Effect of worldwide oil price fluctuations on biomass fuel use and child respiratory health: evidence from Guatemala

Objectives. We examined the effect of worldwide oil price fluctuations on household fuel use and child respiratory health in Guatemala.Methods. We regressed measures of household fuel use and child respiratory health on the average worldwide oil price and a rich set of covariates. We leveraged variation in oil prices over the 6-month period of the survey to identify associations between fuel prices, fuel choice, and child respiratory outcomes.Results. A $1 (3.4% point) increase in worldwide fuel prices was associated with a 2.8% point decrease in liquid propane gasoline use (P < .05), a 0.75% point increase in wood use (P < .05), and a 1.5% point increase in the likelihood of the child reporting a respiratory symptom (P < .1). The association between oil prices and the fuel choice indicators was largest for households in the middle of the income distribution.Conclusions. Fluctuations in worldwide fuel prices affected household fuel use and, consequently, child health. Policies to help households tide over fuel price shocks or reduce pollution from biomass sources would confer positive health benefits. Such policies would be most effective if they targeted both poor and middle-income households.Acute respiratory illnesses are the leading cause of death among children in the developing world and account for nearly 20% of child deaths.^1–4 Past research has found a strong association between respiratory health and household use of biomass fuels,^5–15 leading to the conclusion that exposure to indoor air pollution from cooking and heating with biomass fuels such as wood, dung, or crop residues causes at least one third of childhood respiratory illnesses.^3,4 These findings are supported by results from studies that used quasi-experimental conditions to more rigorously establish causality.^16–18The design of effective policies to reduce indoor air pollution requires an understanding of how families choose fuels. Certainly, socioeconomic status is important: poorer households are more likely to use biomass fuels, with high start-up costs and lack of access preventing adoption of cleaner alternatives.^2-4,7 The relative price of clean fuels, such as liquid propane gasoline, vis-à-vis dirty fuels could also affect fuel choice.^19,20 The price of liquid propane gasoline is determined not only by local supply and demand but also by the worldwide market price of crude oil, which is used to produce liquid propane gasoline. Anecdotal evidence indicates that increases in worldwide crude oil prices may cause families to substitute away from cleaner alternatives, particularly in the short run.²¹ However, no research has explored the effect of fluctuations in worldwide crude oil price on fuel use and health outcomes.The great variation in household fuel use in Guatemala—around 60% of households use wood, 40% use liquid propane gasoline, 35% use some combination of the two, and 8% use other types of fuels, such as kerosene, coal, or electricity²²—makes it an ideal setting to study the impact of price changes on fuel choice. As with other developing countries, previous research on Guatemala has suggested that education, socioeconomic position, and clean fuel availability play a large role in driving liquid propane gasoline adoption. The effect of price fluctuations, however, has not been well elucidated.²³ Therefore, we addressed this gap by using a rich data set from Guatemala to examine the association between fluctuations in the worldwide crude oil price, household fuel choice, and childhood respiratory illness.