Household energy use, forest and poverty are entangled in developing countries with environmental and health problems. Dependence on wood for cooking fuel generally increases the dependency of poor people on forests. This fuelwood consumption is not only linked to the forest environment, but also to the health of the inhabitants due to indoor air pollution. As the women are exposed more to the smoke pollution than the men, and children are more sensitive to it than adults, the issue of fuel is also linked with the gender and child issues. Fuelwood is the main source of cooking energy in Nepal and will remain so for foreseeable future. About 66 percent of households use wood as the main fuel for cooking. Only about 13 and eight percent households, mostly in urban areas, use kerosene and LPG respectively. The households using biogas as the main fuel is less than two percent [CBS (2002)]. One study shows that over 89 percent of total energy use in Nepal comes from the traditional fuels [ADB (2003)]. Wood and other biomass fuels (crop residues as well as animal dung) can substitute for each other, though most consumers have a general preference for wood over other biomass [FAO (1997)]. With socio-economic development, the fuel used by a household changes to better ones in the fuel-ladder. Everybody likes to maximise their utility by choosing more convenient and prestigious fuel subject to the budget constraint. Climbing the fuel-ladder generally means stepping up from dung cakes or crop residues, fuelwood, kerosene, biogas, LPG and ultimately to the electricity. Moving to the higher steps in the ladder means better respiratory health of the family members due to lower emission.