An econometric analysis of demand for charcoal in Tanzania: the case of Dar es Salaam and Mwanza
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Date
1984
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Publisher
University of Dar es Salaam
Abstract
The impact of the dual energy crisis, consisting of increasing oil prices in the past decade and the shortage of fuel wood (firewood and charcoal) and other traditional forms of energy, has attracted the interest of researchers, academicians, planners and policy makers the world over. Increasing oil prices have imposed heavy strains on the economies of non-oil producing countries at aggregate level and well as at the level of individual economic agents. And the other hand, the shortage of fuel wood has not only imposed difficulties on those who depend on it, but also threatens the quality of the environment. Both crises seem to reinforce one another. Rising oil prices induce an increase in demand for fuel wood whose supply is dwindling. This study looks at an aspect of the fuel wood crisis namely, the consumption of charcoal in urban areas where charcoal is the main source of energy for the majority of the people. There is evidence that the charcoal industry is one of the causes of deforestation especially in areas surrounding big cities. The study specifically seeks to identify and measure the influence of the major determinants of demand for charcoal in two urban areas of Tanzania, i.e. Dar es Salaam and Mwanza. The purpose is to obtain estimates of demand functions for charcoal which can be used for forecasting future consumption levels. If this is achieved, it can help policy makers in trying to solve the problem of deforestation by having information on the demand/supply situation of various wood products, and in this case, charcoal. Determinants of demand for charcoal at household level are examined using household budget survey data for Dar es Salaam and Mwanza. Also an aggregate demand analysis for Dar es Salaam is attempted. In both cases econometric techniques are used. The main findings are as follows: In Dar es Salaam at household level, the significant determinants are family size and supply and price of kerosene which is the main substitute of charcoal. The income factor did not appear to be very crucial. In Mwanza, the significant determinants are family size, income and supply and price of electricity. In the latter town, firewood seems to be the main source of energy rather than charcoal. Indeed, the significance of various determinants of demand for charcoal clearly reflects the end-use pattern of the various forms of energy in each urban area which differs significantly. At the aggregate level in Dar es Salaam, the significant determinants are population, income, price of charcoal, price of kerosene and time factor (a proxy for tastes and preferences). Average elasticities at the aggregate level are estimated as follows: population (6.85), price of charcoal (1.93), income (-1.16), price of kerosene (-0.93) and time (-1.68). At the household level they are as follows: In Dar es Salaam: family size (0.34), expenditure on kerosene (0.57). In Mwanza: family size (0.67), income (0.012) and expenditure on electricity (0.46). From the above findings, short-run and long-run policy implications are suggested. In the short-run since charcoal and firewood will continue to be the main sources of energy, it is important to increase the supply of wood through afforestation, conservation and better management of existing wood resources. It is also important to check consumption of wood by improving the efficiency of cooking stoves and charcoal making kilns. In the longer run, it is necessary to check on population growth rate through a population policy, increasing national output so that more foreign exchange is made available for the importation of adequate oil products, electric and gas cookers etc. Also encouraging the use of electricity and other alternative energy sources will help reduce dependence on wood fuels and hence save forests and the environment.
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Keywords
Consumption (Economics), Surveys, Dar es Salaam and Mwanza, Charcoal, Supply and demand
Citation
Shechambo, F. C. M (1984) An econometric analysis of demand for charcoal in Tanzania: the case of Dar es Salaam and Mwanza, Masters dissertation, University of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/detail.aspx?parentpriref=)