____==___1T(2 Series Editor. - - - J____ Rs" English proJ '1 le Wr oridi Rank (roup ;1n flerl-< Note :\X. 4 Juh 1995 Niger Household Energy Project Task Manager: Willem Floor Introduction Promsing nitial results from the Niger household energy project suggest that an mtegrated program of taxation and land tenure reform can bring about sustainable management of fuelwood resources. Although it is too early to draw firm conclions about the optimal strategies for technical management of the natural forest, the project has mobilized significant pohitical and grass-roots support, and the approach appears promising for Saheman and other countries where fuielwood supply is ical Similar projects are currently beig designed for Chad, Senegal, and Burkina Faso and are at Board stage for Mali and Guinea. Other countries (Malawi and Mozambique) and other organizations (FAO) have expressed mterest in replcating the project Pm-Project Situation Landlocked in the Sahel, Niger is one of the world's 20 least-developed countries. The totaL population was 8.2 million in 1992, and the urban population (about 900,000) is increasing rapidly. Fuelwood, used by 99% of households, is the major source of energy. In many areas, fuelwood conumption greatly exceeds the rate of natural regeneration, depleting the natural forest and degrading the soils. Before the inception of the project, access was open to all forested areas, and fuelwood was '4mined7 in an anarchic manner. This uncontrolled exploitation was most severe around urban areas, mainly because neither the forested land nor the wood itself belonged to the fuelwood collectors. Moreover, attempts to recover the environmental cost of the harvested wood from fuelwood traders had not been very successful The Project Objectives The project has two key objectives: * to restructure the fuelwood sector around the main urban centers so that the supply of fuelwood is managed rationally and the environment is protected; and * to encourage conservation of fuelwood by promoting the use of improved stoves and substitute fuels and by establshing economic pricing of fuelwood. continues on next page Energy Note No. 4 Design The project, financed by DANIDA and managed by the Industry and Energy Division of the Bank's Sahel Department, began in 1989 and has been divided into two phases: Phase I ran from 1989 to 1994; Phase 1I runs from 1995 to 1999, consohdates and expands the program, and requires furither involvement of vilages. Criteria for Success Success of the project depends on some key features: * the two-pronged approach used: This involves measures to improve the supply of fuelwood on the one hand and measures to reduce the demand for fuelwood on the other; this aproach is unique among household energy projects; -- * ithe crucial role played by a large number -of individuals. The project depends on vohmtary popular pardcipation and decisionmnaking; * monitoring and evaluation. These are integral to the project. Data are collected on all aspects and results are disseminated regularly and acted upon; and * the links between the government departments of energy and the environment. Moreover, the project requires the govemment to reduce its traditional, dominant role. Supply-Side Measures Facilitating Village The project introduces an mnovative approach to sustainable management of the Management fuelwood sector, transferning responsibility for the forest areas directly to the rural communities. The forest around a village is transferred to a village management committee under a 60-year franchise from the government The viRlage elects a management committee, which is responsible for the daily management of the forest. In Phase LI, participating villages develop their own forest management plans with the help of consuLtants hired by them The plans are subject to the approval of the forestry service. The fuelwood harvested from the area is sold to commercial transporters at a rural madet at a price determined by the villagers. The commercial tansporters pay tax at the rual market, and then, to enter an urban area, they must pass through a government-nm post that controls the payment of the tax Urban consumers thus pay the price of fuelwood (determined at the rural market) plus transportaton costs, the transportation/distbution mark-up, and the tax The introduction of the tax is progrssive, such that, by 1999, the price offuelwood will equal its economic value. Promoting Rural Ideally, all forested areas around the urban centers will be controlled through rural Markets markets. The markets wfl only be establshed when a village wants to participate and an agreed management plan is drawn up. Each market wil have an annual fuelwood quota based on the sustainable production capacity of the village's natural forest. Discouraging To discourage the cuttig of fuelwood from uncontrolled forest areas, the tax paid at Uncontrolled Areas the control post by tansporters of wood from uncontrolled areas is higher than the tax plus the fuelwood cost at the rural markets. Applying a Taxation Taxation levels depend on the origm of the fuelwood and decrease with distance System from the city so that transporters are encouraged to buy from rural markets firthest away from the urban centers. Tax receipts are splt among the villages, central treasury and local governmeint; ultimately these receipts wfll cover all project costs. continues on next page Energy Note No. 4 Establishing Tax Posts Control posts were establshed on all the main urban access routes, and mobile controls were mtroduced to help counteract tax evasion. Penalties are imposed on transporters who avoid paymg tax Problem Solving In Phase I of the project, two main problems - a low rate of tax colection and a lower-than-anticipated amount of fuelwood coming from the new rural markets - were encountered and to some extent resolved. Countering Low Rates of Tax Colection: The low tax collection on wood from uncontrolled areas stemmed both from evasion by transporters and from neglect of duties or embezzlement by control post operators. Mobile teams have now been establshed to control secondary roads, and the quality of personmel at the control posts has been improved. In addition, an incentive system for tax collectors has been introduced whereby the tax coBector receives 10% of the tax collected. Supervision of personnel wmi also be improved, and penalties will be imposed for evasion. Before the project, only some 10% of the fuelwood taxation was levied and collected. By early 1994, this had increased to 40%, and the new control measures have resulted in firther increases in tax compliance. Enarging the Rural Markets: During Phase I, the majority of fuelwood for urban consumption stil came from uncontrolled areas. Some 50 rural markets were establshed during this phase, comprising a managed forest area of about 150,000 hectares, that provides 10% of the fuelwood market. However, a large increase in rural markets, with a consequent decrease of uncontrolled forest land, is still needed. In Phase II, approximately 350 rural markets will be establshed, and the tax on fuelwood from uncontroBed areas wil be increased substantialy, so that fuelwood from controlled areas wil be cheaper than fuelwood from uncontrolled areas. Demand-Side Measures The second thrust of the project is to reduce the demand for fuelwood by promoting the use of improved woodstoves and by using modem fuels with new equipment Research was undertaken worldwide to identy the most appropriate kerosene cooking equipment, and in Niger promotional activities were undertaken to increase public awareness of the equipment available. Disseminating Tbrough the project, metalsmiths in Niger have been trained in the manufacture of Improved Woodstoves improved woodstoves for several years and can now produce them in several sizes. Improved woodstoves allow fuelwood savings of between 20% and 30% in relation to the traditional "three stone" stove, although atual savings are only 7%, due to inefficient consumer behavior. The project runs demonstrations to assist the trade in sensitizing consumers to cooking with fuelwood more economically. Promoting the After a careful selection process, the Tchip stove, originally from Indonesia, was Kerosene Stove identified as the most appropriate kerosene stove, because it provides the best match for local cooking needs and its capital and operational costs are cheaper than altemative stoves considered. Capital costs are still high, however, and an ini subsidy was directed to help defray these costs. Both types of stove are being promoted in the media and through demonstrations to emphasize their best use; they are also being supported by a private sector after-sale service throughout the city. continues on next page Energy Note No. 4 Problem Solving Uptake of new technology was slow in Pbase I. This was caused by distribton problems, political turmoi, an economic downturn, and the low price of fuelwood. A parucular problem was that imports of the Tchip stoves were delayed, resultig m stock shortages at distnbution outlets. In Phase I, the Tchip stoves are to be produced locally, and this, combmed with improved management and continued emphasis on marketing and promotion, should speed the uptake of the new technology. Fuelwood was still cheap relative to its substitutes even before the recent devaluation of the FCFA. The fuelwood tax is intended to ensure that the fall economic value of fuelwood is reflected in its price, thus creating an equal playing field for all household fuels. Key Lessons To date, lessons leamed relate mainly to the process of establshing the project rather than to its impact on forestry resources; that will take more time to evaluate. However, a technical report on the early results of natural forest management efforts indicates that the initial impact on forest conservation is positive. Project is Cheap to The project is relatively cheap and can ultimately be self-financing. Total project F7nance costs are $7 mlion and should result in the sustainable management of 500,000 bectares of natural forest. The project could be self-financing withn five years; during Phase 1, 40% of the project costs wil be met by tax receipts. Popular Partcipation Ownership of the project by the people is essential for the project's success. This is is Vital achieved by involving local pardtipants in many features of the projecL Villagers are encouraged to take an active role in the sustained production of forested areas by beig given rights over the land. The project also provides basic literacy and accounting training, and vilagers have responsility for settling any disputes concerming ownership rights to the forested areas. Villagers Must Have Vilagers must have effective and absolute long-term rights over land, exchlsive Land Tenure rights for woodcutbing, and sole responsility for forestry management. GovernmentMust The project requires government support embodied m new, transparent reguations, Create Enabling review and approval of plans, and provision of funds and technical assistance. The Environment government thus creates an enablng environment, but commercial decisions are left to private economic agents. Benefits Must be Clear ViMagers want to form rural markets only when it is clear that it is profitable for them to do so. The project therefore also requires appropriate levels of taxes and fies; price increases of fuelwood that are sufficiently gradual to be acceptable to consumers; and institutional capabilities for the enforcement of tax coMection and penalties for avoidance. fl Industry and Energy Department Vice Presidency for Finance and Private Sector Development Energy lues is produced by the Energy Practice Management Office, which seeks to dssemmiate information about recent and ongoing energy activities of the World Bank Group. For ftuther infonnatiou, contact the Energy Practice Manager, Rachel En G-5055,TheWorldBaukj8l8H tNW,WasliintonDC20433orfax 2 _22004 onirecyc ded .