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Reynolds, Travis William

Community Development and Applied Economics

2007

MS

The "island factor" refers to a series of shared energy-related issues that many island nations face due to their isolation and limited population size. The absence of local energy sources has forced most island countries to import fossil fuels for electricity generation. This practice has contributed to unusually high electric rates for consumers. At the same time, small markets and the associated diseconomies of scale in small island states have resulted in high per capita distribution costs for electricity, further exacerbating the high rates paid by consumers. Under such conditions, one of the only ways for consumers to reduce energy costs is through energy efficiency - including the use of energy-saving compact fluorescent light bulbs (CFLs). The objective of this research is to provide information for policymakers to help in the decision of whether to entertain proposed policy changes seeking to promote the adoption of energy-saving compact fluorescent lighting in Saint Lucia. The thesis begins with an overall introduction to the economic and environmental implications of energy efficiency - with a focus on developing countries - along with a general review of economic theories and empirical studies pertinent to the study of energy efficiency promotion. Three articles are then presented. The first article uses the results of a pilot survey (n=267) designed and administered in 2006 to investigate how awareness, past purchase behavior, and demographic characteristics influence consumers' purchase intention and willingness to pay for CFL bulbs in Saint Lucia. Findings indicate that a lack of understanding of energy efficiency, combined with high product costs and a lack of product availability inhibit the adoption of compact fluorescent technologies by Saint Lucian consumers. Awareness of energy efficiency, income, and geographic location are identified as significant factors related to increased use of CFLs. In the second article data from this same survey are used to test an econometric model linking energy efficiency knowledge and attitudes to self-reported willingness-to-pay and use of CFL bulbs. Finally, the third article uses the results of a larger 2007 survey (n=538) and coupon tracking to contrast results for self-reported willingness-to-pay with the prices Saint Lucians actually pay for CFL bulbs, based on observed coupon redemption rates. Purchase behavior with coupons is significantly lower than might be expected based on self-reports of willingness-to-pay, and results of binary logit analysis suggest that income and education impact the likelihood of purchasing a CFL at any price. Findings indicate that a minimum subsidy of 75 percent off the cost of high-quality CFL bulbs would be needed to substantially increase CFL-use among Saint Lucian consumers. The thesis concludes with a summary, policy recommendations, and recommendations for future research. Public education and cost subsidy for the promotion of CFL bulbs and other energy-saving technologies are proposed.