Cash for Coolers or Sustainable Lighting? Assessing Different Components of a Large-Scale Energy Efficiency Program in Mexico

Abstract

In one of the largest demand-side energy efficiency programs at the time, the Mexican government supported more than 11 million, mostly low-income households in replacing their old light bulbs and appliances with more efficient models. Previous evaluations of this program focused exclusively on appliances, which made up almost 90 per cent of the total program cost, and found modest benefits in terms of energy savings. This study compares the respective effects of replacing light bulbs and appliances simultaneously in a single econometric framework, using data from nationally representative household surveys and a difference-in-differences approach which exploits geographical variation in treatment intensities. Despite using different sources and types of data, our results for the appliances replacement intervention are largely in line with the estimates of previous studies. In addition, we find that the impact on energy consumption (proxied by the amount paid for electricity) of replacing light bulbs was of comparable magnitude as that of replacing appliances, although the average cost per participating household was much smaller. Overall, our results suggest that low-cost investments that help poor households reduce their energy consumption for lighting can have high returns on energy efficiency in the residential sector.