Preferences for domestic fuel: Analysis with socio-economic factors and rankings in Kolkata, India

Abstract The choice of domestic fuel is a matter of great concern for households and policy makers in India. This paper investigates the demand for domestic fuels when households face four choices: Fuelwood, Coal, Kerosene and LPG. The study is based on a survey of 500 households in Kolkata, India. The demand estimates are conducted using a two-stage process where the first stage investigates choice and the second the quantity used. Determinants of fuel demand are identified and their relative importance shown. Extending the study, the paper also analyses the choice of the main cooking fuel in terms of the households' stated rankings of six fuels for five attributes. The policy discussion indicates that subsidies have less potential to reduce polluting fuels such as coal and fuelwood due to weak cross-price elasticities, while increased availability of LPG and potentially also increased awareness of indoor air pollution have greater prospect.