Cost/benefit analysis of biomass energy supply options for rural smallholders in the semi-arid eastern part of Shinyanga Region in Tanzania

Abstract

This study analyzes the economic feasibility of sustainable smallholder bio-energy production under semi-arid conditions. The eastern part of Shinyanga region in Tanzania was chosen as a case study area. Three different sustainable biomass energy supply systems were compared by means of cost/benefit analysis: a small-scale forestation project for carbon sequestration, a short rotation woodlot and a Jatropha plantation, thereby using the produced Jatropha oil as a substitute for fuelwood or diesel. Rotational woodlots are most profitable with a Net Present Value of up to US$₂₀₀₇ 1165/ha, a return on labour of up to US$₂₀₀₇ 6.69/man-day and a fuelwood production cost of US$₂₀₀₇ 0.53/GJ, compared to a local market price of US$₂₀₀₇ 1.95/GJ. With a production cost of US$₂₀₀₇ 19.60/GJ, Jatropha oil is too expensive to be used as an alternative for fuelwood. Instead it can be utilized economically as a diesel substitute, at an observed diesel cost of US$₂₀₀₇ 1.49/l. The mean annual biomass increment (MAI) in semi-arid East Shinyanga is too low to collect sufficient benefits from trading forestation carbon credits under the Clean Development Mechanism (CDM) to cover the costs of forestation and forest management.

Introduction

Traditional biomass is the main energy source in many developing countries. Its use is still growing in absolute terms due to a rapid population increase [1]. The need for traditional biomass energy, mainly fuelwood and charcoal, places a high burden on forest resources in many developing countries [2]. One of the major problems of current patterns of traditional woodfuel is a low energy efficiency of 7–12% and 11–19% for fuelwood and charcoal, respectively [3], [4]. Especially in the world's drylands, deforestation leads to severe degradation of soils and energy poverty [5].

In Tanzania, traditional biomass accounts for 92% of the energy supply [6]. Access to electricity in Tanzania is one the lowest in the world. In 2001, only 10% of the population had access to electricity and only 2% in rural areas [7]. The low electric load density and the use of relatively expensive generation technology in isolated grids, leads to relatively high costs for electricity supply compared to national-grid-connected households [8]. Kerosene is the most widely used fuel for lighting [7] and increasing kerosene prices pose an additional burden on many rural households.

The semi-arid eastern part of Shinyanga region in Tanzania, was chosen as a case study area. It is considered representable for a dry region in Africa where energy poverty is prevalent. Fuelwood scarcity in rural Shinyanga has led to commercialization, because for many women the distance to natural woodlands is too long to walk. In 1998 it was surveyed that 62% of the population was buying fuelwood. As a result, fuelwood consumption is considerably lower as the Tanzanian average [9]. To combat uncontrolled deforestation, the government imposes permits for legal wood production from both public and private land, against an annual registration fee. Furthermore, taxes are levied on each unit of wood produced. However, because of a lack of law enforcement, the majority of charcoal and fuelwood is produced illegally [10]. Charcoal is sold in two qualities: locally produced, lower quality acacia charcoal and higher quality Miombo charcoal, produced in the sub-humid West Shinyanga and Tabora regions.

To decrease local energy poverty, combat forest and land degradation and as an intermediate step towards a modern energy provision, small-scale sustainable biomass energy production could be an effective tool. However, since yields are relatively low and people are generally poor, economic constraints towards implementation are serious. This study aims to explore the economic feasibility of implementing a sustainable biomass energy supply in semi-arid conditions on the smallholder level. Various alternative systems are possible. In Tanzania, agroforestry systems are well-recognized as a technology that can significantly improve the rural energy situation [11], [12]. Furthermore, planting trees for CO₂ mitigation could provide income for local communities by trading ‘carbon credits’ and at the same time provide a sustainable source of fuelwood [13], [14]. Alternatively, woodfuel could be replaced by an alternative energy carrier, like plant oil from the shrub Jatropha curcas L. On Jatropha oil production, limited literature on economic costs and benefits could be found [15], [16], [17], [18]. Furthermore, comparative cost/benefit analysis of such systems could not be found. In order to determine the most feasible biomass energy system in semi-arid Shinyanga, this study analyzes and compares the economic costs and benefits for smallholders of these three different biomass energy supply systems: (1) A small-scale forestation project for carbon sequestration, which can be a sustainable source of fuelwood, (2) a short rotation woodlot for the sustainable production of fuelwood, charcoal or poles and (3) a Jatropha plantation, thereby using the oil as a substitute for fuelwood or for rural electrification.

The eastern part of Shinyanga region is a part of the vast semi-arid highland plateau in central Tanzania, which covers up 30% of the total land surface [19], [20]. Rainfall is unimodal but variations in rainfall pattern and quantity are large. Historically, Shinyanga was covered by Miombo woodlands towards the west and acacia savannah towards the east. However, massive deforestation for the expansion of livestock and agriculture led to severe land degradation and water shortage [21]. From 1986 this trend was successfully slowed down and reversed by encouraging traditional land management based on regeneration [9], [21]. Shinyanga is one of Tanzania's poorest regions with an average income of US$₂₀₀₇ 186 and US$₂₀₀₇ 400 for rural and urban households, respectively [7], [19], [22], [23], [24], [25]. About 80% of the population belong to the Sukuma, who are agro-pastoralists. Shinyanga has by far the largest livestock population in Tanzania, resulting in severe overgrazing [26], [27]. Over 46% of the land surface is considered to be arable land [25] and agriculture is the main economic activity. Maize and sorghum are the main staple crops, while cotton and tobacco are the main cash crops [19]. The yields in Shinyanga are below the Tanzanian average, which is mainly because of the inherent low soil fertility, low fertilizer inputs, poor rainfall and poor traditional crop management [9]. Crop production used to be characterized by shifting cultivation and long fallow periods. Due to increasing population pressure, this has changed to almost permanent cultivation [9]. Nevertheless, smallholders are generally more constrained by their labour capacity as by their land capacity, as the average farm size is still the largest in Tanzania [28].

Both the national and local governments have undertaken several initiatives towards forest planting in Shinyanga. These initiatives were largely unsuccessful mainly because of poor forest management due to a lack of public responsibility for maintaining the forest [29]. Potentially, this could be improved by trading carbon credits obtained from forestation, thereby rewarding good forest management. Afforestation and reforestation activities are included in the Clean Development Mechanism (CDM) under the Kyoto Protocol, using temporary, expirable carbon credits [30]. A key criterium for this mechanism is so-called additionality. Greenhouse gas reduction should be additional to the baseline, meaning that projects that are already economically feasible without the benefit of trading carbon credits are not eligible under the CDM.

Parallel to the CDM, a voluntary market for carbon offsets has emerged. Many voluntary afforestation projects follow general CDM guidelines [31]. In this analysis, both trading Certified Emission Reductions (CERs) under the CDM and Voluntary Emission Reductions (VERs) on the voluntary carbon market are analyzed. These carbon trade mechanisms are not included in the other two systems, rotational woodlots and Jatropha oil production. Rotational woodlots are already practised in Shinyanga and are likely to be economically feasible in the baseline, thus not complying to the additionality criterium. Jatropha shrubs are simply not eligible as carbon sinks within the CDM mechanism.

In order to decrease the CDM transaction costs for smaller size projects, ‘lighter’ methodologies were developed, which may not generate more than 8 ktonne CO₂ equivalent per annum and are specifically aimed at low-income communities and smallholders [30], since the combined effort of groups of smallholders can store a significant amount of CO₂ on smallholder land [14], [32]. However, this does not stimulate fuelwood production, since smallholders would not harvest any wood when the benefits of carbon income are higher as the opportunity costs of harvesting and selling fuelwood or timber, and vice versa. Alternatively, marginal general land can be used for a more centrally organized carbon forest. General land falls under local customary law and is used for grazing, as is basically all land in Shinyanga. In order for a carbon forestry project to be successful, therefore the local population has to be involved and benefit from the project, so that competition for land is avoided [33], [34]. For example, forestation on such degraded grasslands can significantly improve fodder production, since different fodder resources like foliages, including leaves, pods and seeds become available [34], [35], [36]. Furthermore, apart from fuelwood, non-wood forest products such as herbal medicines, mushrooms, meat from small wildlife, gum, honey from bee-keeping can be obtained from such woodland [19].

Various agroforestry technologies exist in Shinyanga for the purpose of improving fuelwood supply, fodder production and combating soil degradation. For each purpose, different tree species are preferred by local smallholders [9]. When combining tree planting and crop production, management efforts benefit both trees and crops. In this way, both land and labour utilization can be optimized [37]. When agroforestry is focussed on wood production, short rotation woodlots are practised, using fast-growing tree species [38]. Rotational woodlot technology involves growing of trees and crops on farms in three inter-related phases. During the first phase, trees and crops are planted. After this establishment phase, the tree crown cover causes crop yields to become uneconomical. In this phase the area is left fallow and cattle is allowed to graze. At the start of the last phase, the trees are harvested and crops are planted in between the tree stumps. Coppice shoots are pruned so that single new stems emerge [39]. The trees not only have the capacity to provide wood and fodder, but can also function as a natural fertilizer by fixing nitrogen in the soil, which increases crop yields. Yields can thus be maximized by using smart combinations of trees and crops.

In Sub-Saharan Africa, producing biofuel from the shrub Jatropha Curcas L. (hereafter named as Jatropha) is by many regarded as a promising alternative for rural communities [15], [16], [17], [40], [41]. Jatropha grows relatively well on poor soils and on severely degraded land. It is reported that Jatropha is suitable for reclaiming marginal land, though seed production under marginal conditions is not yet validated [42]. Potential seed yields strongly differ per location, management method and variety and range from 0.4–12 tonne per hectare after five years of growth [15]. Jatropa needs a minimum of 600 mm of rain annually to be productive, but is able to withstand long droughts, in which it sheds its leaves [15]. Jatropha is traditionally used for soap making, as a medicine and for protective hedges around fields, since its leaves and fruits are poisonous [15], [16]. It is presently still a wild plant that is not cultivated through variety research [43]. Its seeds contain non-edible oil, which can be extracted by cold pressing, using a manual ram press or a mechanic oil expeller. The latter has a significantly higher oil extraction rate, but against much higher investment costs [16]. The remaining seedcake is an excellent organic fertilizer [15], [44]. Because of its high viscosity, filtered Jatropha oil can generally not be used instantly as a fuel in conventional diesel engines, electricity generators, wick-lamps or wick-cooking stoves [18], though Jatropha oil can be blended with diesel [45]. For household applications like cooking and lighting, solutions towards the use of Jatropha oil are hardly available. One plant oil cooking stove could be found [46].

The three systems will be compared based on cost/benefit analysis using the present situation in East Shinyanga as baseline. The methodology for analyzing this baseline and the three biomass energy systems are explained in chapter 2. In chapter 3, the input data is presented after which the results are presented in chapter 4. Finally, this analysis is discussed and conclusions are drawn.