Income elasticity of cooking fuel substitution in rural China: Evidence from population census data

Abstract

Solid fuels are still widely used as primary cooking fuel in rural China, which brings severe health, environmental and socio-economic consequences. A sound understanding of the energy transition pattern of rural households will provide valuable insights for policy makers aiming to facilitate transition towards cleaner fuels. The most relevant questions include whether measure of improving income could help facilitate transition and how quickly the transition would happen as household income grows. Using National Population Census data (2000–2010) for over two thousand Chinese counties, we estimated the income elasticities of primary cooking fuel substitution between traditional biomass, coal, gaseous fuels, electric power and others. It is found that the income effect is positive for the cleaner fuels gases and electric power but negative for dirty solid fuels like coal and biomass. However, our estimated elasticities show that the adoption of cleaner fuels (gases and electric power) as primary cooking fuel is income elastic (elasticity>1) for rural village households but income inelastic (elasticity<1) for township households whereas the substitution of dirty fuels are all income inelastic (elasticity<1). Our results show significant cooking fuel transition in China as well as substantial heterogeneity in the transition process. Our findings provide useful information for informed energy demand modelling and forecasting for rural residential sector in China.