The effect of environmental good scarcity on own-farm labor allocation: the case of agricultural households in rural Nepal

As environmental goods such as fuelwood and fodder become more scarce, rural households in developing countries spend more time in their collection. It has been suggested that as a result households may reallocate labor away from own-farm agricultural production. This paper examines whether this is the case for a sample of agricultural households from rural Nepal. Cross-sectional estimates of agricultural labor demand equations give some indication that reallocation away from farm work may occur as environmental products become more scarce. However, these results disappear in random-effects estimation suggesting that time is instead reallocated from other activities or leisure. What little evidence there is for a labor reallocation from agriculture suggests that policies to relieve environmental good collection labor burdens should focus on leaf fodder and grass used as livestock feed rather than on fuelwood.