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.
