Off-farm income promotes energy transition in the Pan-Third Pole cross-national region

Abstract

The Pan-Third Pole region comprises multiple nations affected by climate vulnerability and energy inequality, wherein promoting energy transitions in rural households would provide a path to combat climate change. Identifying the factors that drive rural household energy consumption and the transition is important. This study performed a micro-survey of 1060 rural households in five countries in the Pan-Third Pole region and empirically analyzed the relationships between off-farm income, energy consumption, and energy transitions. The off-farm income of rural households was found to have a significantly positive effect (p < 0.01) on energy expenditure, indicating that energy expenditure increased with increasing off-farm income. Off-farm income has a significantly positive effect (p < 0.01) on the proportion of commercial energy but a significantly negative effect on the proportion of noncommercial energy. These results indicate that increasing off-farm income can adjust the energy consumption structure of rural households. Furthermore, a robustness check by substituting independent variables, instrumental variable method (IV), and propensity score matching method (PSM) provided strong evidence to prove the robustness of the results. The heterogeneity analysis showed that the effects of off-farm income on energy expenditure and transitions differed among countries, off-farm income had no significant impact on energy expenditure in Cambodia and Myanmar, but it worked for China, Nepal, and Thailand. Finally, policy implications are proposed to promote energy transition in the Pan-Third pole region: providing more full-time or part-time off-farm employment opportunities, employment assistance or skill training by local governments; increasing the pace of infrastructure construction to solve energy inaccessibility; multiple measures to promote the education and environmental knowledge.