The impact of unconditional cash transfer on fuel choices among ultra-poor in Pakistan: Quasi-experimental evidence from the Benazir Income Support Program

We analyze the impact of the unconditional cash transfer program, namely the Benazir Income Support Program (BISP) on fuel choices among ultra-poor in Pakistan using two rounds of household-level data collected in 2011 and 2016. The analysis based on regression discontinuity design shows that BISP cash transfer has a significant impact on interfuel substitution. Cash transfer increases the use of modern fuels among BISP beneficiaries. Besides, cash transfer also encourages the use of intermediate fuels, even in some cases traditional fuels. Cash transfer also increases the share of fuel expenses in total household expenses. Therefore, the fuel stacking theory provides a better explanation of interfuel substitution than the energy ladder theory of the cash transfer program. The provincial analysis shows that interfuel substitution exists due to cash transfer but varies from province to province, signifying the role of regional heterogeneities. The net impact on fuel choices may depend on the availability of different fuel components. From policy perspective, the expansion of the cash transfer program, as planned by the government, would require a reasonable investment in the energy sector to ensure an uninterrupted supply of modern fuels.