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Paper Abstract
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We study an energy efficient charcoal cookstove in an experiment with 1,000 households in Nairobi. We estimate a 39 percent reduction in charcoal spending, which matches engineering estimates, generating a 295 percent annual return. Despite fuel savings of $237 over the stove's two-year lifespan—and $295 in emissions reductions—households are only willing to pay $12. Drawing attention to energy savings does not increase demand. However, a loan more than doubles willingness to pay: credit constraints prevent adoption of privately optimal technologies. Energy efficient technologies could drive sustainable development by slowing greenhouse emissions while saving households money.
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Paper Citation
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Berkouwer, Susanna B., and Joshua T. Dean. 2022. "Credit, Attention, and Externalities in the Adoption of Energy Efficient Technologies by Low-Income Households." American Economic Review 112 (10): 3291–3330.
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Paper URL
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http://doi.org/10.1257/aer.20210766
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