Abstract
This paper evaluates the impact of distributing high-cost LPG stoves to urban households through subsidy and on credit in a randomized controlled trial setup on charcoal consumption, CO2 emission, and cooking time. The paper finds that the treatment group (credit and subsidy combined) reduced charcoal consumption by 28.7 percent 15 months after the intervention, corresponding to an average aversion of 3.78 MT of CO2/household/year. The two treatments are not statistically significantly different. However, a social cost-benefit analysis suggests that the benefit of the stoves is 30-fold larger than their cost under credit and 18-fold larger under subsidy, which indicates that credit is the most socially effective instrument for supporting LPG interventions. The paper also documents that LPG stoves reduced cooking time by 68.5 percent 15 months after the interventions. The findings suggest that access to micro-finance is a promising avenue for promoting energy transition and addressing the adverse effects of biomass fuel use in developing countries.
