Impact of Household Income on Energy Patterns in

Impact of Household Income on Energy Patterns in Botswana: Implications for Economic Growth and Forest Biodiversity Conservation. Charity K. Kerapeletswe Botswana Institute for Development Policy Analysis (BIDPA)

Objectives of Study § To establish fuel-specific consumption patterns of income groups in Botswana § To assess the effect of increase in household income on household energy consumption patterns Ø Investigate whether the energy ladder hypothesis apply to households in Botswana § To establish factors that contribute to choice of energy sources in Botswana and assess implications forest biodiversity and economic growth

Theoretical Background § The energy–economic growth (GDP) relationship - energy is an input in the growth and development process (Reddy, 1998; § Studies from developing countries generally reveal that the that households climb the energy ladder as their income increases (Jack, 2004; Barnes et al. , 1998; Davis, 1998) § Bardhan et al (2002) provide evidence from Nepal that suggests that households may not climb the energy ladder if supplies of cleaner fuels are lacking § Some studies of forest use have demonstrated that demand for biomass energy especially firewood, have direct relationship with household income up to an income threshold level, after which households switch cleaner fuels. (Chaudhuri and Pfaff, 2003; Rosenzweig and Foster, 2003; Leach, 1992).

Methodology § Household Energy Consumption Survey in 2006 Ø 1500 urban households § Area classified as urban if 75% of inhabitants derive livelihood from non-agricultural sources Ø 1000 rural households ØData analysis employs descriptive statistics and econometric models

Botswana Background § Often hailed as Africa success story of economic growth-one of the poorest in 1966; middle income by 1997 § Narrow economic base (mining – more than 30% of GDP) § High unemployment of about 24% § High incidence of HIV/AIDS (32. 4% in 2006) § eroding the previous social development achievements § Contributing to increase in incidence of poverty through loss of household bread winners

Botswana Settlement Patterns • Increase in urban population may increase demand for energy given the energy-intensive lifestyles • There the may be increased energy switching from biomass to cleaner energy sources

Poverty and Rural/Urban Split § Incidence of poverty is high in rural areas § Incidence of poverty is more than 20% in urban areas except in Jwaneng (mining town; 3. 16) and Gaborone (capital city; 6. 79%) (2003); And 30. 2% (2006)

Skewed income distribution poorest 40% of the population receiving 12% of total income middle 40% receive 29% of total income and richest 20% receive 59% of total income.

Botswana Energy Policy Framework NDP 7 (1991 -1997 BEMP 1996 (1985 -1996) NDP 8 (97/98 -2002/03) Vision 2016 (1997) NDP 9 (2003/042008/09) BEMP 2004 Energy policy 2005 • National Development Plans 7 -9 and Botswana Energy Master Plan (BEMP of 2004) emphasize rural electrification • Vision 2016 seeks to expand electricity to all by 2016

Botswana Energy Policy

Electricity Generation Botswana Power Corporation has sole responsibility for power generation Ratio of local generation to imports is 25: 75 percent

Final Energy Consumption by Sector • Household sector is the biggest energy consumer of energy • Major source of energy for household sector is non-commercial

Preliminary Findings Energy and economic growth in Botswana

Household Energy Consumption in Botswana § Sources of Energy for Households in 2006 § Fuelwood § Liquid Petroleum Gas (LP Gas) § Electricity § Households spend 24% of household income on energy

Household Connection to National Electricity Grid • At national level only 22% of households are connected to electricity • 43. 3% of urban households are connected to national grid • 17. 1% of rural households are connected to national grid

Fuel Use Patterns by Income Group

Use of Electricity for Cooking by Income Group

Use of Fuelwood for Cooking by Income Group

Use of Gas for Cooking by Income Group

Factors that Influence Energy Choice

Preliminary conclusions § Increase in income (GDP per capita) increase energy consumption per capita – this may not directly increase demand for cleaner energy sources due § § Households in Botswana are multiple energy users; with fuelwood and gas being used to energy intensive uses (e. g. cooking) § § Skewed income distribution which limits poor households in switching from fuelwood use to commercial fuels High unemployment rate due to undiversified economy limit household income generating capacity and hence switch to commercial fuels High incidence of poverty and HIV/AIDS limit ability of households to expand income sources and switch to commercial fuels Rural electrification program adds electricity to household energy portfolio without promoting energy switching due to high tariffs Electricity is hardly used for energy intensive uses even among households which are connected to national grid § § § Electricity is used mainly for lighting and powering media Only the 1. 9% and 7. 1% of the fourth and fifth quintiles respectively use electricity for cooking There is limited access to electricity especially in rural areas and this limits use § There is some energy switching fuelwoodl and gas at a threshold of P 24000 annual income and above § The choice of energy source is influenced by multiple of factors but household income dominates

Implications for Forest Conservation and Economic Growth § Increase in energy consumption resulting from increase in economic growth is likely to put pressure on forest resources § There localized forest degradation around urban centers § Responding to shortage of fuelwood people resort to cutting life trees forgoing other forest benefits § Increased use of fuelwood has implications for health through indoor pollution § Forest conservation measures should be associated with poverty reduction measures as well as target different income groups § Limited use to commercial fuels limit economic growth and rural development § Small and medium enterprises (SME) that are usually initiated at house level require energy infrastructure § SME have potential to catalyze rural development § Employment creation § Poverty alleviation § Without adequate infrastructure and improvement in wellbeing of households, SME potential contribution to economic and social development is constrained § There need to expand the rural electrification program § Improve uptake of economic support programs to facilitate SME development