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Saving Africa's tropical forests through energy transition: A randomized controlled trial in Tanzania

Yonas Alem and Remidius D. Ruhinduka

No 885, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: The production of charcoal to meet cooking needs of urban households is one of the main causes of deforestation and degradation of Africa's tropical forests, which offer significant carbon sequestration capacity to the global economy. In collaboration with a reputable local microfinance institution, we designed a randomised controlled trial in urban Tanzania and offered LPG stoves through subsidy and on credit to measure their impact on charcoal consumption and the corresponding reduction in deforestation. We also investigate the impact of the stoves on cooking time of women, who are the default cooks of the household. We find that, relative to households in the control group, adoption of LPG stoves reduced charcoal consumption by about 30% in the treatment group 15 months after the intervention. This corresponds to an average reduction in deforestation of 0.04 ha/household/year. However, providing subsidies for stove purchases resulted in a larger reduction in charcoal use (38%) than did providing access on credit (27%) with the corresponding likely reduction in deforestation by 0.05 and 0.03 ha/household/year respectively. A social cost-benefit analysis suggests that the cost of both programs is far below the benefits of the averted carbon dioxide CO2 due to possible reduction in deforestation. A carefully conducted controlled cooking test shows that cooking with LP gas is 50% cheaper than cooking with charcoal and it reduces cooking time by about 44% - welfare effects clearly indicating that LPG is cost-effective to the household as well. We highlight the importance of relaxing households' financial constraints and improving access to credit to encourage urban households to switch to cleaner energy sources and save the remaining forest resources of Africa.

Keywords: charcoal; deforestation; carbon dioxide; LPG stoves; liquidity constraint; credit (search for similar items in EconPapers)
JEL-codes: G21 H31 O10 O13 Q23 Q51 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-afr, nep-agr, nep-ene and nep-env
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:885

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