Last week, I was lucky to have been invited to the IGC’s first annual (we hope!) Energy and Growth conference in London. Organized by heavy-hitter energy economists Michael Greenstone and Nick Ryan, this cool conference brought together economists who work on energy and development with policymakers from a range of international organizations and governments. The IGC seems to have facilitated many useful collaborations between researchers and the ``real world,’’ and this was an interesting venue to highlight some of that work (and some other work as well). A few highlights:
- Not to plug my advisor again, but I can’t help it: Catherine’s work with Ted Miguel and Ken Lee (fellow ARE PhD student) on an RCT they’re conducting in Kenya might have been the hit of the conference. First, they noticed that a large number of households were “under-grid”, or had electricity infrastructure nearby, but not in, their homes. This is an example of the last mile (last centimeter?) problem. They’ve randomly assigned subsidies for grid connections to households in rural villages, and have varied the subsidy level across villages, letting them estimate a demand curve for electrification among these households. They also have cost information from the Kenyan Rural Electrification Authority, so that they can estimate a supply curve as well. The surprising punchline? The supply curve sits above the demand curve basically everywhere: households aren’t interested in taking up connections at the cost at which the Kenyan government can provide them. Also some cool stuff about credit constraints. I’d be interested in learning more about what’s driving this effect: is it concerns about reliability? Lack of information about the power of electricity (eheheh)? Something else? They’re also conducting a follow-up survey which will let them understand the effects of electrification in these regions, which will also hopefully shed some light on what’s going on here. Fascinating stuff.
- Kelsey Jack has some really cool new work with Grant Smith (PhD student at UCT – one of my favorite places) on the consequences of pre-paid electricity metering in Cape Town, also using an RCT. When these meters are installed, some households do reduce their energy consumption – but many also dramatically increase their electricity-related transactions costs, by going to the shop to fill their meters multiple times a week. It turns out that pre-paid meters don’t substantially reduce consumption of the households that are being subsidized, and do reduce consumption among the subsidizers, so they don’t seem to be an effective tactic for additional revenue recovery, either. Again, lots more to be learned about pre-paid metering. I’m hopeful that they’ll be able to expand their study area as well.
· Koichiro Ito has new work looking at willingness to pay for air quality in China, exploiting the Huai River discontinuity. While I’ve always been highly skeptical of a certain previous paper using this result (sorry, MG), this one is definitely more convincing, in particular because it measures PM10 which is a fairly local pollutant, because it includes longitude controls, and, most importantly, because the effect is only visible in the winter. Combining this with scanner data on retail outlet purchases of air purifiers, Koichiro is able to give us what’s probably a lower bound on the Chinese WTP for air quality (and in turn, quite a low VSL – though not so low as Kremer et al found using clean water in Kenya). I want to see more about getting from this number to an implied VSL, and the discount rates or lack of information that would have to be required to rationalize a VSL closer to the one we use in the US, but that should be doable in a fairly simple back-of-the-envelope calculation. Neat!
- Rohini Pande made some insightful comments as part of a panel discussion about the importance of government oversight and regulatory strength in keeping local and global pollutants managed in the context of growing energy demand in the developing world. It sounds like she’s also got some interesting new work about the placement of energy infrastructure: should it be near people (ala China) or near coal (ala India)? These have vastly different distributional consequences, which we know from some of her earlier work (“Dams” with Esther Duflo) can be very important. Looking forward to seeing what she does. One of my favorite researchers.
Lots of other interesting work was also presented (check the program for some details); I’m inspired to do more work in this area. There are obviously a number of smart people working in this space – but luckily it’s a vast and important research space, so hopefully there’s room for another grad student or two.
Stay tuned to this blog for the next few weeks for a couple of exciting announcements about upcoming work and new results!