Three Essays on Energy and Development Economics

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2019

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Abstract

Global energy-use patterns are characterized by deep inequality. Electricity is indispensable for households, clinics, schools and firms, yet over a billion people live without it. At the same time, nearly three billion rely on traditional stoves and polluting biomass fuels (such as firewood) for their basic energy needs. The resulting household air pollution causes four million deaths annually, a health burden borne disproportionately by women. The international community has hastened to respond to this global energy challenge. This dissertation highlights how—and under what conditions—policies that seek to ensure universal access to modern energy deliver expected environmental and development benefits.

In the first chapter, I ask what drives heterogeneity in the impacts of large-scale rural electrification. Prior evidence on the labor-market impacts of grid electrification is mixed. I hypothesize that variation in local economic conditions—which can complement investments in infrastructure—may help explain why, and combine two natural experiments in India within a regression discontinuity design to test this hypothesis. Most of the world's guar, a crop that yields a potent thickening agent used during hydraulic fracturing ("fracking"), is grown in northwestern India. The rapid rise of fracking in the United States induced a parallel commodity boom in Indian guar production, resulting in a large positive shock to rural economic activity. Leveraging population-based discontinuities in the contemporaneous roll-out of India's massive rural electrification scheme, I show that access to electricity significantly increased non-agricultural employment in villages located in India's booming guar belt. Where these complementary economic conditions were lacking, electrification had almost no discernible impact. Using a firm-level panel dataset, I then provide suggestive evidence that this growth in non-farm work is partly driven by the rise of electricity-intensive firms that complement agricultural production. In line with the prior literature, I show that electrification alone may not be sufficient to deliver economic benefits, but I also demonstrate that, when combined with complementary economic conditions on the ground, access to electricity can enable individuals, households and firms to take advantage of new opportunities in potentially welfare-enhancing ways.

In the second chapter, I turn to household-level energy use and empirically evaluate the role played by non-governmental organizations (NGOs) in delivering environmental, energy and development interventions in remote, rural settings. I develop a model of household decision-making to evaluate how NGOs address implementation-related challenges and influence intervention effectiveness. To test the model's predictions, I apply quasi-experimental methods to household-survey data from a randomized controlled trial designed to promote clean-cooking solutions in rural India. I uncover a large, positive and statistically significant "NGO effect": prior engagement with the implementing NGO increases the effectiveness of the intervention by at least thirty percent. These findings provide some of the first causal evidence on how NGOs directly influence outcomes, which has implications for the generalizability of experimental research conducted jointly with such local partners. In particular, attempts to scale up findings from such work may prove less successful than anticipated if the role of NGOs is insufficiently understood. Alternatively, policymakers looking to scale up could achieve greater success by fostering partnerships with trusted local institutions.

In the final chapter, I consider how heterogeneity in households' preferences influences demand for energy technologies. I conduct technology-promotion campaigns followed by second-price, sealed-bid ("Vickrey") auctions for two cleaner cooking technologies with over 1,000 households across seventy communities in rural Senegal. I induce exogenous variation in the extent to which these promotion activities cater to heterogeneous preferences by randomly assigning a subset of communities to an auction arm in which both devices are promoted jointly. Consistent with a model in which preferences are constructed—and not simply revealed—as agents make repeated choices, joint promotion lowers willingness to pay for the relatively less familiar alternative compared to settings in which the two devices are promoted exclusively. Rather than simply providing additional choices, implementers looking to enhance uptake of improved technologies must instead devise approaches to help potential end-users think carefully through trade-offs, crystallize and understand their own preferences, and identify solutions that fit their needs.

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Usmani, Faraz (2019). Three Essays on Energy and Development Economics. Dissertation, Duke University. Retrieved from https://hdl.handle.net/10161/18818.

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