Energy consumption and income of the poor in rural China: Inference for poverty measures

Abstract

In this study, we investigate the relationship between energy consumption and income of poor rural households in China and recover measures for relative poverty from household energy demand of the poor. With novel data collected from 16 counties in eight provinces of China, we apply semi-parametric energy demand models to capture the nonlinear relationship between income and energy consumption and parametric models to find the effect of income on energy demand within different groups. The relative poverty line is inferred from the empirical results of demand models and is defined as the income threshold point after which household energy consumption begins to rise significantly. As a result, we find that the poor household's demand for energy increases with income after a threshold point, and the relative poverty line of rural households in China is estimated at 5153.47 yuan per capita in 2015. Our results suggest that when a poor rural household's income passes the relative poverty threshold, its increasing energy demand comes primarily from biomass and non-clean commercial energy. The findings of this study suggest policies to support energy transition and upgrade in rural China and stimulate rural households to substitute non-clean energy with clean energy.