Do Households in Developing Country Choose Energy Efficient Air Conditioner?:
Evidence from the Philippines○Miwa Nakai*, Majah-Leah Ravago**, Yoichi Miyaoka***,Kiyoshi Saito****, Toshi. H Arimura*****
1.

Introduction
According to the latest energy consumption survey in the Philippines, the third largest end-use

electricity by households is space cooling and air conditioning (Department of Energy, Philippines,2011). Currently, air conditioners (hereafter AC) are used by around 20% of Metro Manila’s
population of 13 million and less than 10% of the Philippines’ population of 107 million. The
percentage of AC owners is expected to increase in the future due to economic growth. Hence, one of
the effective energy-saving behaviours that households can take is choosing energy efficient AC. How
do we incentivise households to choose energy efficient AC? To answer this question, we will conduct
face-to-face survey in Metro Manila, the capital city of Philippines. The survey includes choice
experiment questions on AC alternatives, hence, the basic preferences and willingness-to-pay (WTP)
for each attributes of AC can be estimated. The survey will also reveal what information encourages
consumers to choose energy efficient AC.

2.

Survey Design
In order to develop the survey instrument, we conducted preliminary surveys, which is especially

important for choosing attributes and its levels on choice experiment questions. The preliminary
surveys include market research, two focus group discussions (hereafter FGD) and Pre-Test in
February and March 2019. We have twelve participants for FGDs and five respondents for Pre-Test
who are mix of male and females from 25 to 45 years old and purchase decision-makers for appliances.
Reflecting the preliminary surveys, we set four attributes including Purchase Price, Country ofManufacturer, Additional Function, and Energy Efficiency. Because there is a physical limitation toinstall either split type or window type AC, we set six choice experiment questions for each type ofAC, leading to twelve choice experiment questions in total. One of our main objectives is examining
what type of information encourages consumers to choose energy efficient AC, hence, we will divide*Research Institute for Environmental Economics and Management, Waseda University
Address:1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050, Japan
E-mail: miwanakai@aoni.waseda.jp**
Economics Department, Ateneo de Manila University, Email: mravago@ateneo.edu***
School of Fundamental Science and Engineering, Waseda University,
Email: miyaoka@aoni.waseda.jp****
School of Fundamental Science and Engineering, Waseda University, Email: saito@waseda.jp*****
Faculty of Political Science and Economics, Waseda University, Email: arimura@waseda.jp

our sample into three-treatment groups with different information on Energy Efficiency. For selecting
three information, we conducted hearing surveys at Department of Energy and Manila ElectricCompany (Meralco) in May 2019. These hearings led to set the following information as Energy
Efficiency; Energy Efficiency Ratio (EER), Estimated Costs per Hour, and Energy Rating Star. EER
is the information on the energy label issued by the government and Estimated Costs per Hour is theone on the label issued by Meralco. Only Energy Rating Star is the hypothetical information.
3.

Methodology
The objective of using choice experiments is to investigate people’s preferences across a set ofalternatives expressed as a bundle of attributes. Respondents are asked to choose either their mostpreferred AC among two options or choose “I purchase neither AC 1 nor AC 2” (see Table 1). We
will examine whether and how attribute(s) significantly affect decision-making for AC by applying
random parameter logit model which can relax restrictions of homogeneity of preferences andindependence of irrelevant alternatives that are assumed by conditional logit model.
Table 1: An Example of Choice Set for Window Type AC
Purchase Price
Additional Function

AC 1AC 2

PhP 25,000

PhP 30,000

Noise Reduction

Smart FunctionI purchase neither

PhilippinesJapan

AC 1 nor AC 21115

Country of Manufacturer
EERChoose One

4.

Conclusion and Further Tasks
We conducted a sequence of preliminary surveys in Philippines to design the questionnaire for thefield survey which aims to examine preferences for attributes of AC. The FGDs and Pre-Test found asfollows. Firstly, people indeed want to purchase AC with high efficiency because electricity rate in thePhilippines is extremely high. Secondly, however, the current information label (EER) issued by thegovernment is not easy enough for people to understand and would not encourage consumers to choose
the energy efficient AC. This result will be further validated in the analysis of the field survey that is
conducted in June and July 2019 in Metro Manila.
Reference
Department of Energy, Philippines, 2011. 2011 Household Energy Consumption Survey.
https://psa.gov.ph/sites/default/files/HECS%202011.pdf (Accessed 13 June 2019)