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Climate Change and Energy Consumption in Bangladesh
Abstract : There is extensive research that has been conducted on the relationship between temperature and energy consumption in high-income countries, but much less is known about these dynamics in poorer and yet more vulnerable regions. This study addresses that gap by analyzing energy expenditure patterns in rural Bangladesh, where households depend on a mix of fuel types ranging from solid fuels to electricity. The study uses data from the Bangladesh Integrated Household Survey (BIHS), a nationally representative dataset spanning three rounds (2011–2012, 2015, and 2018–2019), and combines it with temperature and precipitation data from the ERA5-Land dataset, prepared by the European Centre for Medium-Range Weather Forecasts (ECMWF). By employing a temperature bin approach, the study estimates the effects of extreme temperatures on household energy expenditures in a flexible manner. The econometric strategy controls for village and year-fixed effects, ensuring that variations in energy expenditures are mainly driven by temperature fluctuations rather than broader economic or infrastructural factors. The analysis reveals distinct patterns of energy consumption: an increase in extreme hot days leads to a decrease in electricity spending, but an increase in solid fuel spending. The robustness of these findings is confirmed through multiple econometric specifications, including degree days and quadratic models. This conclusion is crucial as the adaptation failure can have serious consequences for household well-being, including increased health risks and mortality. This study further finds that two potential mechanisms of effects are decreased agricultural income for these rural households and electricity infrastructure failures, which are examined through price-weighted agricultural yield and the incidence of power outage during extreme heat, respectively.