The Impact of Climate Change on Household Energy Consumption: using Life in Kyrgyzstan Data

Abstract

Kyrgyzstan faces significant challenges related to climate change and an energy crisis. Each year, the number of hazards caused by climate change increases, disrupting the lives of the population. In addition to these challenges, the population must contend with an energy crisis characterized by frequent shortages and inefficiencies due to outdated infrastructure and an inadequate energy system. This study analyzes the impact of climate change-induced weather shocks, such as droughts, floods, very cold winters, frosts, and landslides, on the energy consumption of Kyrgyz households. It addresses a significant gap in the literature by exploring energy consumption at the micro level. A uniqueness of this work is in the use of climate shocks as a proxy for climate change, instead of the commonly used measure of annual temperature change. The analysis utilizes household panel data from the Life in Kyrgyzstan survey, covering six waves: 2010, 2011, 2012, 2013, 2016, and 2019. The Hausman test showed that a fixed effects model should be employed to account for unobserved household traits. The findings reveal that climate change has a significant negative effect on household energy consumption. Specifically, one additional weather shock leads to a 4.7% reduction in energy use, holding other variables constant. Surprisingly, the results also show that education increases energy consumption during times of shock. This indicates the need to integrate lessons on climate change and energy efficiency into all levels of education.