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Household Fuel Choice in Urban Ethiopia: A Random Effects Multinomial Logit Analysis

  • Alem, Yonas
  • Beyene, Abebe D.
  • Kohlin, Gunnar
  • Mekonnen, Alemu

We use three rounds of a rich panel data set to investigate the determinants of household fuel choice and energy transition in urban Ethiopia. We observe that energy transition did not occur following economic growth in Ethiopia during the past decade. Regression results from a random effects multinomial logit model, which controls for unobserved household heterogeneity, show that households’ economic status, price of alternative energy sources, and education are important determinants of fuel choice in urban Ethiopia. The results also suggest the use of multiple fuels, or “fuel stacking behavior.” We argue that policy makers could target these variables to encourage transition to cleaner energy sources.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-13-12-efd.

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Date of creation: 10 Oct 2013
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Handle: RePEc:rff:dpaper:dp-13-12-efd
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  1. Chambwera, Muyeye & Folmer, Henk, 2007. "Fuel switching in Harare: An almost ideal demand system approach," Energy Policy, Elsevier, vol. 35(4), pages 2538-2548, April.
  2. Alem, Yonas & Söderbom, Måns, 2012. "Household-Level Consumption in Urban Ethiopia: The Effects of a Large Food Price Shock," World Development, Elsevier, vol. 40(1), pages 146-162.
  3. Peter Haan & Arne Uhlendorff, 2006. "Estimation of Multinomial Logit Models with Unobserved Heterogeneity Using Maximum Simulated Likelihood," Discussion Papers of DIW Berlin 573, DIW Berlin, German Institute for Economic Research.
  4. Abebe Damte & Steven F. Koch, 2011. "Clean Fuel-Saving Technology Adoption in Urban Ethiopia," Working Papers 229, Economic Research Southern Africa.
  5. Heltberg, Rasmus, 2004. "Fuel switching: evidence from eight developing countries," Energy Economics, Elsevier, vol. 26(5), pages 869-887, September.
  6. Kebede, Bereket & Bekele, Almaz & Kedir, Elias, 2002. "Can the urban poor afford modern energy? The case of Ethiopia," Energy Policy, Elsevier, vol. 30(11-12), pages 1029-1045, September.
  7. Ouedraogo, Boukary, 2006. "Household energy preferences for cooking in urban Ouagadougou, Burkina Faso," Energy Policy, Elsevier, vol. 34(18), pages 3787-3795, December.
  8. Catherine Wolfram & Orie Shelef & Paul Gertler, 2012. "How Will Energy Demand Develop in the Developing World?," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 119-38, Winter.
  9. Leiwen Jiang & Brian C. O'Neill, 2004. "The energy transition in rural China," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 21(1/2), pages 2-26.
  10. Heltberg, Rasmus, 2005. "Factors determining household fuel choice in Guatemala," Environment and Development Economics, Cambridge University Press, vol. 10(03), pages 337-361, June.
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