Examining the willingness-to-pay for exclusive use of LPG for cooking among rural households in India

Abstract

Using unique household-level data from rural areas of six energy-access-deprived states in India, we examine the willingness-to-pay (WTP) for exclusive use of liquefied petroleum gas (LPG) for cooking. We find that awareness about LPG's health benefits and diffusion of LPG within the community are the strongest determinants of WTP for exclusive use of LPG. Among demographic characteristics, only household size is correlated with WTP. Importantly, households exhibit significant price elasticity with regards to exclusive use of LPG. Households with irregular cash flows are less likely to pay for exclusive use of LPG. We find limited evidence supporting a negative association between availability of free biomass and the WTP for exclusive use of LPG. In contrast, higher household expenditure on purchased biomass is positively associated with WTP. Our estimates of mean WTP suggest that they are higher than the current effective monthly cost of subsidized LPG across households. However, they mask variation, and disaggregated estimates suggest that about 40–45 per cent of the households not using LPG as their primary fuel have a lower WTP than the current effective monthly cost of subsidized LPG and hence would need additional support to enable their cooking energy transition.