The Light and the Heat: Productivity Co-benefits of Energy-saving Technology

Abstract

Measurement of the full costs and benefits of energy-saving technologies is often difficult, confounding adoption decisions. We study consequences of the adoption of energy-efficient LED lighting in garment factories around Bangalore, India. We combine daily production line-level data with weather data and estimate a negative, nonlinear productivity-temperature gradient. We find that LED lighting, which emits less heat than conventional bulbs, decreases the temperature on factory floors, and thus raises productivity, particularly on hot days. Using the firm's costing data, we estimate the pay-back period for LED adoption is nearly one-sixth the length after accounting for productivity co-benefits.

Temperature effects on productivity and factor reallocation: Evidence from a half million chinese manufacturing plants

“…Given that TFP is a weighted average of labor and capital productivity, we now turn to exploring whether these negative effects primarily originate from labor productivity, capital productivity, or both. Previous studies have predominantly focused on labor productivity (e.g., see Adhvaryu et al (2014); Somanathan et al (2014)). …”

“…This paper adds to recent firm-level studies (Adhvaryu et al, 2014;Somanathan et al, 2014;Chen and Yang, 2017) along with subnational (Colmer, 2017) and national-level (Hsiang, 2010;Dell et al, 2012;Burke et al, 2015) studies that have examined temperature effects on manufacturing activity around the world. In particular, consistent with Hsiang (2010) and Dell et al (2012)'s evidence from other parts of the world, we find that a 1 • F shift in the annual distribution of daily temperature reduces China's GDP by 0.92% through manufacturing sector impacts alone.…”

“…In addition, high temperatures could also affect machine performance and lower capital productivity. Previous studies have largely focused on labor productivity (e.g., see Adhvaryu et al (2014) and Somanathan et al (2014)), without examining capital productivity. Although one cannot explicitly disentangle TFP as labor and capital productivity, we look for differential TFP effects for labor-and capital-intensive firms.…”

Access to modern energy: a review of barriers, drivers and impacts

“…The identification of impacts for the adoption of individual appliances appears challenging and very few studies have attempted to investigate it. Barreca, et al (2016) find that air conditioning lowered heat-related mortality in the US and there is a strong emerging evidence of the link between temperature and economic activity (Burke et al 2015, Adhvaryu et al 2016) which highlights the scope for adaptation strategies to climate change. Few studies assess the potential impact of refrigerators on food security and health.…”

Pollution effects on preferences: A unified approach

“…Each additional degree Celsius (within the range of temperatures from to C) implies a reduction of % in labor productivity. Somanathan, Somanathan, Sudarshan, and Tewari () and Adhvaryu, Kala, and Nyshadham () showed that manufacturing workers' productivity at the plant level declines with hot days (a C increase, above C, causes a % reduction in plant‐level productivity) . Interestingly, these two studies disentangle the contributions of workers' productivity decline and workers' absenteeism.…”