Fuel switching in slum and non-slum households in urban India

Abstract

Improving access to modern fuels is essential in developing countries for reducing adverse human health and environmental impacts caused by traditional fuels. Fuels use in developing countries is heterogeneous across households. This paper estimates drivers of fuel switching in non-slum and slum households in urban India, using a discrete choice model on a nationally representative micro data. The choices considered are three categories of cooking fuels: traditional – firewood, dung, crop residue and coal/charcoal; modern – kerosene and liquefied petroleum gas (LPG); and mixed fuels. The results suggest that the patterns of fuels use are consistent with the energy ladder theory in urban India. In addition to income, the major determinants of modern fuels uptake are fuels prices, access to electricity and water supply, and education attainment. The increasing price of LPG affects the willingness to change fuels for low-income non-slum and the high-income slum households negatively. The analyses make a strong case for applying differential subsidies on modern fuels employing multidimensional aspects of poverty. Moreover, there is a need for partial diversion of existing fuels subsidies on improving physical and social capitals, which will result in uptake of modern fuels, particularly among disadvantaged communities.