Economic Analysis of Urban Fuelwood Demand - The case of Harare in Zimbabwe

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 fo11ow. 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 a11ocate to energy, among other household goods. At the second stage, they decide how much of their total energy outlays to a11ocate to specific fuels. Empirical analyses are carried out using household survey data co11ected 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 a11 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 a11ocated to fuelwood 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.