Migration and Fuel Use in Rural Mexico Dale T. Manning UC-Davis USAEE/IAEE North American Conference...

Migration and Fuel Use in Rural MexicoDale T. ManningUC-Davis

USAEE/IAEE North American ConferenceJuly 2013

Health Biomass fuel causes bronchitis and other lung

diseases, heart disease, premature death—US EPA

Environmental impacts Forest depletion, erosion, loss of habitat/biodiversity National parks less effective if people depend park’s

resources

Climate change Wood: 0.39 kg CO2 per kWh Coal: 0.37 kg CO2 per kWh Kerosene: 0.26 kg CO2 per kWh

Quality of life Time-consuming activity, TOC

Why care about fuel use?

http://www.engineeringtoolbox.com/co2-emission-fuels-d_1085.html





2 theories of fuel choiceFuel ladder Fuel stacking

Main contributions

1. Present theoretical model of fuel choice

2. Use model to show how migration changes fuel-choice incentives

3. Show empirical impact of out-migration on household fuel use

Research question

How does rural out-migration affect fuel choice in rural Mexico?

Important because rural-urban migration is a part of development process!

Theoretical frameworkHousehold producer

Home-cooked food Agriculture

Given capital Woodstove, gas stove

Chooses inputs Labor/leisure ENERGY SOURCE—Firewood or gas?

Theoretical frameworkNon-separable model

Imperfect labor markets Non-marketed resource, home-cooked food

Household makes consumption and labor allocation decisions simultaneously

Energy inputs chosen to minimized cost of meeting energy needs required for optimized consumption

Cost of gas: market price Cost of firewood: value of time

Migration and labor allocation

Ag labor

$

Firewood Collection

Lto


Ag labor

$

Firewood Collection

Lto

VMP in Ag (market price)

VMP in resource collection (non-market)


Ag labor

$

Firewood Collection

Lto

What happens when a migrant goes to the US?


Ag labor

$

Firewood Collection

Ltm

1. Less total time available


Ag labor

$

Firewood Collection

Ltm

2. Demand for firewood can change


Ag labor

$

Firewood Collection

Ltm

Theoretically ambiguous net impact(will likely decrease)

Theoretically ambiguousInvestigate empiricallyRural Mexico

National Household Survey of Rural Mexico

Representative of rural Mexico 80 communities, 14 states, 5 regions 1543 households

Rural Population of Mexico

http://www.tradingeconomics.com/mexico/rural-population-percent-of-total-population-wb-data.html

2010 rural population: 25,179,916




As a percentage of total





2002 2007Only gas 43 39Only firewood 28 25Both 29 36

Household fuel use (percent)

Econometric estimation

𝐿𝑛𝐷𝑎𝑦𝑠𝑖 ,𝑡=𝛼 𝐼𝑉+𝛽𝐼𝑉 �̂�𝑖𝑔𝑟𝑎𝑡𝑒𝑖 ,𝑡+ 𝑋𝑖 ,𝑡𝛾𝐼𝑉+𝜀𝑖 , 𝑡

Natural log of days per year collecting firewood

=1 if household has member in US IV with networks

:IndigenousEducationYearHousehold sizeHh incomeCommunity wage

Econometric estimation

𝐿𝑛𝑔𝑎𝑠𝑖 , 𝑡=𝛼𝐼𝑉+𝛽𝐼𝑉 �̂�𝑖𝑔𝑟𝑎𝑡𝑒𝑖 ,𝑡+𝑋 𝑖 ,𝑡𝛾

𝐼𝑉+𝜀𝑖 ,𝑡

Natural log yearly gas expenditure

=1 if household has member in US IV with networks

:IndigenousEducationYearHousehold sizeHh incomeCommunity wage

Results t-stats in parenthesisVARIABLES OLS IV RE IV Placebo

US migrant -0.225** -3.419** -0.220** -7.373(-2.286) (-2.058) (-2.248) (-0.849)

Wage (log) -0.832*** -0.394 -0.824*** 0.391(-5.415) (-1.135) (-5.248) -0.368

Hh size (log) 0.217*** -0.452 0.221*** -0.311-2.636 (-1.183) -2.637 (-0.463)

Hh income (log) -0.0103 0.145 -0.00597 0.321(-0.254) -1.451 (-0.148) -0.985

Indigenous 0.00525 -0.273 0.0145 -0.447-0.0383 (-1.104) -0.106 (-0.446)

Only primary school 0.0286* 0.163** 0.0285* 0.228-1.869 -2.201 -1.818 -0.903

Year 0.385*** 0.517*** 0.378*** 0.74-4.028 -3.229 -4.054 -0.898

Constant 6.445*** 4.280*** 6.374*** -0.602-9.285 -2.777 -9.006 (-0.0901)

Observations 823 819 823 676R-squared 0.067Robust t-statistics in parentheses*** p<0.01, ** p<0.05, * p<0.1

Table 5: Impact of US Migration on Days Collecting FirewoodLHS: Days per year collecting firewood

Results

VARIABLES OLS IV RE IV Placebo

US migrant -0.225** -3.419** -0.220** -7.373(-2.286) (-2.058) (-2.248) (-0.849)

Without a migrant, spend about 3 times as many person-days per year collecting firewood!

Average is ~121 days

Results t-stats in parenthesis (1) (2)

VARIABLESGas

expenditureWood

expenditure

US migrant 1.954*** -0.0816(4.348) (-0.147)

Wage (log) -0.123 1.007***(-0.678) (6.060)

Hh size (log) 0.411*** -0.0714(4.754) (-0.751)

Rate of stove use 4.263*** 0.525***(22.01) (2.879)

Hh income (log) 0.139*** -0.0281(4.530) (-1.004)

Indigenous -0.672*** 0.736***(-4.961) (5.493)

Only primary school -0.142*** 0.0174(-6.577) (0.702)

Year -0.0676 -0.244**(-0.759) (-2.506)

Constant -0.446 -3.439***(-0.602) (-5.247)

Observations 2,945 2,945R-squared 0.444 0.035Robust t-statistics in parentheses*** p<0.01, ** p<0.05, * p<0.1

Table 6: IV Estimation of Impact of US Migration on Fuel Expenditures

Results

VARIABLESGas

expenditureWood

expenditure

US migrant 1.954*** -0.0816(4.348) (-0.147)

Approximately double gas expenditure!

Results t-stats in parenthesis (1) (2)VARIABLES IV linear probability Probit average effects

US migrant 0.334*** 0.319***(3.388) (4.236)

Rate of stove use 0.870*** 3.295***(22.90) (22.30)

Hh income (log) 0.0254*** 0.135***(4.393) (4.972)

Indigenous -0.0829*** -0.489***(-2.815) (-5.276)

Only primary school -0.0232*** -0.0708***(-5.981) (-6.579)

Year -0.0150 0.121*(-0.867) (1.873)

Constant -0.0788 -2.749***(-3.064) (-8.897)(-1.228)

Observations 3,056 3,070R-squared 0.427

Robust t-statistics in parentheses*** p<0.01, ** p<0.05, * p<0.1

Table 7: Migration and Gas Stove Investment

Results

VARIABLES IV linear probability Probit average effects

US migrant 0.334*** 0.319***(3.388) (4.236)

Increase probability of having a gas stove by ~33%!

Impact on gas expenditure larger when controlling for selection (Heckman)

Results(1) (2) (3)

VARIABLES Linear Probability IV Linear Probability Probit

US migrant 0.0300 0.278 0.0800

(0.962) (1.085) (0.975)

Wage (log) -0.103 -0.113 -0.276

(-0.924) (-1.136) (-0.932)

Hh size (log) 0.0880*** 0.125** 0.234***

(3.398) (2.543) (3.305)

Hh income (log) -0.0116 -0.0162 0.333***

(-1.156) (-1.405) (3.504)

Indigenous 0.0675 0.105 -0.0312

(0.692) (1.020) (-1.174)

Only primary school 0.0192*** 0.00830 0.170

(3.241) (0.590) (0.673)

Year 0.126*** 0.0976** 0.0501***

(3.627) (2.096) (3.231)

Constant 0.594 0.639 0.277(1.259) (1.468) (0.222)

Observations 1,993 1,981 1,993R-squared 0.042Robust t-statistics in parentheses*** p<0.01, ** p<0.05, * p<0.1

Migration and Collecting Firewood

(1) (2) (3)VARIABLES Linear Probability IV Linear Probability Probit

US migrant 0.0300 0.278 0.0800

(0.962) (1.085) (0.975)

Wage (log) -0.103 -0.113 -0.276

(-0.924) (-1.136) (-0.932)

Hh size (log) 0.0880*** 0.125** 0.234***

(3.398) (2.543) (3.305)

Hh income (log) -0.0116 -0.0162 0.333***

(-1.156) (-1.405) (3.504)

Indigenous 0.0675 0.105 -0.0312

(0.692) (1.020) (-1.174)

Only primary school 0.0192*** 0.00830 0.170

(3.241) (0.590) (0.673)

Year 0.126*** 0.0976** 0.0501***

(3.627) (2.096) (3.231)

Constant 0.594 0.639 0.277(1.259) (1.468) (0.222)

Observations 1,993 1,981 1,993R-squared 0.042Robust t-statistics in parentheses*** p<0.01, ** p<0.05, * p<0.1

Migration and Collecting FirewoodResults

Results summaryHouseholds with US migrant

spend less time collecting firewood

Spend more on gasMore likely to have a gas stoveBut they don’t stop collecting

firewood

Implications for policyGas stove investment can be an

obstacleHouseholds will use gas if it is cheaper

Can lower price of gas (e.g., improve delivery) Increase perceived cost of firewood (health

effects) Increase opportunity cost of time

Households may add gas into fuel mix without switching completely

Beware of firewood markets Especially if common-property resource Conventional management may become easier

Thanks!

BackgroundFuel use/firewood collection

connected to other sectors Agriculture Labor market development

Proposed theories: Fuel ladder Fuel stacking

DataNational Household Survey of Rural

Mexico PRECESAM, Rural Economies of the Americas

and Pacific Rim (REAP)

2002, 2007Representative of rural Mexico—

populations from 500 to 2499 people80 communities, 14 states, 5 regions1543 households, 10 states in 2010

Household economy

𝑓 2𝜇𝜆

=𝑃𝐺

𝛿𝑈 3

𝑈 2

= 𝑓 3= 𝑓 1𝐹′ (𝐿𝐹 )

2002 2007Households that include gas in fuel mix 72 74Households that cook only with gas 43 39Households that cook only with firewood 28 25Households that use gas and firewood 29 36Average expenditure on gas (2002 Pesos) 118 145Average expenditure on firewood (2002 Pesos) 24 25

Table 4: Role of Gas in Rural Mexican Fuel Use(Percent unless otherwise indicated)

Migration and Fuel Use in Rural Mexico Dale T. Manning UC-Davis USAEE/IAEE North American Conference...

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