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and increased demand for kerosene (positive cross-effect). A similar positive cross-effect is observed with regard to fuelwood demand when the price of kerosene rises. These phenomena clearly suggest that, for rural households, fuelwood and kerosene are substitutes. The presence of electricity also increases fuelwood demand. That fuelwood is considered a good fuel for cooking in Bangladesh supports the notion that villages with electricity are more affluent than those without electricity. These measures have an overall village-level income effect on the demand for alternative energy sources. In addition, availability of electricity results in reducing villagewide energy prices, which affords households more to spend on energy generally, including fuelwood. But demand for kerosene declines with village electrification, which signals the substitution effect of users switching from kerosene to electricity (mostly for lighting).
Summing Up In rural Bangladesh, access to energy is governed not only by its availability, but also by its pricing (monetary and non-monetary), household income, and other characteristics. Household demand for energy is sensitive to both price and income. If electricity is available, household access is determined by income; the higher the income (proxied by land and non-land assets), the greater the demand. For any energy source, pricing also determines demand. Thus, energy access is not equitable because the source is either priced too high or carries a high opportunity cost (e.g., biomass collection). Inequitable access and level of use may lead to further inequities (e.g., low-income households may pay far higher prices for equivalent lighting services). By exploiting price sensitivity, policy makers can play a role in influencing demand (e.g., by withdrawing the price subsidy for an energy source whose demand is insensitive to price or, conversely, introducing a price subsidy for a source whose demand is negatively sensitive to price). The next chapter demonstrates the loss to household welfare that can result from such inequities and the important gains that moving up the energy ladder makes possible.
Notes 1. Much of women’s time is spent collecting tree leaves and grass; in terms of fuelwood collection, men’s time is at least as important as that of women. 2. Efficiency of appliances (kerosene kupis and hurricane lamps or electric bulbs and tubes) determines the ultimate lighting use rate, which, in turn, determines the quantity of fuel used. 3. Households that sell electricity to their neighbors cannot accurately determine the amount of such use. The neighbor buyers, who do not have meters, usually pay a fixed monthly amount based on a rough estimate of load, which they underestimate or under-report to the household sellers. The actual load is determined by the wattage and hours of use of all electric appliances and lightbulbs, which is difficult for the sellers to compute. 4. In such locations as Sylhet District, sun-drying, rather than parboiling, is used to process paddy before milling. 5. Only those influencing variables considered most important are reported here; see Table A2.1 (Annex 2) for the complete regression output.