Energy Consumption and the Welfare of Ugandan Households: A Panel Analysis

Abstract

Literature well recognizes the central importance of energy consumption in enhancing household welfare. The policy stance for Ugandan government is to improve the welfare households through implementation of various household energy consumption enhancing initiatives has been visibly robust. Albeit theoretical and empirical and practical recognition of the welfare impact of energy consumption by households, on Uganda regarding household welfare remain unappealing. This study examines the relationship between households’ energy consumption and the households’ welfare in Uganda. The study adopts a combination of longitudinal and explanatory research designs. Household welfare is measured by the household’s level of consumption expenditure per adult equivalent while household energy consumption expenditure is captured the household’s monthly total expenditure on all fuels in Uganda Shillings. The study utilizes four waves of panel data from the Uganda National Panel Survey (UNPS);2019/2020, 2017/2018, 2015/2016 and 2013/2014 obtained from the Uganda Bureau of Statistics (UBOS). The household is taken as a unit of analysis and the household head as a unit of observation. The empirical model is specified in the general framework of the Bergson-Samuelsson Social welfare Model/function (BSSWF) and is estimated by the method of the Two-Stage Least-Squares with Fixed Effects Estimator (2SLS-FE). Results show that when the households’ energy consumption levels increase by 1%, Consumption Per Adult Equivalent among the Ugandan households increase by 0.14 percent other factors constant. Meaning energy consumption levels have the ability to explain households’ welfare. Initiatives aimed at improving household energy consumption levels is a pragmatic policy option to increase household welfare in Uganda.