Media Coverage about the project:
Freakonomics.com: The economics behind our project makes too much sense not to contribute to it.
Economist.com: What makes it noteworthy is not just its goal, whether rural Ugandans might adopt new solar-powered lights over traditional kerosene, but its provenance.
Daily Californian: An incremental step in bringing safe, affordable light to the 1.3 billion people worldwide who lack access to electricity
A $20 solar light can transform the life of a poor family in rural, off-the-grid Uganda. Fueled by the unlimited power of the sun, solar lights replace dangerous kerosene lanterns, freeing families from their toxic fumes, high risk of burns and fires, and the burden of ongoing fuel costs. The brighter light from an LED-based solar lamp allows children to study in the evening and gives adults more time to work, boosting income and educational achievement. Many solar lamps also charge cell phones, keeping a family connected to the world.
Even though the solar lights pay for themselves in just five weeks, they have been slow to catch on among the 1.3 billion people worldwide who lack access to electricity. What’s getting in the way? Is it just the up-front cost? Lack of credit? Are there other factors, such as poor distribution or mistrust of the technology? And most importantly, how can we remove these barriers?
We are three professors from UC Berkeley’s Haas School of Business who have teamed up with a Ugandan economist to study ways to get rural Ugandans to upgrade from kerosene to clean, sustainable solar lighting. We are partnering with BRAC, the world’s largest nongovernmental development organization, which has an existing micro-business program in Uganda.
All funds raised will be used for our research costs, including the purchase of solar lamps developed by Barefoot Power. Our goal is to develop recommendations for nongovernmental organizations or for-profit companies to quicken the rate the adoption of solar lighting.
About 590 million Africans live off the grid, according to a 2011 study by the International Finance Corporation, an arm of the World Bank. Most of them rely on flame-based lamps powered by fossil fuels like kerosene. The light from these lamps is dim and comes with significant health and financial costs. A kerosene lamp may cost less than $5, but fuel averages about $57 per year, or about $158 over the lifetime of the lamp. Sub-Saharan Africans burn up about $10 billion annually on kerosene, and worldwide, kerosene costs people without electricity $36 billion, according to the report.
People who are dependent on kerosene not only have less money for food, clothing, education expenses and other essentials, but also risk their health and even their lives. Many of them also cook over open flames, and the combined indoor air pollution generated by stoves and lamps is equivalent to smoking two packs of cigarettes a day. Women and children suffer the most. The United Nations Development Program and the World Health Organization report that 1.6 million deaths per year in developing countries are caused by indoor air pollution from traditional fuels. They also report 300,000 deaths every year from burns. Many more lose their home to fires.
Solar lights can completely eliminate the need for kerosene lighting, with little or no ongoing costs.
This project grew from Berkeley-Haas Professor David Levine’s past work to encourage Ugandan cooks to switch from open-flame cook stoves to safer, more efficient models. The efficient stoves cut fuel use in half and provide health benefits; but as in the case of solar lighting, adoption has been frustratingly slow. One of the biggest barriers is access to free credit, which is beyond the capacity of many small retailers.
David tested a new sales offer: everyone received a free trial, a payment plan, and the chance to return the stove if didn’t work well. It was a success: 47 percent of those in the study took the free stoves with only 2 percent returning them; compared to a 5 percent adoption rate with the cash-and-carry offer. Read more about his research here.
For the current project, David has joined forces with Haas professors William Fuchs and Brett Green to test whether an alternative sales model can speed the adoption of solar lamps. Ugandan economist Vastinah Kemigisha will lead the work on the ground. The research team is already in the process of hiring and training 640 Ugandan women who are involved with a microfinance program through BRAC.
Our plan is to run a controlled randomized trial in which we will give each woman in our test group four $20 lanterns, which they can then sell for about a 20% markup. They can then use the proceeds from their sales to purchase more lamps at $20 and slowly grow their business. The test will be whether these women are able to sell the lamps, and whether the lack of a startup barrier and the pay-as-you-go model will incentivize the entrepreneurs to continue business. Each woman will be responsible for her own sales, and if she is successful, she will build a small business. We will also have another control group who will be offered the lamps but without credit. Thus we can explore how our experiment affects the end outcomes.
The project is led by three UC Berkeley Faculty: William Fuchs, David Levine and Brett Green. We are also collabarating with BRAC Uganda a non-profit organization and have the help of Vastinah Kemigisha who is our lead person in the field.
David I. Levine is the Eugene E. and Catherine M. Trefethen Professor of Business Administration at the Haas School of Business at the University of California, Berkeley. He is past chair of the University’s Center for Health Research, founding chair of the the Advisory Board for Center for Effective Global Action, and the first Research Director at the Haas School’s Center for Responsible Business.
William Fuchs is an Assistant Professor of Finance at the Haas School of Business. He was previously an Assistant Professor and Thornber Research Fellow at the University of Chicago. His research is focus on problems of enforcement and contracting when there is limited information or a lack of formal contracts.
Brett Green is an Assistant Professor of Finance at the Haas School of Business. He was previously and Assistant Professor at the Kellogg School of Management at Northwestern University. His research focuses on the role of information in markets.
Vastinah Kemigisha is an Ugandan economist, she is one of the team leaders at CIRCODU (http://www.circodu.org/) which is the Center for Integrated Research and Community Development in Uganda. She has a lot of experience conducting field work and has previously worked with David Levine on the adoption of efficient cook stoves.
Please help us spread the word about the project! Thank you so much for your support.