Stephanie Kestelman, Economics

Long-Term Effects of Electricity Rationing on Electricity Consumption: Evidence from Brazil

How do households respond to sudden caps on their consumption of electricity? Do they change behaviors, or do they buy new appliances? And do those changes have long lasting effects? This paper seeks to answer these questions within the context of an electricity rationing in Brazil in 2001 and 2002. Due to mismanagement, political inefficiency, and an unexpected drought, the supply of electricity from hydraulic power plants did not meet demand in some Brazilian states. In response, the Brazilian national government implemented in a rationing policy in some states. This paper investigates the short run effectiveness of the policy and the permanent effects of program on residential consumption of electricity. I analyze state-level data from 2000 and 2011 to assess the effects of the policy on long-term residential consumption patterns at the state-level. I find that physical investments to close the efficiency gap did not account for conservation. Instead, households modified their behavior during the rationing period. I also conclude that these changes in behavior and consumption patterns were not stable or permanent, and did not affect consumption in the long run.