Collaborative Research: Using Field Experiments to Understand Household Barriers to Energy Efficiency in Alaska
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Energy efficiency is a policy goal of first magnitude. For individuals, it can imply significant welfare gains. For the country as a whole, it can imply not only improvement in energy independence but also attaining environmental goals. The research team proposes to investigate the reasons why individuals fail to adopt seemingly adaptive conservation technologies and behaviors. The proposal is based on a series of studies that combine field experiments and data analysis of large policies initiatives in the state of Alaska.Heating costs throughout the polar North stress community resilience. Cold is extreme, hydrocarbon prices volatile, and local opportunity to adjust cash income to price shocks limited. Energy conservation would appear adaptive, and the State of Alaska provides substantial subsidies to facilitate household energy conservation. Despite this, relatively few adopt energy efficient technologies to reduce home heating costs. The research team proposes three related studies to understand why. The project explores individual decision rules, the role of cash payoffs, information, and nuisance and other hidden costs of making investments to reduce energy for space and hot water heat.The project is focused on discovering opportunities to design better policy. Taking seriously the complexity of household decision-making, it will produce new information on engineering models, behavioral models, program effectiveness and policy alternatives. It will generate the first publically available data on household heating oil use -- a critical input to Northern energy policy. The project works collaboratively with local stakeholders, agencies, and academic communities, which will produce lessons for building future effective partnerships. Finally, the project entails substantial outreach and training with local participants through direct participation in the project in combination with educational opportunities.The first part of the research project jointly analyzes participant records in Alaska''s Home Energy Rebate Program (HERP), which subsidizes investments to reduce space and hot water heat, and gas utility billing records. Detailed program and energy consumption data permit assessment of both program-predicted and actual household payoffs, point to investments that may occur for reasons other than energy conservation, and indicate cost-effective investments not pursued. This analysis will reveal the way decisions about conservation are made in the face of relevant information and their effectiveness in producing energy savings.The second part of the research measures the comparative importance of hidden, non-pecuniary costs of completing the HERP''s initial home energy assessment. We will conduct a field experiment that systematically isolates and removes participant costs and uncertainty from the task. Also, the incentives to gather technology information will give causal evidence of the importance of information on HERP participation and completion.The third part of the research project measures behavioral impacts of providing rural consumers real-time information on their consumption and expenditures for heat. Essentially all rural Alaskan households use heating oil as primary heat source, but consumer ability to map realized costs of behavior is limited: Costs are observed only when the fuel oil tank is refilled, which may occur as little as 2-3 times a year. By deploying new heating oil metering technology developed by the Alaska Center for Energy and Power specifically for remote rural application, we assess behavioral effects of a dramatic increase in information. This study will generate the first Alaska dataset of measured residential heating oil demand.The proposal will significantly improve knowledge of the complex reasons why seemingly adaptive energy efficiency investments are not made. The research team will access information not previously available to researchers, and conduct experiments to create counterfactuals that observational data cannot deliver, to: better understand the motivations of adopters; recalibrate engineering models of building energy use to incorporate human behavior; measure the causal effect of pecuniary incentives in the adoption of energy savings technologies; produce a novel dataset of actual demand for heating oil in rural Alaska; determine the importance of hidden costs as a barrier to energy conservation program participation.