1. Valuation of energy preferences and health risks
- Author
-
Nduka, Eleanya Kalu, Chakravarty, S., and Grosskopf, B.
- Subjects
Renewable Energy ,Willingness to Pay ,Willingness to Accept ,Pico-Photovoltaic ,Improved Cookstoves ,Contingent Valuation ,Choice Experiments ,Nigeria ,Health Risks ,Secondhand Smoke ,Environmental Tobacco Smoke ,Energy Policy - Abstract
It remains a paradox that Nigeria, rich in energy resources, suffers from severe energy poverty. It ranks second in the world with the number of people without electricity, meaning that most of its citizens rely on dirty traditional energy sources. Also, the vast majority of households connected to the grid experience incessant blackouts and voltage fluctuations. To tackle this problem and following the World Bank's recommendations, the government has made some policies that encourage private-sector-driven renewable energy projects. However, rural and urban households are heterogeneous in socio-economic composition and energy demand. Thus, an effective policy should consider these discrepancies, which can be investigated through stated preference techniques. The first chapter contributes directly to the World Bank's private sector-driven "Lighting Africa" program, which aims to provide clean, modern, and affordable electricity to 6 million Nigerians living in rural and peri-urban areas and to reduce greenhouse gas emissions by 120,000 metric tons. Households want to transition to clean energy but cannot afford the upfront costs. They have long waited for the government to solve their energy problems, to no avail. Rural households' energy status can be improved if companies offer them an installment plan to acquire clean energy technologies. Thus, we provide evidence about how much money households can afford every month, how long it will take them to complete the payment, and whether such a payment plan is viable. We employ the contingent valuation method (CVM) to elicit willingness to pay (WTP) for pico-photovoltaics and improved cookstoves. We find that 92% and 80% of households are willing to pay $2.86 and $2.15 for pico-PV and improved cookstove per month, respectively. It will take only eighteen and nineteen months to complete the payments of those technologies. Moreover, adopting these technologies would save each household $60 annually, on average. Furthermore, our cost-benefit analysis shows that it is viable to invest in the technologies even at a higher discount rate of 16%. To bolster investors' confidence, we provide a model that would ensure accountability. We also show that the models that account for inter-dependent demand based on language clusters produce more robust estimates. In chapter two, we focus on urban households. We show that as the world clamors for reducing the global carbon footprint to tackle climate change, Nigeria, as a country, is well placed to make a significant impact. Since the country has abundant sunshine year-round, off-grid solar PV would produce the cheapest and most sustainable power. As the number of companies that deal with off-grid solar PV systems grows in Africa, it is vital to investigate households' preferences and financing options. Although the government has declared its support for a market-driven off-grid solar power transition, little has been done regarding financial policy incentives. An effective way to help households would be to provide them with a solar PV subsidy and installment system. Thus, like the first chapter, we utilize the CV method to analyze households' willingness to pay for a solar PV system under four scenarios - (i) WTP when a solar PV is complemented with a generator (ii) WTP when a solar PV completely displaces a generator (iii) WTP when a solar PV is complemented with a generator, plus a subsidy and (iv) WTP when a solar PV completely displaces a generator, given a subsidy. We find that overwhelming 64% and 70% indicated a positive WTP for solar PV in the first two scenarios. Although the figure declines by one percent (63%) in the third scenario compared to the first, it increases significantly when a 20% subsidy option is given in scenario four (76%). The monthly mean WTP values in the four scenarios are $9.53, $11.04, $8.76, and $14.58. Our cost-benefit analysis shows that solar PV investment under the installment option is a win-win venture between households and investors. It would save families $72.81 annually. However, we also find that Nigerians have high discounts for the future, which may give further insight into why there is a slow energy transition in Nigeria. Chapter three uses choice experiments and contingent valuation techniques to quantify the attributes of environmental tobacco smoke (ETS) health risks, focusing on generating cross-country comparisons due to heterogeneous healthcare systems. We hypothesize that agents in different healthcare systems (private and public) would differ in health risk valuation. We find that U.K. respondents are indifferent (neutral) to a potential policy that would give a monetary payoff to nonsmokers as compensation for ETS exposure. However, the opposite is the case among U.S. respondents. We further find that U.S. respondents are more "health risk-averse" than their U.K. counterparts. Furthermore, there is a consistent gender difference in the valuation of health risks regardless of the healthcare system. Thus, this study uncovers a new dimension of health risk-related behaviors lacking in the literature.
- Published
- 2021