Beyond the Blaze: The Impact of Forest Fires on Energy Poverty

Abstract

There exists limited empirical evidence on the linkage between natural disasters and energy consumption in a developing country setting. This article exploits a plausibly exogenous distribution of fire radiative power over space and time to evaluate the impact of forest fires on energy poverty in Nepal. Results show that an additional unit increase in fire radiative power from last year’s forest fires is associated with a 0.43% decline in energy expenditure and a 0.36% decrease in energy poverty among Nepalese households. Energy poverty induced by forest fires is pronounced among individuals from rural areas and villages with smaller degrees of ethnic fractionalization. Findings indicate that forest fire incidents may differentially alter energy-related responses among individuals belonging to different caste groups. Estimates suggest that individuals likely shifted to alternative energy sources for adequate food consumption in response to forest fire events. These results support the hypothesis that natural disasters may exceed a country’s capacity to recover from economic damages and cause a significant overall decrease in energy consumption.