Adding fuel to fire? Social spillovers and spatial disparities in the adoption of LPG in India

This paper investigates the role of ‘social spillovers’ – people learning from and imitating the behaviour of other people – in the adoption of new technologies, with a focus on liquefied petroleum gas (LPG) in India. The authors explore whether Indian households might be more likely to adopt LPG in place of traditional biomass as a cooking fuel if other households in the same locality do so.

The Indian population is still heavily reliant on solid biomass for cooking, especially in rural areas, despite its negative implications for health. Cooking with traditional biomass also emits greenhouse gases, contributing to climate change, and degrades forests and local ecosystems. Substituting with LPG greatly reduces indoor air pollution, but its higher cost implies that its use is often limited to the richer, urban areas of India. To encourage greater uptake, the Indian government has subsidised LPG considerably.

The authors find positive spillovers in the decision to use LPG between households living in the same village or urban block. They also find that membership in social networks such as women’s groups, credit and savings groups or development groups may facilitate the emergence of stronger spillovers, whereas other members of groups where preferences for cooking choices may be strong (such as religious groups and agricultural cooperatives) exhibit weaker spillovers. The authors conclude that interventions targeting ‘pivotal’ households and influential segments of society may lead to quicker adoption of LPG, especially in the earlier phases of the adoption process.

Key points for decision-makers

• This paper investigates how social spillover effects on LPG use vary across different population groups in India, and whether they heighten or reduce existing spatial disparities in LPG use.
• Almost 67% of the population overall still rely on biofuels such as firewood, charcoal and agricultural waste, according to the 2011 Census – this rises to 85% among rural households.
• Since its entry into the Indian market in the 1960s, LPG use has been greater in urban than in rural areas. This is partly because subsidies have been targeted more at urban areas. Subsidies are also unevenly targeted across states.
• The authors find a positive social spillover effect, with social networks playing a critical role in dispersing information about LPG use, encouraging further uptake of the fuel.
• The effects are stronger for rural households compared with urban. They are also stronger in states at an early stage of adoption compared with states where adoption rates were higher when LPG was first introduced and promoted.
• Spillovers are found to be stronger for households that are members of social networks where common preferences for food and/or fuel may be weak, compared with households that do not belong to any network.
• The effect is stronger among households that belong to specific networks including women’s associations, unions or business groups, self-help groups, credit and savings associations, caste associations and development groups or non-governmental organisations.
• In contrast, the spillover effect is weaker for households that belong to religious, social, youth, and sports groups, and agricultural cooperatives.
• The authors conclude that capitalising on the information flows that exist among consumers of energy products in developing countries could be used as a policy measure by governments looking to hasten the switch to cleaner sources of energy.
• The findings are supportive of the Indian government’s recent efforts to target subsidies more strongly at poorer populations.
• The research used two sets of large-scale, nationally-representative survey data, from the National Sample Survey (NSS) and the India Human Development Survey (IHDS).