Increasing microsolar technology adoption: Efficacy of vouchers, cash transfers, and microfinance schemes

Abstract

Solar lanterns serve as practical substitutes for kerosene as a source of lighting; however, because of liquidity and affordability concerns, the uptake of lanterns has been slow. We conducted a randomized control trial in Bahraich, Uttar Pradesh, amongst 500 households to see whether a voucher, microfinance, or cash program would be most effective. Using the Becker–Degroot–Marschak (BDM) method to elicit the respondents’ willingness to pay (WTP), we found that households receiving the voucher are willing to pay 436 INR (95% CI: 398–473) for a solar lantern (control mean = 326 INR, 95% CI = 291–361), or about 34% more than households in the control group, but still below the retail price of the lanterns. Quantile regression revealed that the voucher program has larger effects on households that are willing to pay least. Finally, we use Bayesian Additive Regression Trees (BART) to show that household wealth or lighting importance perceptions were not significant factors. These results highlight the problem of affordability as a prime obstacle and support the use of voucher-like incentive programs to encourage transitional technologies.