Environmental cost-effectiveness analysis of alternative rural energy programs in Ethiopia

Abstract

Existing studies on evaluating rural energy programs in developing countries have primarily relied on cost-benefit analysis (CBA). CBA is based on measurements made on tangible and monetized aspects of costs and benefits and largely ignores the non-marketable, environmental, and health effects of alternative energy programs. Measuring non-marketed benefits have been identified as a limiting factor to apply cost-effectiveness analysis. In this study, we quantified environmental non-marketed benefits associated with alternative rural energy programs in Ethiopia. To measure the environmental effects, we considered the traditional cookstoves as a baseline energy package to which improved cookstoves (ICS) and biogas energy can be compared. We develop a simple linear growth model to capture forest regeneration to account for the environmental effect of ICS and biogas. The Environmental Cost-Effectiveness Analysis (ECEA) results show that biogas is not environmentally cost-effective compared with the ICS. Our analysis has considered a zero-subsidy scenario. Hence, it is essential to subsidize biogas programs to make them environmentally cost-effective. This study's findings can be used to compare the different energy interventions and signal the importance of using cost-effectiveness analysis over traditional CBA in the design and implementation of energy programs.

Keywords:

• Biogas
• improved cookstoves
• environmental cost effectiveness
• rural energy

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 We note that biogas vs. ICS benefits also include significant direct human health concerns. However, we were unable to obtain reliable data for the study area to quantify these benefits, so they are excluded from the present analysis. The framework presented here is readily extendable to include health benefits when data are available.

2 Cost effectiveness analysis basically relies on the comparison of two policy options. For that sake, we used the costs, benefits and environmental effects generated through improved cook stoves as an alternative energy sources. We then derive the cost effectiveness ratio.

3 Since there are different traditional cook stove types available in Ethiopia, in this study we refer only to cook stove types that use firewood.

4 Equation 5 does not account to a special species; we have just compared the change in forest cover before and after biogas energy; considering the baseline energy source as improved cook stoves. Practically, households’ access to improved clean energy sources would improve the regeneration of species differently.

5 In Ethiopia both 4m³ and 6m³ are common

6 It should be noted that the costs and benefits calculation take into consideration the biogas plants that are privately introduced.

7 It should be noted that there is a margin of urban households who are using biogas as sources of energy. But for the purpose of this study, we exclude urban dwellers from the analysis. It should also be noted that the average household in Ethiopia is 4.8.

8 A report from UN FAO indicates that the annual forest cover change rate (%) from 2005 to 2010 in Ethiopia is 0.04