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The Economics of Energy Efficiency in Developing Countries

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  • Meredith Fowlie
  • Robyn Meeks

Abstract

Almost all of the world’s energy demand growth is projected to occur in low- and medium-income countries (LMICs). Targeted energy efficiency investments have the potential to mitigate tensions between economic growth objectives and sustainable development commitments. We review the empirical evidence on both the private and social benefits of energy efficiency improvements in LMICs. In addition to direct energy savings, energy efficiency investments can generate indirect benefits such as improved reliability, enhanced energy access, and increased productivity. We highlight the role that energy subsidies, unreliable power supply, and capital constraints may play in the underinvestment in energy efficiency. Increasingly, LMICs are implementing policies and programs aimed at mitigating these barriers. We discuss some recent policy design innovations and emphasize the importance of rigorous evaluation.

Suggested Citation

  • Meredith Fowlie & Robyn Meeks, 2021. "The Economics of Energy Efficiency in Developing Countries," Review of Environmental Economics and Policy, University of Chicago Press, vol. 15(2), pages 238-260.
    • Handle: RePEc:ucp:renvpo:doi:10.1086/715606
    DOI: 10.1086/715606
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    Cited by:

    1. Shah, Wasi Ul Hassan & Hao, Gang & Yan, Hong & Yasmeen, Rizwana & Xu, Xiaowei, 2024. "Natural resources utilization efficiency evaluation, determinant of productivity change, and production technology heterogeneity across developed and developing G20 economies," Technology in Society, Elsevier, vol. 77(C).
    2. Bożena Gajdzik & Magdalena Jaciow & Radosław Wolniak & Robert Wolny & Wieslaw Wes Grebski, 2023. "Energy Behaviors of Prosumers in Example of Polish Households," Energies, MDPI, vol. 16(7), pages 1-26, March.
    3. Beattie, Graham & Ding, Iza & La Nauze, Andrea, 2022. "Is there an energy efficiency gap in China? Evidence from an information experiment," Journal of Environmental Economics and Management, Elsevier, vol. 115(C).
    4. Fishman, Ram & Giné, Xavier & Jacoby, Hanan G., 2023. "Efficient irrigation and water conservation: Evidence from South India," Journal of Development Economics, Elsevier, vol. 162(C).
    5. Massié, Camille & Belaïd, Fateh, 2024. "Estimating the direct rebound effect for residential electricity use in seventeen European countries: Short and long-run perspectives," Energy Economics, Elsevier, vol. 134(C).
    6. Tan, Xiujie & Liu, Yishuang & Dong, Hanmin & Zhang, Zhan, 2022. "The effect of carbon emission trading scheme on energy efficiency: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 75(C), pages 506-517.
    7. Meeks, Robyn C. & Omuraliev, Arstan & Isaev, Ruslan & Wang, Zhenxuan, 2023. "Impacts of electricity quality improvements: Experimental evidence on infrastructure investments," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    8. Naeher,Dominik & Narayanan,Raghavan & Ziulu,Virginia, 2021. "Impacts of Energy Efficiency Projects in Developing Countries : Evidence from a SpatialDifference-in-Differences Analysis in Malawi," Policy Research Working Paper Series 9842, The World Bank.
    9. Meron Tesfamichael & Edson Twinomujuni & Mbeo Ogeya & Silver Ssebagala & Yacob Mulugetta, 2022. "Barriers to the institutionalization of industrial energy efficiency in Africa: A case study from Uganda," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 11(3), May.
    10. Das, Narasingha & Gangopadhyay, Partha & Alghamdi, Thamer & Sarwar, Suleman & Haseeb, Mohammad & Barut, Abdulkadir & Dey, Labani, 2023. "Understanding the role of efficiency in the electricity generation process for promoting human development in India: Findings from the novel multiple threshold nonlinear ARDL modelling," Utilities Policy, Elsevier, vol. 82(C).
    11. Wang, Zhongbao & Razzaq, Asif, 2022. "Natural resources, energy efficiency transition and sustainable development: Evidence from BRICS economies," Resources Policy, Elsevier, vol. 79(C).
    12. Singer, Gregor, 2024. "Complementary inputs and industrial development: can lower electricity prices improve energy efficiency?," LSE Research Online Documents on Economics 122365, London School of Economics and Political Science, LSE Library.
    13. Kažukauskas, Andrius & Li, Xiaoying, 2024. "Realized dynamic effect of retrofits on energy consumption in Soviet-era multi-apartment buildings," Energy Economics, Elsevier, vol. 134(C).
    14. Asmare, Fissha & Giedraitis, Vincentas & Jaraitė, Jūratė & Kažukauskas, Andrius, 2023. "Energy-related financial literacy and retrofits of Soviet-era apartment buildings: The case of Lithuania," Energy Economics, Elsevier, vol. 120(C).

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