Abstract
We estimate averting behavior in the form of increased electricity usage in Singapore during the haze caused by Indonesian forest fires. Our results indicate that increases in fire radiative power in Indonesia result in statistically significant increases in one- and two-day ahead electricity demand. Further results show that the Indonesian fires accounted for 0.5% of Singaporean electricity demand between February 2012 and August 2017 at a total cost of over $270 million. In addition, we find that the residential electricity share increases and the industrial share decreases during fire episodes, suggesting the increase in demand may be due to Singaporeans staying home and/or increasing their air conditioning use during these times. This averting behavior is persistent, not diminishing, during periods of frequent poor air quality.
Published Version
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