Determinants of Fuelwood Use in Rural Orissa: Implications for Energy Transition

This study examines household behavior related to fuelwood collection and use. The focus is on identifying the behavioral transition of fuelwood-using households from collection to purchase. The study examines the theory linking households' labor allocation decisions to choice of fuel and models household decision using a three-stage least squares probit specification. Household fuelwood choice (purchase/collection) is predicted based on an endogenously determined wage income that depends on the opportunity cost of fuelwood collection. Expectedly, economic ability and availability of fuel alternatives are found to have significant positive marginal effects on household choice for fuelwood purchases. There is also the possibility that at very high levels of income, and in the absence of alternatives to choose from, households may revert back to collecting fuelwood using either their own labor or hired workers. The policy implication of a possible reverse switch is that improvements in economic ability alone may not be sufficient to bring about the energy transition in rural areas; there may be a need to continue with price subsidies on kerosene and LPG and at the same time create effective institutions for conserving forest commons.