Ghana Priorities: LPG Cooking
- 1. EminentPanelConference,Accra,August7th -9th,2020 Increasing the use of clean cooking fuels in Ghana: A cost benefit analysis of three interventions Dr Maxwell Dalaba: Research Fellow( Navrongo Health Research Centre, Ghana; University Of Health and Allied Sciences, Ho,Ghana). Dr Bjorn Larson and Dr Brad Wong: Copenhagen Consensus
- 2. This is why my topic is important • Exposure to smoke from solid fuels or inefficient fuels caused nearly 4 million premature deaths each year in developing countries, including 18,000 deaths in Ghana every year (WHO,2018). • Exposure to smoke from cooking contributes to a range of chronic illnesses and acute health impacts such as early childhood pneumonia, cataracts, lung cancer, bronchitis, cardiovascular disease, and low birth weight . • Women and young children are the most affected, with more than 2,200 children in Ghana dying every year as a result of acute lower respiratory infections caused by the use of solid fuels (WHO,2018). • There is therefore the need to promote clean cooking methods to improve health and the environment.
- 3. More about the current state • According to the Ghana MHS 2017 survey, 78% of the population in Ghana use solid fuels for cooking, consisting of 45% wood and 33% charcoal, while 22% use gas (LPG) and some electricity. • The use of LPG is concentrated in urban areas with only 15% of LPG users residing in rural areas. • In rural areas, 74% of the population use wood as primary cooking fuel, while 18% use charcoal. Thus 83% of wood users and 28% of charcoal users reside in rural areas. • Rural Ghanaian households spend nearly 1.4 million hours or 680 thousand full time work- years on fuelwood collection. • Therefore increased access to improved cookstoves and LPG has the potential to improve health and improve economic gains
- 4. Interventions analyzed I. Promotion of improved fuelwood and charcoal cookstoves. II. Expanded distribution of LPG in rural areas III. Elimination of taxes on LPG fuel for cooking.
- 5. Intervention I: Promotion of improved fuelwood and charcoal cookstoves Traditional 3 stone stove Traditional Charcoal stove Improved Gyapa wood stove
- 6. Overview of the intervention • The use of inefficient biomass stoves for cooking leads to health consequences. It is therefore important to promote improved, efficient biomass stoves in order to reduce the burden of HAP as well as reduce biomass consumption and monetary expenditure and collection time. • The proposed improved biomass cookstove is the Gyapa wood and charcoal stoves. • The Gyapa stoves cooks food more quickly than traditional cookstoves, requires 50-60% less fuel and produces less smoky fumes compared to the traditional methods of cooking. The stove can be manufactured in Ghana. • At least two Gyapa stoves are needed for households to minimize the continued use of their traditional stoves. • This adds to the initial cost but provides substantial increased benefits.
- 7. Costs Cost GHS Cost of stove 178 Stove O&M 21 Promotion program 260 Total costs 459 Cost of Gyapa per household (GHS) • Gyapa stove (2 stoves per household): GHc40 per stove ( US$20 with exchange rate of US$1=GHC5). • Stove maintenance cost per year: 5% of stove cost • Stove promotion program: US$ 34(GHc6.8) per household per year. • Useful life of Gyapa stove: 3 years • Discount rate of costing: 8% • Time horizon: 10 years
- 8. Benefits • Health improvements (DALYs):Valued at 1.3 times GDP per capita in 2020. • Valued cooking time savings: 20 minutes per day for improved wood fuel Gyapa(300-400 cedi per household in a year) • and 15 minutes per day improved charcoal Gyapa (200-300 GHS per household in a year) • Biomass fuel savings: 40% for improved fuelwood Gyapa and 30% for improved charcoal Gyapa • A value of time: 50% of wage rate Benefit Improved wood stove (Rural) Improved wood stove (urban) Improved charcoal stove (rural) Improved charcoal stove (urban) Health benefits 1,456 1,374 703 747 Cooking time savings 1,688 2,578 1,266 1,933 Fuel savings 1,013 2,173 696 1,024 Total benefits 4,156 6,125 2,665 3,705 Benefits per household (GHS per household)
- 9. BCR •If 10% of all current users of charcoal and wood switch to improved stoves (565,000 households), 190 deaths would be avoided per year in the medium run. •The estimated BCRs for improved cookstove promotion are between 6 and 13. ...... meaning benefits are between GHS 6 and 13 for every GHS 1 spent GHS Improved wood cookstove (rural) Total benefits 4,156 Total costs 459 BCR 9.1 Improved wood cookstove (urban) Total benefits 6,125 Total costs 459 BCR 13.3 Improved charcoal cookstove (rural) Total benefits 2,665 Total costs 459 BCR 5.8 Improved charcoal cookstove (urban) Total benefits 3,705 Total costs 459 BCR 8.1
- 10. Intervention II: Expanded distribution of LPG in rural areas Motorking for distributing LPG
- 11. Overview of the intervention • One of the causes of low usage of LPG, particularly in the rural areas is price of LPG and poor access to LPG (Asante et al. 2018, Dalaba et al, 2018). • All or almost all of the LPG refilling stations are clustered in and near urban areas. • Intervention: - A cylinder recirculation program replaces current system of individual ownership of cylinders - Motor-king (motorcycle with smaller trailer) distribution network from refilling stations to village retail outlets. - The intervention proposed would build on existing refilling stations and not replacing them
- 12. Costs and access: Disaggregated Cost ( pop) Within 15 km Within 15-25km Initial capital cost Additional cylinders 222,213 255,340 Sensitization of retailers 12,556 14,230 Motorkings 24,889 38,133 Station inspection 2,939 5,103 Recurrent annual cost Motorking maintenance 2,489 3,813 Motorking fuel cost 14,282 21,881 Station inspection 197 303 Motorking drivers 23,696 36,304 Expand reach of LPG from 15km to 25km around urban centers • Makes LPG effectively 28% cheaper for those within 15km -> extra 70,000 households take up LPG • Increases access of rural population for those 15-25km away -> extra 380,000 households take up LPG Largest up front costs are new cylinders; largest recurrent are for motorking drivers Within 15km Within 15km 15-25km away 0 200 400 600 800 1000 Current System Cylinder recirculation LPG users in rural areas Users of LPG in rural areas by distance to refilling station
- 13. Because the intervention will cause so many people to start using LPG, the biggest cost from a societal perspective is fuel • Implementing a rural distribution model enabled by cylinder recirculation would mean 448,000 households would adopt the use of LPG in rural areas, thus increasing the percentage of the rural population using LPG from 6 to 17%. • Over 10 years, even after accounting for discontinuation, the largest cost by far would be fuel (1400m GHS) -> mostly paid by consumers. • LPG stove, maintenance and other costs are 227m GHS over 10 years • Distribution network is estimated to cost ~234m GHS over 10 years. On the next page these figures are presented on a per HH level LPG fuel LPG stove and other uptake costs Distribution network - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 Millions 10 year costs of LPG recirculation intervention
- 14. Benefits and BCR Benefits of switching to LPG for new rural users (GHS per household) Switching from fuelwood Switching from charcoal Health benefits 2,476 1,040 Cooking time savings 3,375 3,375 Fuel savings 2,531 2,320 Total benefits 8,383 6,734 Interventions Benefit Cost BCR Expanded distribution of LPG in rural areas New users of LPG (switching from wood) 8,383 4,848 1.7 New users of LPG (switching from charcoal) 6,734 3,625 1.9 Current users of LPG 2,177 347 6.3 New and current users of LPG 4,926 2,328 2.1 BCR (GHS per household) • The intervention would give 3.5m rural households access to LPG within their communities, thus 448,000 households would adopt the use of LPG in rural areas and would increase the percentage of the rural population using LPG from 6 to 17%. • This would reduce deaths from HAP by 180 per year, with more benefits going to current fuel wood users . • 40 min time savings per day for both current fuelwood and charcoal stove users • 30 min collection savings for fuel wood users; savings in charcoal usage of GHS 0.77/kg. • Current users of LPG save time and vehicle costs from accessing LPG The BCR of this intervention is 2.1.
- 15. Intervention III: Elimination of LPG taxes
- 16. Overview of the intervention • LPG used to be subsidized by government, but in recent times, as at July 2019, there has been a 23% tax on LPG. • This increase in the price of LPG, in part caused by the tax, is making some households cut LPG consumption and increase the use of solid fuels for cooking. • The intervention analyzed is elimination of LPG fuel tax increase of LPG in Ghana
- 17. Cost, Benefits and BCR Response to tax removal Benefit Cost BCR LPG from fuelwood Rural 11,084 7,549 1.5 Urban 15,626 6,997 2.2 Total 14,854 7,091 2.1 LPG from charcoal Rural 9,435 6,336 1.5 Urban 12,374 6,275 2.0 Total 11,875 6,283 1.9 LPG (from wood and charcoal) Total 12,471 6,445 1.9 • Same costs for stove, promotion as in previous analysis • Same improved health, cooking time savings and fuels savings as in previous analyses • Included GHS 2700 per HH cost and benefit of tax transfer over 10 years Cost, Benefits and BCR per household (GHS) • Eliminating the 23% VAT on LPG would lead to 391,000 urban households and 80,000 rural households switching to LPG due to the lower cost of fuel. • This would reduce deaths by 193 per year in the medium run while delivering significant time and fuel savings. • Households which currently use LPG, would also enjoy the benefit of reduced fuel costs. • However, elimination of the tax would cost the government 1.3bn GHS in lost revenue over 10 years • The BCR of this intervention is 1.9
- 18. Conclusion • While the BCRs for promotion of improved charcoal and fuelwood cookstoves are several times larger than for the interventions for expanded use of LPG and LPG tax removal • The health impact of using LPG is roughly 50% larger than the health impact of improved cookstoves. • However, improved biomass cookstoves can serve as an intermediate solution for households that elect to do so
- 19. SUMMARY BCR TABLE INTERVENTION Benefit Cost BCR 1a Promotion of improved wood stove Rural 4,156 459 9.1 1b Promotion of improved wood stove Urban 6125 459 13.3 1c Promotion of improved charcoal stove Rural 2665 459 5.8 1d Promotion of improved charcoal stove Urban 3705 459 8.1 Expanded distribution of LPG in rural areas Rural 4,926 2,328 2.1 2a Current users of LPG Rural 2177 347 6.3 2b New Users of LPG Rural 7064 3869 1.8 Elimination on taxes on LPG for cooking 3a Excluding Tax transfer National 9770 3744 2.6 3b Including Tax transfer National 12471 6445 1.9
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