The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia

Solar lanterns are a relatively inexpensive renewable-energy option for household lighting in developing countries. However, the transition to these lighting sources is slow. To understand why, this study uses the Becker-Degroot-Marschak bidding me...

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Main Authors:	Mekonnen, Alemu, Hassen, Sied, Jaime, Marcela, Toman, Michael A., Zhang, Xiao-Bing
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2021
Subjects:	RENEWABLE ENERGY SOLAR LAMPS SUBSIDIES POLICY INSTRUMENTS TECHNOLOGY ADOPTION BECKER-DEGROOT-MARSCHAK BIDDING
Online Access:	http://documents.worldbank.org/curated/en/886181616531982023/The-Effect-of-Information-and-Subsidy-Measures-on-Adoption-of-Solar-Lanterns-An-Application-of-the-BDM-Bidding-Mechanism-in-Rural-Ethiopia http://hdl.handle.net/10986/35307

id	okr-10986-35307
recordtype	oai_dc
spelling	okr-10986-353072022-09-20T00:10:22Z The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia Mekonnen, Alemu Hassen, Sied Jaime, Marcela Toman, Michael A. Zhang, Xiao-Bing RENEWABLE ENERGY SOLAR LAMPS SUBSIDIES POLICY INSTRUMENTS TECHNOLOGY ADOPTION BECKER-DEGROOT-MARSCHAK BIDDING Solar lanterns are a relatively inexpensive renewable-energy option for household lighting in developing countries. However, the transition to these lighting sources is slow. To understand why, this study uses the Becker-Degroot-Marschak bidding mechanism in a randomized field experiment to investigate the effect of information provision and subsidy policy instruments on the uptake of solar lanterns. Subjects’ willingness to pay tends to be low enough that most of them would purchase the solar lantern only if it is subsidized. Households with access to grid electricity have a lower willingness to pay and are less likely to adopt, while those using kerosene as a source of lighting are more likely to adopt. Access to credit also increases willingness to pay. Information treatments have limited impact: provision of different types of information about the private and public benefits of solar lantern use increases adoption only when it is combined with a high level of subsidies. Given the relatively low cost of solar lanterns, the results suggest that achieving universal electricity access under the United Nations’ Sustainable Development Goals by any means will require subsidizing access. 2021-03-25T14:27:03Z 2021-03-25T14:27:03Z 2021-03 Working Paper http://documents.worldbank.org/curated/en/886181616531982023/The-Effect-of-Information-and-Subsidy-Measures-on-Adoption-of-Solar-Lanterns-An-Application-of-the-BDM-Bidding-Mechanism-in-Rural-Ethiopia http://hdl.handle.net/10986/35307 English Policy Research Working Paper;No. 9595 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Africa Africa Eastern and Southern (AFE) Ethiopia
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	RENEWABLE ENERGY SOLAR LAMPS SUBSIDIES POLICY INSTRUMENTS TECHNOLOGY ADOPTION BECKER-DEGROOT-MARSCHAK BIDDING
spellingShingle	RENEWABLE ENERGY SOLAR LAMPS SUBSIDIES POLICY INSTRUMENTS TECHNOLOGY ADOPTION BECKER-DEGROOT-MARSCHAK BIDDING Mekonnen, Alemu Hassen, Sied Jaime, Marcela Toman, Michael A. Zhang, Xiao-Bing The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
geographic_facet	Africa Africa Eastern and Southern (AFE) Ethiopia
relation	Policy Research Working Paper;No. 9595
description	Solar lanterns are a relatively inexpensive renewable-energy option for household lighting in developing countries. However, the transition to these lighting sources is slow. To understand why, this study uses the Becker-Degroot-Marschak bidding mechanism in a randomized field experiment to investigate the effect of information provision and subsidy policy instruments on the uptake of solar lanterns. Subjects’ willingness to pay tends to be low enough that most of them would purchase the solar lantern only if it is subsidized. Households with access to grid electricity have a lower willingness to pay and are less likely to adopt, while those using kerosene as a source of lighting are more likely to adopt. Access to credit also increases willingness to pay. Information treatments have limited impact: provision of different types of information about the private and public benefits of solar lantern use increases adoption only when it is combined with a high level of subsidies. Given the relatively low cost of solar lanterns, the results suggest that achieving universal electricity access under the United Nations’ Sustainable Development Goals by any means will require subsidizing access.
format	Working Paper
author	Mekonnen, Alemu Hassen, Sied Jaime, Marcela Toman, Michael A. Zhang, Xiao-Bing
author_facet	Mekonnen, Alemu Hassen, Sied Jaime, Marcela Toman, Michael A. Zhang, Xiao-Bing
author_sort	Mekonnen, Alemu
title	The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
title_short	The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
title_full	The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
title_fullStr	The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
title_full_unstemmed	The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia
title_sort	effect of information and subsidy measures on adoption of solar lanterns : an application of the bdm bidding mechanism in rural ethiopia
publisher	World Bank, Washington, DC
publishDate	2021
url	http://documents.worldbank.org/curated/en/886181616531982023/The-Effect-of-Information-and-Subsidy-Measures-on-Adoption-of-Solar-Lanterns-An-Application-of-the-BDM-Bidding-Mechanism-in-Rural-Ethiopia http://hdl.handle.net/10986/35307
_version_	1764482760906375168

The Effect of Information and Subsidy Measures on Adoption of Solar Lanterns : An Application of the BDM Bidding Mechanism in Rural Ethiopia

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