Why is firewood use so persistent? The role of income uncertainty

Abstract

Despite significant public efforts towards energy transition, rural households in the developing world often continue to burn traditional biomass as an energy source, sometimes even when they have already partially adopted modern fuels. The motivations for such “energy stacking” (as opposed to switching) remain poorly understood. This study highlights the role of income uncertainty in explaining the slow uptake of modern fuels and the persistence of “stacking”. We construct an analytical framework of energy choices and show energy stacking is rational for households with uncertain incomes, then empirically test the impact of off-farm income volatility on the energy choices of rural households. Using ordered and multinomial logistic regressions on data from 8 midwestern provinces of China, we show that households who had more volatile off-farm income in the past are significantly less likely to adopt modern fuels, partially or fully. A one-unit increase in past income volatility (coefficient of variation) is associated with increased likelihood of using only traditional energy for cooking and heating, by 5.5 % and 3.3 % respectively. This effect is more pronounced for more essential energy uses including cooking and, for cold areas, heating. Our findings highlight the importance of household income stability in the transition to clean energy.