Stage-based Non-price Determinants of Fuel Choice and Its Consumption Decision of Households in Rural India

Abstract

This article investigates non-price determinants of fuel choice and consumption decision of households in rural India. Fuel consumption varies at household levels from traditional fuels like firewood and chips to modern fuels such as LPG. Fuel consumption is based on two-stage decisions: (a) whether households participate or not; and (b) how much they consume if they participate. Significant factors might be different in the first stage and the second stage due to certain socio-economic or non-price factors. Applying Cragg’s double hurdle model on NSSO data, this article finds determinants of fuel choice and its consumption at the household level in rural India. Empirical findings indicate that income significantly determines quantity consumption, not choice decision. The role of assets in determining fuel choice and quantity decision is also considered through a comparative study including and excluding landholding, a major asset in rural India. Bottom and top quintile results suggest that advancement of the economic position of the households changes their attitude towards dirty fuel selection and consumption. Firewood fuel consumption decreases with the rising education level of the household head, especially women-headed households. Increased awareness through education and removing social barriers might help to reduce dirty fuel consumption, and India might move towards Sustainable Development Goal. JEL Codes: C20, C13, C34, O13, Q23, Q40, Q56