Biogas: Clean Energy Access with Low-Cost Mitigation of Climate Change

Using data from the nearly 6000 households in the Nepal Living Standards Survey of 2010–11 we find that the mean reduction in household firewood collection associated with use of a biogas plant for cooking is about 1100 kg/year from a mean of ∼∼2400 kg/year. This estimate is derived comparing only households with and without biogas in the same village, thus effectively removing the influence of many potential confounders. Further controls for important determinants of firewood collection, such as household size, per capita consumption expenditure, cattle ownership, unemployment etc. are used to identify the effect of biogas adoption on firewood collection. We derive bounds on omitted variable bias using the proportional selection assumption. Our central estimate is much smaller than those in the previous literature, but is still large enough for the cost of adopting biogas to be heavily subsidized via carbon offsets at a modest carbon price of $10/tCO22e, when using central estimates of emission factors and global warming potentials of pollutants taken from the scientific literature.