*Increased poverty costs Malawi $191 million on forestry *

Illegal charcoal trade due to the increasing poverty in Malawi is a contributing factor to the country’s loss of MK 26.6 billion (US$191 million) each year in 2007 prices if soil, forest, fishery and wildlife resources were used sustainably.

According to the 2010 Economic valuation of Sustainable natural resource use report in Malawi, with a 10 percent discount rate, the discounted value of unsustainable natural resource use over a decade amounts to more than MK84 billion (US$600 million) in 2007 prices – about MK 28,000 (US$200) for each household in Malawi.

This is more than the total funding allocated to the education sector and to the heath sector in the 2009 Budget.

The 2009 Malawi BEST study estimates that wood fuel accounts for an additional 4.3 percent of annual GDP. Full-time employment in forestry is around 29,000 with a further 130,000 full-time jobs involved in wood fuel supply.

The report, launched recently says there is compelling evidence that unsustainable natural resource management leads to increased poverty in the country. Deforestation has developed roots in the country; this is agricultural means and economical survival by means of charcoal selling.

The current policy of banning charcoal production has not only proved ineffective but encourages inefficient illicit charcoaling and produces incentives for corruption and deprives the Malawi government of tax revenue.

“Our economic analysis of published data indicates that the annual estimated value of bribes paid on charcoal in 2008 was MK 1.3 billion (US$9 million). Transferring these payments from the informal sector to formal taxes would produce revenue for environmental protection or other pro-poor expenditure,” Director of Planning in the Ministry of Economic Planning and Development Yona Kaphale said.

Forestry resources are crucial in supporting livelihoods, infrastructure development and energy in Malawi. Apart from providing a diverse range of wood and non-wood products, forests are important for soil and water conservation for agriculture and household use, provision of animal habitat, beautification of the countryside, enhancement of ecotourism, and regulation of climate change.

Little of this contribution is captured in GDP estimates and the officially reported contribution of the subsector to national output, at 1.8 percent, is certainly an understatement.

Royalties levied on forest products by Government amount to some MK 163 million (US$1.17 million) annually, well below resource rents, because the rates do not reflect current market prices and collection of royalties and fees is limited, in part, by inadequate funding.

Records suggest that the sub-sector currently only receives about one-fifth of its desired operating budget per annum, estimated at about MK250 million (US$1.79 million).

Firewood is immensely important for household energy (providing 95 percent of rural household energy supply and 55 percent for urban households), with charcoal providing around a third of urban household energy supply.

While forests are also an important source of various non-wood products (such as mushrooms, bush meat, fruits, juices, honey, fodder and thatching grass), most of these are produced and used in the informal sector, and reliable estimates of quantities produced and their values are unavailable.

“Evidence suggests that forestry resources are degrading at a fast rate – officially at 2.6 percent per annum, but case studies generated for this study estimate annual deforestation at between 0.67 percent for the Linthipe catchment and 2.12 percent for the Lower Shire catchment.

“The principal cause is agricultural expansion driven by population growth. However, forest degradation for fuel wood (firewood and charcoal) is a significant problem in the catchments surrounding Lilongwe, Blantyre, Limbe and Zomba,” read part of the report.

To counter the problem, the Malawi government is running a forestry component of the EU-funded Income Generating Public Works Programme (IGPWP) is particularly interesting as an intervention, as it aims to reduce poverty by increasing local production of fuel wood, timber and poles through planting community (forestry club) woodlots and planting on individual club member farms.

After a successful three-year first phase, the programme has now entered a second phase with the target of planting 35,500,000 trees over a 5 year period.

Using data from the IGPWP it is estimated that with payments per project club member of around MK 1500 (US$10) over two years (as incentives to raise seedlings and ensure the survival of trees planted out) the average club member plants 858 trees.

After growing for 5 years this number of trees can supply a family of five with 2.5 years of fuel wood and as these trees coppice we can say the families involved will gain around 50 percent of their total fuel wood requirement for the rest of their lives.

Deputy Minister of Natural Resources Energy and Environment Vera Chelewani
said a holistic solution that would address the whole charcoal supply chain
was needed, rather than a technical fix in any one area.

“For example, improved charcoal kilns could play a useful role in reducing the 2.25 million cubic metre excess demands for fuel wood in urban catchment areas but, by themselves, would provide less than 15 percent of this excess demand.

“Subsidising electricity consumption would not solve the charcoal problem given that increasing the rate of domestic electrification would imply switching supply from industrial and commercial sectors.

Moreover, those with an electricity connection would make significant savings compared to those relying on charcoal or purchased fuel wood.

Based on an average domestic consumption of 3,285 kWh and a current tariff of US$0.043/kwh substituting 883 kg of charcoal and 30 litres of paraffin would save the electrified urban consumer around US$105 a year. Even at full cost tariffs (0.065/kwh) urban consumers would save around US$60 year,” she said.

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