Household electricity consumption inefficiency and poverty: Evidence from Ghana

Key Messages 

Improvements in household electricity consumption resulting from efficiency improvements have the potential to reduce household electricity expenditure, and consequently the level of poverty among households. However, little is known about the extent to which improvement in electricity consumption efficiency can reduce poverty. Our study finds that: 

• A one percent improvement in electricity consumption efficiency by households reduces multidimensional poverty by about 9 percent. 
• A one percent increase in household electricity consumption efficiency reduces consumption poverty by about 10 percent. 
• In Ghana, male-headed households are more likely to be multi-dimensionally poor than female-headed households. 
• Households that are willing to take risks to buy new electrical appliances are more able to reduce poverty than those who are not willing. 
• In Ghana, education significantly reduces the probability of being poor. 

We recommend that government strengthens policy choices to improve household electricity consumption efficiency through appliance star ratings and appliance rebate systems. Policy should also focus on increasing the level of education and awareness on energy efficiency to aid poverty reduction.