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Abstract:
Carbon pricing has been proposed as an efficient instrument to reduce carbon emissions and curb climate change. However, in low-income countries, resulting high energy prices might induce trade-offs with other sustainable development goals, such as public health (resulting from increased firewood consumption) and gender equality. We develop a theoretical model to analyse the effect of rising fossil fuel prices on firewood consumption, and time use across fuel collection and labour supply. Given that the majority of firewood consumed in sub-Saharan Africa is collected by women, we also analyse the role of women's intra-household bargaining power in determining firewood consumption when energy prices rise. We test our model empirically, drawing on household- and individual-level panel data for Malawi for the 2010–20 period. We find a positive association between electricity price hikes and firewood consumption, with sizeable increases in women's and girls' time spent on firewood collection. Improved decision-making power for women is associated with a reduced likelihood of firewood use in the context of rising energy prices. Provision of cash transfers to households could alleviate the negative effects of energy price hikes. Targeted cash transfers could improve gender parity in decision-making and could partially mitigate biomass usage, potentially conferring substantial health and environmental benefits in low-income countries.
