Forest and fuel wood are fundamental as sources of energy in almost all developing economies. However there are a few empirical studies addressing the issue of fuelwood production and consumption for rural households. In this paper, household fuelwood use behavior is empirically assessed and policy implications are drawn. with specific reference to Nepal's tarai and mid-hills. Fuelwood production, supply and demand functions are estimated using market, forest and access, and demographic variables characteristic of each region. Both regional and district level supply and demand elasticities are also estimated with respect to opportunity cost of labor, fuelwood price, income, resource stock and access, and demographic variables. The results suggest that rural households produce and consume fuelwood according to the opportunity cost of their labor and market fuel wood prices. Market( economic) variables such as fuel wood price and opportunity costs of labor along with forest stock and its access can provide better insights for assessing household responsiveness to forestry and related development activities and for policy than mere resource stock size or its access. / Master of Science