Abstract
The adoption of energy-efficient appliances has been studied in many developed countries in recent years. However, it is unclear how these findings translate to developing countries. We conduct a discrete choice experiment with a broad sample of potential air conditioner (AC) purchasers in Metropolitan Manila, where the percentage of AC owners has increased concomitant with the economic growth in the Philippines. We find that consumers have the strongest preferences for ACs made by domestic manufacturers with smart functions that enable consumers to save electricity more easily. In addition, we examine the information on eco labels that encourage consumers to choose an energy-efficient AC, including the default option of an energy efficiency ratio, estimated cost per hour or an energy star rating. The estimation results indicate that the probability of an energy-efficient AC being chosen could be increased by approximately 15 percentage points if the eco label uses an energy star rating rather than an energy efficiency ratio. These results have important implications for climate and energy policies for developing countries.
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Notes
Official record from PAGASA, the Philippines weather bureau. See https://www.pagasa.dost.gov.ph/information/climate-philippines#:~:text=Based%20on%20the%20average%20of,mean%20temperature%20of%2028.3oC.
We obtained the data from the ‘National Incidence Study’, a nationally representative survey with 1200 respondents conducted by the Philippine Survey and Research Center from 11 July 2016 to 4 August 2016.
The values are in constant 2015 prices using the Philippines’ consumer price index. The source of the basic data is Global Petrol (2021) https://www.globalpetrolprices.com/Philippines/electricity_prices/.
In addition to the choice experiment studies, one study uses a hedonic price model; Zhang and Tao (2020) empirically investigate the relative importance of the energy efficiency level in purchasing appliances using data from China. On the other hand, Hameed and Khan (2020) applied structural equation modelling using the partial least square method to examine the role of motivational factors in influencing an intention to purchase or actual purchase behaviour concerning energy-saving ACs in Pakistan.
PSRC is one of the leading independent research and survey agencies in the Philippines. They were responsible for hosting the FGDs and pre-tests and recruiting respondents.
PSRC was responsible for programming the questionnaire on the tablet and conducting the interview. The enumerators were aided by a tablet.
We recognize that it would be meaningful to use a sample that matches the population to investigate the impact of label design in the longer term. We defer this to future research.
Jain et al. (2018) and Zhou and Bukenya (2016) also include ‘brand’ as one of their attributes.
In July 2017, MyVoice Communications conducted a representative ‘Questionnaire Survey on Household Air Conditioners’ in Japan. In the results, which they shared with us, one of the questions asked ‘Assume that you are going to purchase air conditioners. Which functions do you consider the most in the top of the basic function of heating and cooling?’ and the greatest number of people (44.2%) answered ‘auto-cleaning function.’.
We visited the DOE and Meralco on 23 and 24 May 2019, respectively. Meralco is the largest electricity distribution company in the Philippines.
Energy Guides and Orange Tags are existing labels, but they are not placed on all ACs. Under the current laws, only window ACs without an inverter have an Energy Guide. Orange Tags have been displayed on specific ACs since February 2019.
See https://meralcomain.s3.ap-southeast-1.amazonaws.com/images/ckeditor-documents/Orange%20Tag%20Appliances%202019_AirCon_0.pdf?null for the standard rate as of February 2019.
We obtained this information from our discussion with Meralco.
Meralco provided us with the factors that they used in the conversion.
The median monthly household income of our respondents is PhP 60,000–99,999, which is considerably higher than the average of PhP 38,000 per month (PhP 460,000 divided by 12 months).
We base consideration of labels when purchasing an AC in the past on all AC owners in our sample. Although we calculate this separately for each group, similar results are observed between groups.
Results for consideration of labels when purchasing an AC in future are calculated for all respondents. Similar results are observed when we calculate separately for each group.
We also conducted the Chow test and find that there is a statistical significance in AME for the most efficient level (level 4) between new label 1 (estimated cost per hour) and new label 2 (energy star rating) at 1% level for window type ACs.
We also conducted the Chow test and find that there is a statistical significance in AME for the most efficient level (level 4) between new label 1 (estimated cost per hour) and new label 2 (energy star rating) at 1% level for split type ACs.
In the interest of brevity, these estimation results are not reported. They are available upon request.
In our choice experiments, 200 respondents were shown an EER. They had read the instructions explaining the definition of an EER. Therefore, we excluded the respondents who were clear on the meaning of an EER from the quiz questions.
See DOE’s Department Circular (DC) 2016–04-0005, Annex B.1.-PPR 01-AC:2018.
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Acknowledgements
The authors are grateful to Prof. Susumu Ito at University of Niigata Prefecture, Prof. Kenji Takeuchi at Kyoto University, Prof. Takahiro Tsuge at Sophia University and Prof. Wataru Shimokawa at Waseda University for their valuable comments on the questionnaire. We also appreciated insightful comments on the estimation results by Prof. Shigeru Matsumoto at Aoyama Gakuin University and Prof. Kenichi Mizobuchi at Matsuyama University.
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Miwa Nakai: conceptualisation, methodology, software, formal analysis, investigation, data curation, writing – original draft, supervision, project administration.
Majah-Leah V. Ravago: conceptualisation, validation, investigation, writing – original draft.
Yoichi Miyaoka: conceptualisation, investigation, writing – review and editing.
Kiyoshi Saito: conceptualisation, investigation, writing – review and editing, funding acquisition.
Toshi. H Arimura: conceptualisation, investigation, writing – review and editing, funding acquisition.
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This study was financially supported by the Research Institute for Environmental Economics and Management of Waseda University, the Organization for University Research Initiatives of Waseda University, the Environment Research and Technology Development Fund (JPMEERF20202008) of the Environmental Restoration and Conservation Agency, and the Environmental Research Grants (#193312) of Sumitomo Foundation. TA and MLR are grateful for the financial support from TCER-TIFO Fellowship. MLR conducted her research for this project with support from Ateneo de Manila University Research Council under the Research and Creative Work Faculty grant.
The authors have no competing interests to declare that are relevant to the content of this article.
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Nakai, M., Ravago, ML.V., Miyaoka, Y. et al. Consumers’ preferences for energy-efficient air conditioners in a developing country: a discrete choice experiment using eco labels. Energy Efficiency 16, 14 (2023). https://doi.org/10.1007/s12053-023-10095-8
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DOI: https://doi.org/10.1007/s12053-023-10095-8