This study examined the demographic and socio-economic determinants of households'rninvolvement in charcoal production in rural areas of Ziway Dugda Wereda of Arsi Zone. Bothrnprimary and secondary data were used. Primary data were generated from household survey, keyrninformants and Focus Group Discussions.rnSecondary data were collected from Journals, books, Ziway Dugda Wereda and Arsi ZonernGovernment Offices. Using SPSS, data were analyzed and some relationships between dependentrnvariable (engagement in charcoal production) and independent variables (demographic andrnsocio-economic features of the households) were explored. Logistic Regression Model was usedrnto explore variation of the dependent variable based on variations made by independentrnvariables and to rank the relative importance of each in dependent variable.rnAs expected, households with large landholding and livestock holding size less involve inrncharcoal production. Similarly, male-headed households more involve in charcoal production. Inrncontrmy to what was expected, ages of the household heads and households' family size arernpositively correlated with involvement in charcoal productiOn. Moreover, as literacy level ofrnhousehold heads increase, involvement in charcoal production also increases.rnThe findings of this study have both academic and practical purposes. The academic benefit isrnimproving knowledge on how various socio-economic facto rs shaping the attitudes and activitiesrnof the rural households towards the environment. The practical benefit is for policy formulationrnin the areas of poverty, energy and environment linkage. Finally, the author of this thesis callsrnfor further studies in other charcoal producing areas to validate the results obtained in thisrnstudy.