We present a quantitative dynamic simulation model as a system study for rural household-biomass fuel consumption in LDCs such as Bangladesh. The rural areas of Bangladesh serve for model validation. The parameters, constants and initial values in the model represent present conditions. The performance of the system has been evaluated by incorporating alternative policies, and the model has been simulated to project the status of the system over an extended period of time. Several variables have been selected to assess system response as well as the impacts of policies. An assessment of household-biomass fuel consumption impact on environmental degradation is made for deforestation.