emissions in Nigeria," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1228-1239.
    3. Independent Evaluation Group, 2014. "Social Safety Nets and Gender : Learning from Impact Evaluations and World Bank Projects," World Bank Publications, The World Bank, number 21365.
    4. repec:eee:energy:v:127:y:2017:i:c:p:786-802 is not listed on IDEAS
    5. Arik Levinson & James O'Brien, 2015. "Environmental Engel Curves," NBER Working Papers 20914, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting

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