Household heterogeneity, time allocation, and the use of environmental products: Responses to deforestation by rural Nepali households

This study attempts to better understand the time allocation decisions of rural agricultural households in response to increasing scarcity of environmental resources. For rural households increasing scarcity of an environmental product such as fuelwood is assumed to be reflected in a higher exogenous time price per unit of the good collected from the surrounding environment. It has been suggested by several sources that increasing the time required to collect fuelwood may reduce the amount of time, particularly women's time, a household allocates to productive activities such as farm labor or cooking meals. This reallocation may result in lowered agricultural production and/or household nutrition. This study attempts to ascertain whether this is the case for a sample of households in rural Nepal, and whether there are similar effects from increasing costliness of other environmental products such as fodder and water. Three issues related to this time reallocation are explored. The first is whether household heterogeneity influences how a household reallocates its time. The second is whether an increase in the time price of an environmental good with fewer substitutes is more likely to affect agricultural productivity and/or nutrition than an increase in the time price of a good with more available substitutes. The third is to determine the effect of a simultaneous increase in the time prices of several environmental goods.;Using data from the Nepal Energy and Nutrition Survey 1982/1983, reduced form demand equations for environmental products and the time allocated to several activities are simultaneously estimated. This is done first using a yearly cross section of data; then a fixed-effects model with quarterly panel data is estimated to ascertain any seasonal effects. Results indicate that households definitely reallocate time across activities and household members when environmental products become more costly and that seasonality is quite important. Households use less of the environmental products and the total time spent in their collection increases, mostly from increases in women's collection time. Negative effects on agricultural productivity and household nutrition appear to be minimal or nonexistent. Simultaneous increases in the time prices of several environmental goods frequently have a stronger impact on time reallocation than a rise in the price of just one good. This indicates that using the time price of just one good to proxy for the effect of environmental degradation on rural households may not adequately reflect the conditions these households face.