Empirical analysis of crop diversification and energy poverty in Ghana

Abstract

Despite the importance of energy in countries' economies, the vast majority of people, especially in developing countries, live under the energy poverty line. To mitigate this trend, several policy options have been enacted to promote the use of clean and modern fuels given the targets set out in the Sustainable Development Goal Two (SDG2). However, there is a lack of systematic empirical evidence on how crop diversification can alleviate energy poverty in developing countries. This study used the seventh round of the Ghana Living Standard Survey (GLSS 7) to test the effect of crop diversification on the multidimensional energy poverty index (MEPI). I employ the instrumental variable (IV) and the Lewbel two stage least squares (2SLS) techniques and perform several robustness checks to address the potential endogeneity in crop choices. The estimates show that crop diversification is associated with a 0.829 standard deviation decreases in household energy poverty. The effect is prominent for urban and high-income earning households. Household income is identified as the main potential channel through which crop diversification influences energy poverty.