The Case of Harare in Zimbabwe

Economic Analysis of Urban Fuelwood Demand The case of Harare in Zimbabwe Muyeye Chambwera Promotoren: Professor Dr. H. Folmer Hoogleraar in de Algemene Economie Wageningen Universiteit, Nederland Professor Dr. W.J. M. Heijman Hoogleraar in de Regionale Economie Wageningen Universiteit, Nederland Promotiecommissie: Professor Dr. Ir. G.M.J. Mohren, Wageningen Universiteit Professor Dr. G. Antonides, Wageningen Universiteit Dr. Ir. W.J.H. van Groenendaal, Universiteit van Tilburg Dr. ir. H.A.J. Moll, Wageningen Universiteit Dit onderzoek is uitgevoerd binnen de onderzoekschool Mansholt Graduate School Economic Analysis of Urban Fuelwood Demand The case of Harare in Zimbabwe Muyeye Chambwera Proefschrift ter verkrijging van de graad van doctor op gezag van de rector magnificus van Wageningen Universiteit, Prof.dr.ir. L. Speelman in het openbaar te verdedigen op dinsdag 7 September 2004 des namiddags te vier uur in de Aula Muyeye Chambwera Economic Analysis of Urban Fuelwood demand: The Case of Harare in Zimbabwe Ph.D. Thesis, Wageningen University, Wageningen, The Netherlands, 2004 ISBN 90-8504-086-8 To My parents, my wife (Beatrice) and my son (Emmanuel) Acknowledgements This accomplishment was made possible by the support of many people. Given the choice, I would list the people to whom I am indebted for this success in alphabetic order, because I cannot list them in any order of importance. Thank you everyone. The research project leading to this thesis was supported by funding from WWF’s USAID-funded NRMP II project in Zimbabwe, SAIL in the Netherlands and WWF-US Many thanks go to all my supervisors. They each made huge contributions at various stages of my studies. Professor Henk Folmer at Wageningen University provided the main technical guidance during the entire course of my study. When I was most discouraged and challenged, he promised that a doctor would be produced out of me! He never accepted anything below standard, which at times I was not amused with, but it was all to my benefit. And going to the gym together at 5:00pm helped ease the pressure especially before the evening meetings. I also thank my administrative supervisor, Professor Wim Heijman at Wageningen University for taking care of my administration and financial affairs. These two men supervised me in an economic arrangement they called “division of labor.” I also thank Professor Kay Muir-Leresche and Dr Ivan Bond in Zimbawe, and Dr Greg Hertzler and Professor Michael Burton at the University of Western Australia for their contributions towards my studies. I enjoyed the company and support of many people in my department at Wageningen. The secretaries Annelies Coppelmans and Margaret van Wissen provided secretarial support in a manner that I can only say √√√ ladies. I am also delighted to have been in the company of Dr Pierre van Mouche, Dr Rein Haagsma, Professor Gerrit Antonides, Dr Jan Rouwendal, Dr Ophem of my department at Wageningen. My collegues-in-study in Wageningen, Morteza Chalak, Judith Cornelise, Pius Odunga, Subrata Dutta, Afaf Rahim, Beatrice Salasya, Regis Chikowo, Arnold Mashingaidze, and elsewhere, Florence Chokuda, Chiedza Gwata, Wavell Standa-Gunda, gave me the spirit i and “mob psychology” to carry on. The Zimbabwean community in at Wageningen University was always a great lot to do with during my several stays in the Netherlands. I would also like to acknowledge the support I got from World Wide Fund for Nature – Southern Africa Regional Office (WWF - SARPO) in Harare. I also acknowledge the support of Kate Newman and Amos Mugisha at WWF-US for managing my project under the grant from WWF-US. I also recognize the contribution of the research assistants Violet Muringayi, Takudzwa Fundira and Blessing Banda towards my studies, and that of the enumerators who helped me in the survey, not forgetting the households who gave their time and private information to make this study possible. My very special acknowledgements go to my wife Beatrice for supporting and encouraging me. Several times I left you alone as I went to the Netherlands, even at the time we were expecting our first baby! To my son Emmanuel, thank you for bearing with me when I arrived home from the Netherlands a day after you had been born, and when I left you when you were only two months old, and again when your first upper teeth were starting to come out. Many thanks go to my parents, brothers, sisters, and friends for their for moral support and prayers. And all praise goes to the Lord God for taking me this far. Muyeye Chambwera Wageningen, 7 September 2004 ii Abstract This study carries out an economic analysis of the demand for fuelwood in urban areas using Harare, the capital city of Zimbabwe, as a case study. The demand for fuelwood in urban areas is one of the causes of several environmental and health problems in Africa, where the up to 90% of energy requirements are met by wood. The study first develops an energy mix model as the conceptual framework, using the energy ladder hypothesis as a starting point. The energy mix model is based on the fact that in any one period, urban households use multiple sources of energy. Consumer theory is used to underpin this reality, and link it to the analyses that follow. System of demands is used in the empirical analysis, using the Almost Ideal Demand System (AIDS model), in linear approximate form, as the empirical model, incorporating the effects of other household characteristics in addition to income and prices. A multi-stage budgeting process is used the analyses, which assumes that households first decide how much of their total expenditures to allocate to energy, among other household goods. At the second stage, they decide how much of their total energy outlays to allocate to specific fuels. Empirical analyses are carried out using household survey data collected in Harare from a sample of 500 households. The share of energy in total expenditure is shown to be 13% and 11% for electrified and unelectrified households respectively. For all households, total energy expenditure increases with total household expenditure. Other factors that explain household differences in total energy expenditure shares are household size, energy-using appliances owned, the number of rooms owned, the number of families living together at the same property and the level of education of the household head. The main sources of energy are electricity, firewood and kerosene, accounting for 73%, 14% and 13% of total energy expenditure respectively. Electrified households spend 81%, 9% and 10% of their total energy outlays on these fuels respectively, while unelectrified households spend 55% and 45% of their total energy budgets on firewood and kerosene respectively. Among electrified households, the share of the energy budget allocated to fuelwood iii increases as household size, the number of households living together at the same property, the number of rooms being used by a household, the prices of electricity and kerosene increase. It decreases with total household expenditure, the educational level of the household head, the value of energy appliances, the square of household size and the price of fuelwood. Among unelectrified households, the share of fuelwood in the energy budget increases with total energy expenditure, the value of appliances, household size, the educational level of the household head and the price of kerosene. It decreases with households living together at the same property, the square of household size, the number of rooms used and the price of fuelwood. The shares of other fuels estimated in the same system of equations respond in different ways to these variables. The main policy implication of the findings is that fuelwood demand management is best approached by taking the whole energy urban system into account. The specific management options are pointed to by the response of demand to the different demand variables. Total electrification will not eliminate urban fuelwood demand if other demand variables are not attended to. iv Contents Acknowledgements i Abstract iii Contents v 1 GENERAL INTRODUCTION 1 1.1 Introduction 1 1.2 Problem specification 4 1.3 Economy-environment linkages 6 1.4 Study Objectives 9 1.4.1 Methodology 11 1.5 Thesis outline 11 2 ZIMBABWE BACKGROUND: ENERGY CONSUMPTION AND THE ECONOMY 13 2.1 Introduction 13 2.2 Characteristics of urban energy consumption 13 2.3 Zimbabwe’s Physical Characteristics 17 2.4 Demographic structure 21 2.5 Economic environment 22 2.6 Background to fuelwood and energy consumption 27 2.6.1 Africa and the developing world 27 2.6.2 Energy and fuelwood consumption: Zimbabwe 28 2.6.3 Fuelwood acquisition in Harare 32 2.7 Likely impact of economic environment on urban energy consumption 33 2.8 Policy and institutional environment of the energy sector in Zimbabwe 35 2.9 Environmental Impact of fuelwood consumption 38 2.10 Conclusion 41 v 3 CONCEPTUAL FRAMEWORK OF HOUSEHOLD ENERGY CONSUMPTION 43 3.1 Introduction 43 3.2 Fuel substitution and the energy ladder model 43 3.3 A critique of the energy ladder model 49 3.4 The energy mix model 52 3.4.1 Formal presentation of the energy mix model 55 3.5 Conclusion 60 4 THEORETICAL BASIS OF THE EMPIRICAL DEMAND MODEL 61 4.1 Introduction 61 4.2 Theory of consumer demand 62 4.2.1 Specification of the theory 62 4.2.2 Theoretical postulations 68 4.3 Household budgeting process 70 4.4 Systems of demand 72 4.4.1 General properties of systems of demands 72 4.4.2 The Almost Ideal Demand System 75 4.4.2.1 AIDS Specification 76 4.4 Incorporation

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