Household Energy Issues as Viewed by ESMAP

Dr Willem M Floor, Senior Energy Planner, ESMAP

1. During the 1990's, the developing countries (LDC) will have to deal with two major energy issues: a. Growing dependence on imported petroleum products for inter alia the power, transport and household sector, with its foreign exchange and national security implications; and b. Persistent and growing demand for woodfuels (firewood and charcoal) as an energy source, which is increasingly contributing to deforestation. Notwithstanding the differences between the LDC (and regions within these countries) in terms of income, resource endowments, population etc, there are a number of common elements in their household energy situation. First, the level of total energy demand is low in keeping with the level of per capita national incomes. Secondly, a high level of total energy use to meet household and informal sector energy needs, In the low income countries, between 70 and 90 % of total energy demand is attributable to household and informal sector use. The comparable proportion for the middle income countries is 40-60% on account of the requirements of their industries, commercial and transport sectors. Thirdly, most households use energy primarily to meet the basic human needs of cooking. Energy use for other purposes would only increase as the household income increases. The manner in which household energy demand is met in most LDCs comprises the fourth factor to be taken into cognizance. Woodfuels meet over 79% of household energy demand in most LDCs. Other traditional fuels such as agricultural and animal residues are important in some countries. The main reason for the predominant use of woodfuels in satisfying energy requirements are fourfold most woodfuel users are poor and unable financially to exercise the privilege of fuel choice; t h e costs of woodfuel are low relative to other fuels; t h e cooking devices which use woodfuels are inexpensive (the traditional charcoal stove) or free (the traditional three-stone fuelwood fire), and t h e distribution and marketing systems for modern fuels are, generally speaking, inadequate,unreliable and underdeveloped. 2. A factor which compounds the woodfuel problem is population growth. With current demographic development, the total population in the LDCs will double over the next 25 years, while that of the major urban centers will
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double every decade. For the major charcoal consuming countries, this factor is compounded by the fact that in primary energy terms, an urban charcoal consumer uses twice as much energy as a rural wood consumer. If urban households continue to consume woodfuels at the same rate, urban demand for woodfuels would represent between 50 and 80 % of total woodfuel use in many African countries by the end of the century. 3. The share of woodfuels in meeting household energy demand is projected to remain high irrespective of the country's income or urbanization level, since rising incomes and increased urbanization results only in gradual change in the type of fuel used. 4. On the woodfuel supply side, a key issue is that during the next decade, woodfuel demand in many LDCs will exceed sustainable supply; if immediate action is not taken, the resulting deficit will grow and exacerbate the ecological, agricultural and economic problems of these countries. Various actions have been undertaken by Governments and Donors, but reforestation has failed to increase, or even stabilize, the capital stock of wood. Although much remains to be teamed in detail about the subject, it is widely accepted that the rate of consumption of fuelwood greatly exceeds the rate of natural generation in many environmentally vulnerable areas in the LDC.s. The main reason for the uncontrolled exploitation of the natural forest cover, apart from land clearing, is that there is neither incentive for management of the existing forest cover leading to long-term sustained production of wood, nor for optimization of yields and profits. For the same reasons, improved charcoaling techniques have not been successfully disseminated. The combination of rising woodfuel demand and diminishing wood stock has led in many areas to devegetation. The resulting ecological destruction of the top soil and its fertility has caused agricultural and related socio-economic problems. 5. This situation has, as yet, not resulted in rising wood prices. In fact, we observe that the (urban) population is largely unaware of the long-term supply-demand fuelwood gap. The market efficiently supplies the consumer with a steady, uninterrupted supply of fuelwood at low prices, which are, however, considerably less than the economic cost of wood, due to the fact that in most cases taxes on wood) charcoal are insignificant and hardly collected. Despite nominal increases in prices of wood/charcoal, prices in constant terms have not risen, and in fact have even decrea-

sed. This also explains why improved stoves have not penetrated their potential market, with the possible exception of a few countries. However, at some stage in the future, wood prices are likely to rise sharply, which could cause considerable social hardship, since low-income urban families already spend a sizeable proportion of their income on fuel. 6. Thus, the question of Household Energy supply gives rise to a complex series of issues which have to be disaggregated on the basis of rural-urban differences as well as differences between regions within a country. The creation and implementation of reliable and productive energy supply-demand strategies, with the assistance of local men and women, is an essential element in the fight against environmental degradation. 7. These strategies will be built around five basis inter- c . ventions: a. To improve control over the exploitation of the forest cover, improved public and private management of the biomass stocks and supply system will be required. In the past, large and small scale schemes for reforestation, including woodfuel plantations, have been tried to expand the resource base. However, not only were the results disappointing, the schemes were also too costly. To help ensure that urban wood supplies can be maintained on a sustainable basis, schemes for the systematic management of the local vegetative cover need to be developed. The lack of financial and especially manpower resources places this task beyond the capacity of d . forestry services in the leDCs. As a result, if it is to take place, it will require an effective devolution of control to local people and communities. This means that local people need to have secure rights to an adequate return from the resources that they are managing. Questions of land tenure, usufruct, and revenues will therefore have to be resolved in a manner satisfactory to the rural populations involved. It would involve channeling woodcutting to the least fragile areas while protecting over exploited regions and modernizing the woodfuelicharcoal marketing system. To encourage local people in the supply of woodfuels on this basis, arrangements need to be created under which woodfuel transporters are encouraged to enter into contractual agreements with local communities, which have a surplus of woodfuel for sale. Forestry services should act to support such arrangements and ensure that they are respected by both sides. They also should see to it that woodfuel transporters pay stumpage fees which reflect woodfuel replacement cost. b. Accelerated and diversified interfuel substitution is an option that is complementary to and determined by the e .

woodfuel supply and demand management activities. Moreover, this only should be pursued to the extent that it is affordable by the economy (balance of payments, budget), is cost-effective, and really results in a substitution of fuel. Therefore, it is necessary to establish the

market's willingness to pay, its willingness to change, and not to exclude any fuel. In this respect, ES MAP' s leitmotiv is teach fuel has its market'. But to effectively compete with one another, these fuels need to be, priced at economic cost, they need to be available when and
wherever the consumer needs them; and finally, the

appropriate equipment needs to be available. Once all the above factors are in place, real fuel substitution can take place as is clear from the energy transition process in
some LDCs. Demand management comes down t o one word energy conservation through greater efficiency, Measures should be taken to reduce household fuel con sum ption by promoting more fuel efficient stoves and other energy conversion appliances such as better ovens. Also, behavioural changes can be stimulated through public education and sensitization campaigns to modify cooking habits. In addition, the efficiency of charcoal produc-

tion should be increased through the use of improved kilns. Currently, charcoal makers have no incentive to adopt improved charcoal techniques. Therefore, arrangements need to be put in place that will induce a change in their behaviour. The pricing mechanism can be used to guarantee that the market price of household fuels reflect their true economic cost. Adequate stumpage fees can be assessed and charcoaling and/or transport taxes can be collected at the city gate so that the real cost of sustainable fuelwood production is incorporated in the final price of firewood and charcoal. This requires the gradual introduction of economic cost for household fuels. These prices should be affordable to low-income consumers, while encouraging conservation and/or interfuel substitution. These pricing measures should be accompanied by the introduction of improved stoves which will enable consume r

to save energy and thus neutralize the price effect. This phased comprehensive pricing package is an alternatiN c
to explosive price rises that will manifest themselves at a late stage, if nothing is done. To develop these pricing policies, the economic and financial cost of producing. transforming and marketing fuelwood products need to

be established. At the same time, the institutional mechanisms for imposing and collecting relevant fees and tasC s
should be assessed and adjusted. Institutional development means manpower planning

management and training to enable both the public and private sector to formulate, implement, evaluate and adjust a household energy strategy. This entails identifying where quantitative and qualitative changes need to be made. It also means the identification of the various institutions that need to be involved in carrying out household energy policies, especially national and local women's organizations. Training of staff from these various institutions takes place both during the preinvestment study as well as during the implementation of the household energy strategy. From the above, it is clear that there is not one single solution. There is a variety of long and short-term policies and

technical interventions that complement each other, and when properly coordinated and supported by the government and people concerned, that can alleviate the energy and environmental problems in most LDCs.

This contribution has been condensed by the author. The complete paper is available from LCHS.

Publications from the World Bank

"Annual Report" , 1988, ESMAP Binswanger HP, 1989: "Brazilian Policies that Encourage Deforestation in the Amazon", Environment Department Working Paper No. 16 "Dakar, Senegal - Conference des Pays d'Afrique Francophone sur rEnergie Dornestique" , 1989, ESMAP "Fuelwood Stumpage: Considerations for Developing Country Energy Planning", 1989, Industry and Energy Department Working Paper Energy Series Paper No.16 "Improved Stoves Project - Niger", Activity Completion Report No. 080/87, ESMAP "Information and Status Report", 1988, ES MAP "Information And Status Report", 1989, ES MAP Leach G & Gowen M, 1987: "Household Energy Handbook, An Interim Guide and Reference Manual", World Bank Technical Paper No. 67 Magrath W, 1989: "The Challenge of the Commons: The Allocation of Nonexclusive Resources", Environment Department Working Paper No. 14 Nelson R, 1988: "Dryland Management - the Desertification problem", Environment Department Working Paper No. 8 "Proceedings of the ESMAP Eastern and Southern Africa Household Energy Planning Seminar", Activity Completion report No. 085/88 Southgate D, 1988: "The Economics of Land Degradation in the Third World", Environment Department Working Paper No. 2 Southgate D & Pearce D, 1988: "Agricultural Colonization and Environmental Degradation in Frontier Developing Economies", Environment Department Working Paper No. 9 Terrado E/Mendis M/Fitzgerald K, 1989: "Impact of Lower Oil Prices on Renewable Energy Technologies", Policy, Planning and Research Working Papers, Industry and Energy Department "Woodfuel Supply and Enviromnental Management" , 1989, Industry and Energy Department Working Paper, Energy Series paper No. 19

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