Gross Value Added of Wood Fuel Production in Ethiopia

Abstract

Ethiopia is among the developing countries dependent on solid biomass energy source. Wood-fuel is among the dominant solid biomass energy source used by all households in the country. Charcoal and firewood are the source of income for the poor rural households and primary fuel in most rural and urban areas of Ethiopia. The gross value added from value chain across all levels of wood fuel production in Ethiopia was about USD 5,858 million, accounting about 4.5% of the GDP in 2014. It increased to USD 6,419 million in 2015. It is difficult to present the cost-benefit distribution along the chain of charcoal production and marketing because it passes through informal channels. Large number of people are employed in the various phases of the charcoal value chain, including: tree harvesting; sizing of wood; preparation of charcoal kilns; loading the wood into kilns and unloading charcoal after conversion; unloading, bundling, packaging and transportation, and marketing. However, that distribution of income and profit in charcoal production-supply channel in Ethiopia is highly skewed toward the producers, that is, 75% of the total revenue/bag. Even though, wood-fuel production generates significant income to rural poor, the production and consumption of both charcoal and firewood is inefficient and unsustainable causing environmental problems. Therefore, there is a need for institutional interventions that promote and regulate more environmentally friendly means of production. Promotion of improved cook stoves (ICS) can increase energy efficiency and sustainability. We recommend using alternative renewable energy sources like biogas and electricity (hydroelectric power, electricity from wind power and thermal energy) to reduce the environmental impact wood-fuel production and consumption.

Keywords: Wood fuel, gross value added, value chain, gross domestic product, Ethiopia

DOI: 10.7176/JETP/10-7-01

Publication date: November 30^th 2020