Ecological Economics 35 2000 243 – 257
ANALYSIS
Economics of charcoal production in miombo woodlands of eastern Tanzania: some hidden costs associated with
commercialization of the resources
E.J. Luoga, E.T.F. Witkowski , K. Balkwill
Department of Animal, Plant and En6ironmental Sciences, Uni6ersity of the Witwatersrand, Pri6ate Bag
3
, WITS
2050
, Johannesburg, South Africa
Received 21 October 1998; received in revised form 1 May 2000; accepted 10 May 2000
Abstract
This paper assigns monetary values to commercial production of charcoal using traditional earth kilns in the miombo woodlands surrounding Kitulanghalo Forest Reserve in eastern Tanzania, through cost – benefit analysis
CBA. Charcoal is the most commercialised resource in the study area and the net present value NPV for the charcoal business over a 15-year period was US 511 ha
− 1
. The profit from charcoal production is attributable to very low capital outlays, ‘free’ own labour, ‘free’ raw materials, lack of concern about associated external costs and
high demand for charcoal. When the cost of labour, raw materials and opportunity costs were considered, the NPV value was negative US − 868 ha
− 1
, indicating that profit realization is accomplished at the expense of other potential uses of the woodlands. The estimated local wood consumption for charcoal of 6.01 m
3
capita
− 1
year
− 1
is very high compared to subsistence firewood consumption of 1.5 m
3
capita
− 1
year
− 1
. The estimated area cleared for charcoal production locally was 1671 ha year
− 1
, which was about 13 of surrounding easily accessible communal woodlands in the area B 5 km from settlements and B 10 km from the Dar-es-Salaam – Morogoro highway, which
were estimated to cover 13 350 ha. This shows that although commercialisation of wood resources provides tangible monetary benefits to rural communities, it also contributes to the resource depletion that will ultimately threaten their
long-term survival. We recommend some policy interventions in order to safeguard the resources. © 2000 Elsevier Science B.V. All rights reserved.
Keywords
:
Cost-benefit analysis; Net present value; Opportunity cost; Wood fuel www.elsevier.comlocateecolecon
1. Introduction
The fuelwood crisis in most Southern African Development Cooperation SADC countries has
Corresponding author. Fax: + 27-11-4031429. E-mail
address
:
edgecko.biol.wits.ac.za E.T.F.
Witkowski. 0921-800900 - see front matter © 2000 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 1 - 8 0 0 9 0 0 0 0 1 9 6 - 8
been highlighted since 1980 International Insti- tute for Environment and Development, 1980,
but it continues unabated Monela et al., 1993; Kaale, 1995. About 90 of the total energy
consumption biomass, petroleum, electricity and coal of Tanzania is fuelwood, compared with
only 14 in South Africa SADC, 1993. Most of the fuelwood is obtained from miombo wood-
lands, which are dry tropical woodlands covering nearly 3 million km
2
in Africa and inhabited by \
40 million people Clarke et al., 1996. The demand for fuelwood is rising due to the relatively
high cost of electricity and petroleum-based fuels e.g. paraffin as well as the rapid human popula-
tion growth, particularly in urban areas Deudney and Flavin, 1983.
In Dar-es-Salaam, Tanzania, the consumption of charcoal was positively related to its price, and
price elasticity of demand for charcoal was also positive Shechambo, 1986. The main reason for
this market trend is that charcoal is a complemen- tary commodity, as it requires metal or ceramic
stoves for it to be consumed. These stoves are cheap, affordable and readily available in the
market as compared to electric and gas cookers Shechambo, 1986; Luoga et al., 2000a. The im-
pact of the commercial charcoal industry on the vegetation around urban areas in miombo wood-
land
has been
relatively well
documented Mashalla, 1979; TFAP, 1989; Chidumayo, 1991;
Monela et al., 1993. In Tanzania, the areas neighboring Dar-es-Salaam are particularly badly
affected TFAP, 1989; Monela et al., 1993.
In resource economics, the economic definitions of ‘benefits’ and ‘costs’ have been expanded
Pearce, 1993. Total economic value TEV com- prises actual use values and non-use values, with
the latter describing option and existence values. Direct use values are conceptually fairly straight-
forward, but are not necessarily easy to measure in economic terms Pearce, 1993, while non-use
values are normally difficult to determine Turner et al., 1994; Costanza et al., 1995. The ap-
proaches used to determine non-use values are often based on willingness-to-pay WTP tech-
niques Turner et al., 1994, but these techniques are only used reliably in situations where it is
possible to impute a value to the unpriced goods or services Tobias and Mendelsohn, 1991; North
and Griffin, 1993; Goulder and Kennedy, 1997 and are almost impractical to apply in most eth-
nobotanical studies as the questions are probably too hypothetical to elicit consistent responses
from rural people Martin, 1995; Clarke et al., 1996.
Informal trading in savanna e.g. miombo woodland products is more economically reward-
ing near cities Monela et al., 1993 and along main roads Campbell et al., 1997 than in villages
because of very limited market opportunities due to lower purchasing power in rural areas. The
primary value of savanna woodlands lies in do- mestic and subsistence uses within households
Shackleton, 1993; Campbell et al., 1997; Shackle- ton et al., 1999; Luoga et al., 2000a and hence
finding suitable prices as a basis for valuation is often difficult because of the nature of a subsis-
tence economy. Local people have twelve types of uses for trees in miombo woodlands of eastern
Tanzania, which are charcoal, firewood, poles, timber, medicine, withies, food, fibre, live fences,
carving, spiritual and other technological uses Luoga et al., 2000b. Of these, charcoal produc-
tion had the highest use value accounting for 18.4 of total use value and was followed by
firewood 16.6 Luoga et al., 2000b. Prices of forest products in such local economies are fre-
quently determined through surveys Campbell et al.,
1997 unlike
products in
industrialised economies, where there are readily available re-
ported price data. However, for the commercial products derived from ecosystems, the market
prices represent only the marginal values of the products which are less than actual values Goul-
der and Kennedy, 1997. Miombo woodlands also perform vital ecosystem services such as carbon
sequestration, nutrient cycling and watershed pro- tection Scholes, 1996.
This study assigns monetary values to commer- cial charcoal production using traditional earth
kilns and determines the importance of the indus- try to the economies of the local producers
through cost – benefit analysis CBA. When CBA is undertaken from a societal perspective, several
other factors may need to be included. Firstly, there is the need to take into account external
costs and benefits; secondly, adjustments may be needed in the market prices of inputs and outputs
to account for price distortions; and thirdly, con- sideration and estimation of any forward and
backward links to the primary charcoal produc- tion industry Abaza, 1993; Dosman and Luckert,
1998.
Specifically, this study focuses on answering two major questions in public miombo woodlands sur-
rounding the Kitulanghalo Forest Reserve: 1 What is the value of charcoal production the main
commercial activity in the area from the produc- ers’ point of view? And 2 is the full cost of
charcoal production being acknowledged?
2. Study area
