Estimating Household Energy Demand for Rural Ethiopia using an Almost Ideal Demand System.
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Date
2008-07
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A.A.U
Abstract
The paper attempts to estimate household energy demand (fuel Choice) using panel data for source of energy consumption . the study contributes to the contemporary literature a coherent view of energy demand (fuel choice) in rural step. The results of the finding suggests that as households’ total expenditure rises. Fuel option widens and fuel mix may change .they respond by increasing the number of fuels they use exhibiting fuel stacking (multiple fuel ) behavior but traditional / inferior fuels are relay entirely excluded from household energy mix it also suggests that households do not simply substitute one fuel for another due only to in come or expenditure increase , rather diversify their fuel consumption in a process of fuel stacking .to envisage this issue deeply , the study used econometric tools of the liner approximation almost ideal demand system (LAAIDS) with normalized prices to compute expenditure elastics and the multinomial log it model of household fuel choice behavior.
The fuel stacking (energy Mix) model is based on the fact that in any point in time rural households use multiple sources of energy. Households make inter fuel switch and inter fuel substitution in optimizing their energy mix by adopting multiple fuel use (fuel stacking ) strategy in response to expenditure change. Rather than completely transiting to consumption of new fuels as the energy ladder hypothesis suggests. To prove this .we computed the expenditure or income elasticites of demand for inferior fuels and advanced fuels. The results of the study , that demand is expenditure elastic for advanced fuels and expenditure inelastic for traditional /inferior provides solid and consistent argument /evidence to the economics literature that despite the income constraints. Households prefer the normal good (advantage fuels )to the (inferior fuels.
Furthermore ,the study used multinomial log it estimate of the determinants of households choice between inferior used fuels. Advanced fuels and mix of the two fuels to scrutinize the fuel stacking (multiple fuel use ) behavior of house holds in the energy mix model our result indicates that households total expenditure, the fact that the household’s is female headed total land owned by (land holding size), total number of livestock .
Owned by household and family size square as predictor have positive coefficients of parameter estimate . this implies that the like hood of household’s choosing inferior fuels or mix of inferior and advanced fuels increases with increment in these predictors. How ever ,family size education of households head ,age households head .time spent on fuel collection and expenditure on advanced fuels have negative parameter estimates ,this indicated that it is less likely that households choose inferior fuel or mix of inferior and advanced fuels compared to advanced fuel with increase in these variable s as predictors. Our result indicates that fuel stacking or multiple fuel use is more applicable hypothesis for rural households of Ethiopia than the simplistic energy ladder hypothesis.
In rural areas however , energy choice of households is constrained by lack of access to commercial fuels energy using equipment and appliances energy supply dependency and affordability as well as consumer preference and tastes. Therefore rural households have less poetical for fuel switching due to the a aforementioned factors and the existence of fuel wood which is gathered without any financial payment.
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Energy demand for rural, Ethiopia using an almost ideal demand system