Abstract:
This study incorporates household energy needs into Foster–Greer–Thorbecke (FGT) based poverty measures to examine energy poverty in South Africa. Our household-specific energy poverty line is founded on the application of semiparametric estimation of energy expenditure shares that are used to determine a household energy equivalence scale and, thus, the household specific required energy consumption level or poverty line. We find that headcount energy poverty is extensive, exceeding 50%, as is the gap and the severity of energy poverty. Decomposition results suggest that energy poverty rates decrease with income, and lower income groups contribute more to total poverty than higher income groups across all the three poverty indexes. Although our poverty rates are determined by the choices we have made, the model is flexible enough to allow for assumptions that differ from ours, and we provide a useful sensitivity analysis for further understanding.
