The impacts of cash transfers on household energy choices

Abstract

AbstractThere are sizeable energy access deficits in the developing world. Leveraging panel data from the experimental impact evaluations of three unconditional cash transfer programs in Malawi and Zambia, we investigate how ultra‐poor households in rural areas adapt their energy portfolios when experiencing exogenous increases in income. Households make several changes to the primary fuel sources that they use on a regular basis after receiving 3 to 4 years of transfers—moving from fires to torches for lighting purposes and reducing collected firewood use for cooking purposes. In general, households are more likely to make income‐induced adjustments to lighting fuels than to cooking fuels. While facilitating some movement away from firewood (arguably the most inferior energy source), the unconditional cash transfers rarely enable households to completely abandon this fuel. This is understandable given the range of pressing needs facing the beneficiary households—such as food security, the enhancement of which is the primary purpose of the transfer programs. Although recipient households are able to meet a greater share of their energy needs with relatively improved fuels (such as charcoal/coal in Zambia) and obtain assets for generating solar power, the observed impacts are unlikely to be large enough to lead to meaningful health impacts (such as lower respiratory disease via reductions in indoor air pollution). However, the cash transfers appear to enhance well‐being in other ways through the energy use channel—for example, by reducing the time households spend foraging for fuel resources.