of Urban Interfuel Substitution, Energy Use and Equity in Developing Countries: Some Preliminary Results The limited understanding about the nature of the energy transition hinder efforts to formulate policy concerning the most effective and socioeconomic strategy for providing energy for households in urban areas. Understanding the energy transition will help provide a framework for understandint the policy choices for urban areas. At what stage do the externalities cause by significant harvesting of wood around urban areas Justify interventon to encourage households to switch to other fuels? At what level of income is it realistic to expect that households will switch from traditional fuels to modern fuell3? Do different energy pricing policies have a harmful or beneficial impact on the poor? Do wood prices rise gradually in urban areas or do they suddenly shoot up causmg problems for markets? Is there a role for government policy to direct the pace of the transition between fuels? The findings in this paper are a beginning attempt to start to answer some of these fundamental poicy questions. From the preliminary evidence we can say the government policy plays a very important role in influencing households to chose one fuel over another. Secondly, policies to promote LPG for households with incomes that are less than about 25 dollars per capita per month are likely to lead to disappointment. Apparently electricity can be promoted at much lower levels income because of the high value urban households have for lighting, although this will require substantial capital costs by the electricity industry. In developing countries, wood fuels do not disappear completely as incomes rise since many high income households till use wood, reflecting the utility of these fuels for urban households. However, they do seem to disappea from urban households in large metropolitan areas over 1 million population, where wood apparently is very hard to obtain. The urban poor are probably affected most by urban fuel policies, since they are spending a significant proportion of their incomes on energy. Obviously, there is much more work to be completed before we fully understand the dynamic patterns affecting urban interfuel substitution in developing countdes.