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Business & Economics

SAVING FORESTS THROUGH DEVELOPMENT? FUELWOOD CONSUMPTION AND THE ENERGY-LADDER HYPOTHESIS IN RURAL SOUTHERN CHINA
Qiran Zhao, Qihui Chen, Qiming Liu , Guoqiang Tian, Xueling Chu, Yitian Xiao

ABSTRACT. Using the baseline data of the Eco-farming project recently funded by the World Bank, which involves 2,700 smallholder households residing in rural areas in five southern Chinese provinces, this paper examines the energy-ladder hypothesis, by estimating the determinants of household fuelwood consumption and the consumption of its major marketed substitute energy, coal. Our Tobit regressions find strong evidence in support of the energy-ladder hypothesis. A one standard-deviation increase in household wealth is associated with a 15% decrease in a household's daily fuelwood consumption and a 3% increase in its daily coal consumption. Meanwhile, off-farm labor supply and the education level of household members have significantly negative impacts on household fuelwood consumption. These findings suggest that economic development, either through wealth growth, through off-farm labor market development, or through human capital accumulation, can help accelerate the process of rural China's energy transition .

KEYWORDS:  fuelwood consumption, energy, development, Rural China.

JEL classification:  Q23, Q28, I31, O12, C3.