Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/333736 
Year of Publication: 
2025
Series/Report no.: 
CESifo Working Paper No. 12190
Publisher: 
Munich Society for the Promotion of Economic Research - CESifo GmbH, Munich
Abstract: 
A central challenge in the global transition to cleaner energy is how governments can design policies that deliver large social benefits while facing trade-offs in energy security, fiscal costs, and household adoption frictions. We study this question in urban Nepal, where cooking is dominated by imported LPG, but abundant hydropower makes both large-scale electrification and improved energy security feasible. We embed household adoption decisions in a model of a planner balancing fiscal, fuel supply, and energy-security considerations, and estimate its key parameters using a scalable randomized controlled trial in Kathmandu Valley. Subsidies had large effects, increasing electric stove adoption by 23 percentage points and compatible cookware purchases by 41 percentage points. In contrast, information treatments highlighting cost or health benefits alone had little impact. Using detailed survey and electricity billing data, we find substitution away from LPG toward electricity, with meaningful household heterogeneity. Disciplined by these experimental estimates, the model evaluates counterfactual targeting rules, and estimates optimal subsidy levels under different macroeconomic conditions.
Subjects: 
electrification
energy transition
technology adoption
policy design
development
climate change
energy security
JEL: 
C93
O1
O33
Q48
Q56
Document Type: 
Working Paper
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