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2013-10-09 | EfD Discussion Paper

Household Fuel Choice in Urban Ethiopia A Random Effects Multinomial Logit Analysis

Alem, Yonas, Abebe Damte Beyene, Gunnar Köhlin and Alemu Mekonnen. 2013. “Household Fuel Choice in Urban Ethiopia A Random Effects Multinomial Logit Analysis.” Environment for Development Discussion Paper Series EfD DP 13-12.
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We use three rounds of a rich panel data set to investigate the determinants of household fuel choice and energy transition in urban Ethiopia. We observe that energy transition did not occur following economic growth in Ethiopia during the past decade.

Regression results from a random effects multinomial logit model, which controls for unobserved household heterogeneity, show that households’ economic status, price of alternative energy sources, and education are important determinants of fuel choice in urban Ethiopia. The results also suggest the use of multiple fuels, or “fuel stacking behavior.” We argue that policy makers could target these variables to encourage transition to cleaner energy sources.