Who is Buying? Fuelwood Collection in Rural India

Mardi | 2015-06-16
Sully 5, 16h-17h20

Ujjayant CHAKRAVORTY – Martino PELLI – Anna RISCH

Fuelwood collection is often cited as the most important cause of deforestation in many developing countries. There is a significant literature on fuelwood markets but almost no studies on who is using the fuelwood collected. Is the fuelwood collected in rural areas used locally or by people living in nearby towns and cities? The answer to this question has implications for both environment and energy policy. We study this issue by looking at the effect of reduced forest cover on the time allocation of buyers and sellers of fuelwood in rural India. We instrument time spent in fuel wood collection by the time it takes to travel from their home to the collection site. By matching two different datasets, we can identify households that buy fuelwood for their own use and those who sell fuelwood in markets. We see a clear difference in the time allocation of these two groups in response to costlier access to forest resources. When the forest is further away, fuelwood is scarce, and sellers decrease their time invested in self-employment activities. Buyers show no such trend in their behavior. Closer to town, sellers increase their collection effort, because fuelwood is likely to fetch higher prices. Buyers do not exhibit the same pattern. By differentiating buyers from sellers, we find that the number of fuelwood sellers rises closer to town and controlling for population, fuelwood sales increase. The main contribution of the paper is in disentangling fuelwood markets into those who buy and those who sell. We can therefore estimate an excess supply function of fuelwood as a function of distance from town. The main policy implication of the study is that fuelwood collection is likely driven not only by rural household demand but by demand from towns in close proximity. Thus energy policies that address deforestation and rural energy use need to target urban energy use as well.