Reducing Environmental Pressure and Improving Welfare Through Solar Home Systems in Ethiopia

SDG 7 underscores the importance of energy to realizing many of the other SDGs including gender equality, poverty reduction, educational achievement, health improvement and the environment. These key issues reflect the immediate needs and priorities of the majority of the poor in developing countries who are connected neither to grid nor off-grid services. Through support and pilot initiatives promoted to contribute to the realization of SDG 7, there has been a surge in the uptake of one of the most popular off-grid technologies– Solar Home Systems (SHSs). To build up on such early interest and garner policy support for promoting and scaling up of these technologies, evidence on their heterogeneous impact is therefore important. We use a regression model with endogenous switching treatment and examine the heterogeneous impact of off-grid SHS technologies on reducing environmental pressure and improving welfare. While they increase nonfarm income, we find a more important role in reducing environmental pressure through significantly lowering the use of fuel wood and charcoal, and improve human health through reducing incidence of disease. The strong demand but limited local technical expertise and aftersales services need to be addressed to strengthen uptake and improve welfare and reduce environmental pressure