An econometric analysis of factors determining charcoal consumption by urban households : the case of Zambia

University essay from SLU/Dept. of Economics

Abstract: The purpose of this thesis is to pin down the factors determining charcoal consumption by urban households in Zambia. These factors are important in facilitating smooth policy formulation in the areas of health, environment and energy planning. The thesis uses urban household consumption survey data collected during the dry and rainy seasons during the period 2007-2008. The data information being used is a product of an extensive survey on household monthly total expenditures in urban Zambia. The biprobit and the Heckman selection models were used to analyse the factors affecting the likelihood of consuming charcoal and demand for charcoal respectively. The results suggest that as household’s per capita total expenditure rises, per capita charcoal consumption increases at a decreasing rate – implying that per capita consumption of charcoal increases in tandem with per capita expenditure until it reaches its maximum and thereafter starts falling. Price of charcoal was also found to be negatively related with per capita charcoal consumption. The notable socio-economic factors driving charcoal consumption were found to be low education, poverty factors such as low income, low wealth and poor household access to electricity. Given that policy formulation in the areas of health, energy and environment would be based on reducing charcoal consumption, mitigation measures on consumption of charcoal were identified. Among others were 1) to increase the income of poor households so that they can have access to electricity, 2) to increase the usage of energy efficient equipments such as the efficient charcoal stoves, 3) finding efficient less carbon fuel-substitutes for charcoal, 4) making electricity both accessible and affordable through investing in hydro-electricity generation. Adoption of the afore mentioned measures would help in reducing demand for charcoal leading to reduction in pollution, deforestation and on a more general level, mitigating adverse effects of charcoal consumption on the environment as a whole.

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