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Economics of Energy Conservation: A Case Study

Author

Listed:
  • Gunatilake, Herath

    (Asian Development Bank)

  • Padmakanthi, Dhammika

    (Saga University)

Abstract

Global energy security relies heavily on exhaustible fossil fuels, whose use contributes significantly to global environmental problems. The recent unprecedented rise in oil prices and the threat of global warming highlight the urgent need for solutions to the energy and environment problem. Shifting to clean renewable energy sources—the long-term solution—has been slow despite efforts of the global community since the 1970s. Demand side management (DSM) is part of the solution to the energy crisis. Among DSM measures, energy conservation has greater potential in developing countries. This paper examines the financial and economic feasibility of adoption of an energy-conserving technology in the household sector in Sri Lanka. Results show that the adoption of this energy-conserving technology is financially profitable and economically viable. Systematic incorporation of environmental benefits further strengthens the case for energy conservation. The paper also discusses policy measures to solve low voluntary adoption, affordability issues, and information failures related to energy conservation.

Suggested Citation

  • Gunatilake, Herath & Padmakanthi, Dhammika, 2008. "Economics of Energy Conservation: A Case Study," ADB Economics Working Paper Series 131, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0131
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    References listed on IDEAS

    as
    1. Toshihiko Masui, Tatsuya Hanaoka, Saeko Hikita, and Mikiko Kainuma, 2006. "Assessment of CO2 Reductions and Economic Impacts Considering Energy-Saving Investments," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 175-190.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    adoption; demand side management; energy conservation; energy crisis; financial feasibility;
    All these keywords.

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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