Dynamics of fuelwood prices in India: Policy implications

Dynamics of fuelwood prices in India: Policy implications

World Der~lopmenr. Vol. 16. No. 10, pp. 1213-1229, Printed in Great Britain. Dynamics 0305-750x/xX 1988 $3.(H) + 0.00 Pcrgitmon Press plc of Fue...

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World Der~lopmenr. Vol. 16. No. 10, pp. 1213-1229, Printed in Great Britain.




$3.(H) + 0.00

Pcrgitmon Press plc

of Fuelwood Prices in India: Policy Implications B. BOWONDER

United Nations Asian and Pacific Centre for Trarufer Administrative

of Technology,


S. S. R. PRASAD Staff College of India, Hyderuhad

and N. V. M. UNNI’” National Remote

Sensing Agency,



- This paper examines the changes in prices of fuelwood in urban centers over fhc years in India. Fuelwood prices have risen in India relative to prices of other commodities. This has been the combined effect of increase in demand for fuelwood and decrease in supply of fuelwood due to degradation and depletion of forests. Policy interventions needed to change the situation are (i) increasing commitment for conserving existing forests; (ii) stimulating the use of fuel efficient cookstoves to contain fuelwood demand and (iii) stimulating agroforeatry systems and wasteland plantations.



Recent studies (Bruenig, 1987; World Commission on Environment and Development, 1987) show that deforestation is becoming severe in many developing countries. Two major reasons for deforestation include conversion of forest lands for agriculture (Goodman, 1987; Myers, 1983) and wood consumption by industries (Kuusela. 1987). Many regions of developing countries are experiencing severe shortages of fuelwood due to the combined action of population growth, deforestation and forest degradation and increases in the price of fossil fti& (Baidya, 1984; Bowonder, 1983; Bowonder, 1986; Bowonder, Prasad and Unni, 1987; Goodman, 1987; de Montelambert and Clement, 1983). Conversion of forest land into crop land and extraction of fuelwood by the poorer sections of the population in rural areas is the major cause for forest depletion (Flueret and Flueret. 1978; Hyman. 1983; Myers, 1983; Nations and Comer, 1983; Openshaw, 1980) in developing countries, whereas degradation of forest quality is mainly due to fuelwood extraction from forests induced by fuelwood shortage outside forest sources. The high rate of urbanization in developing countries, due to the migration of the rural poor to the 1213

cities, has caused an increase in the demand for fuelwood in urban areas (Scholz, 1983: Whyte. 1985). Numerous studies (Alum er al.. 1985; Bowonder. Prasad and Prasad, 1985; Bowonder, Prasad and Raghuram, 1987; Hammer, 1980; McGranahan. Chubb and Nathens. 1980; Reddy and Reddy, 1983) have shown increases in the consumption of fuelwood and charcoal in urban centers in developing countries. This paper examines the changes in prices of fuelwood in urban centers in India and the policy implications of those price changes. 2. FUELWOOD



Very little published statistical information is available on fuelwood use in urban areas in India, since a part of the fuelwood comes from “The authors would like to thank the Ministry of Environment and Forests, Government of India for providing financial support for this study. The authors thank Mr. T. N. Seshan, Secretary to Government of India, Department of Environment, and Dr. D. P. Sinha. Principal, Administrative Staff College of India, for providing necessary support and encouragement. The authors also thank Dr. Balwanlh Reddy for the suggestions and comments given in the course of the study.




unrecorded and illegal sources. Only 2% of the forests are owned by individuals whereas the remaining 98% are owned by the government. The unrecorded production cannot account for the large difference between reported fuelwood extraction from forests and consulnption of fuelwood (which excludes agricultural residues and animal wastes). Illegal extraction and unrecorded extraction from forests comes to 70 to 80% of the total fuelwood extraction (Fernando. lY7Y). In India an estimated IS0 1nillion tons of fuelwood were used in 19X5-86 and that figure is likely to rise to 330 million tons by 2004-05 (Jayaram and Magoo, 10X6; Khoosho. 19X6). The annual incremental growth of wood in India is about 75 million tons (excluding agricultural residues); any extraction beyond this quantity will reduce the forest stock (Bowonder. lYX2a: Bowonder. Prasad and Unni. lYX7). Recent estimates of fuelwood use in urban centers, based on actual surveys, indicate the following: (i) Large quantities of fuelwood are used by the low-income population in urban centers (Alum (‘I N(.. 19X5; Bowonder. Prasad and Raghuram, 1087; Reddy and Reddy. lYX3a). Most of this fuelwood is transported from forest areas. (ii) Fuelwood consumption in cities has increased sharply over the years. For example. fuelwood use in Hyderabad increased from 0.177 million tons in IYXI (Alum et cd., 1YXS) to 0.3Y7 1nillion tons and Raghuram. (Bowonder, Prasad 1987) in IYXS. (iii) Large quantities of good quality fuelwood are used by commercial establishments such as hotels. hostels. bakeries, etc. (Bowonder. Prasad and Prasad. 1987; Bowondcr. Prasad and Raghuram. 1987; Reddy and Reddy lYX3a). It is not possible to obtain the actual consumption figures of fuelwood in urban centres from any primary or secondary sources. The only data available are for cities for which detailed surveys have been conducted. This paper examines the dynamics of increases in fuelwood use. Indirectly. the study assu1nes that the fuelwood market obeys perfect demandsupply relationships, although this is not conpletely true because fuelwood collection has a private component. In urban fuelwood markets the collection component is low since the amount of farm-grown fuelwood is almost negligible. The assumption of perfect market conditions is valid because the fuelwood market is not government controlled in India. The actual nature of the fuelwood flow in a typical Indian city is indicated in

Figure I. The absence of many non-market interventions makes the assumption of a free market mechanism a reasonable one.

3. METHODOLOGY This is an empirical study based on the actual (retail) fuelwood prices prevailing in 41 urban centers in India. The data were obtained from the State Bureau of Economics and Statistics of the state governments and the Central Bureau of Labor. Ministry of Labor, government of India. The data on fuelwood prices are collected regularly in order to estimate the consumer price index for industrial workers. The State Bureau of Economics and Statistics collects the data and the Central Bureau of Labor estimates the consumer price index on a regular basis.




The fuelwood prices in various urban centers were classified into six price and three population classes (Table I). Table 1 indicates that in 1986 the price of fuelwood was 1nore than Rs. 600 per ton in all centers with more than one million inhabitants and more than Rs. YOO per ton in all centers with more than five million inhabitants. This shows that the size of an urban center is a 1najor variable in determining the fuelwood price, quite apart from extent of forest area in the vicinity of the urban center. The size of the urban center determines the demand for fuelwood. The proportion of population using fuelwood is higher in larger cities, since the proportion of population living in squatter scttlc1ncnts (lowlYX2b: Von income) is higher (Bowonder, Oppen. 1979: Agarwal and Narain. IYXS). In India there has been a sharp rise in the number of people living in squatter settlements. Most recent estimates indicate that about 30% of India’s urban population live in poor squatter settlements. In other words. the issues of fuelwood use in urban centers are intricately connected to poverty, low income, unemployment and frequency of number of days of work, and rural 1nigration. One of the major reasons for the rise of fuelwood price has been the rapid depletion of forests in and around the urban centers. The total forest area in India during 1972-75 was 4X.0 million hectares: this had dropped to 37.4 million hectares by lYX(b82 according to the National Remote Sensing Agency. Department of Space of the government of India. This was done using













I Fuelwood arrival I” bullock carts

I 14.965 Trucks the





bypassIng checkpolnts Fuelwood




arrival mil



Wastes 13,140



generated from



units Total

orr~vol Pocking



























by soaol

by military

by pocking

by oLcohol



by SOQP foctorles



Total 1369.498








per year)

1 Figure 1. Flow

of furlwoodinto H_vderahud.

the Landsat satellite imagery of the ground covering a number of seasons (Figure 2). Though the actual forest cover is 37.4 million hectares, statistics brought out by the Forest Department claimed that 74.0 million hectares have forest cover (Planning Commission, 1982). The forest cover estimates of the National Remote Sensing Agency have a reliability of 4% (NRSA, 1983). The Remote Sensing technique allows the actual visualization of deforestation around the urban centers. The actual forest cover is estimated from the Landsat imagery maps in terms of closed forests (undergraded forests) and open forests (degraded forests). The observed forest area changes for 30 major urban centers in India are indicated in Table 2. Except in three cases (Sambalpur, Monghyr and Darjeeling), the forest cover in the

vicinity of all other urban centers has decreased. Open forests have increased and closed forests are being converted to open forests. Closed forests are vanishing rapidly. The comparative changes in forest cover during 1972-75 and I%& 82 for three urban centers (Indore, Ajmer and Hyderabad) are shown in Figures 3, 4 and 5. A sharp decline has been observed in all three centers. The decline is directly attributable to fuelwood extraction. None of these three cities has paper or pulp industries which could change the proportion of wood consumed.




In economic terms, the increase in demand for fuelwood and the reduction in supply of




Six of urban center Fuelwood Population less than price one million (Rs. per ton)

Population between one and five million

Populalion more than five million

Kothagudem Srinagar Balaghat Bhavnagar Chikmagalur Chindwara Darjceling Jalpaiguri

(0. IO) (0.31) (0 16) (0.26) (0.28) (0.31)

Bhilai Bhilware Gudur Samhalpur

(0.09) (0.12) (0.04) (0.16)

Bhopal G0a Madurai Monghyr Rourkela

(0.67) (0.32) (0.Y I) (0.47) (0.32)

Alleppy Amritser Coimbatorc Guntur In&n-c Jamshcdpur Ajmcr Gwalior Varanasi Yamunanagar

(0. 17) (O.SY) (O.YZ) (0.37) (0.83) (0.67) (0.37) (03) (0.X0) (0.16)

Bangalore (0.02) flyderahad (2.54) Jaipur (I .Ol) Nagpur (0.30)

Ahmedabad (2.55) Madras (4.2Y)

Bombay (X.33) (‘nlcuttu (9.19) Delhi (S.73)


in brackets



fuelwood have resulted in sharp increases in fuelwood prices in urban centers. The prices of fuelwood in 41 major urban centers (KS per ton) in 1960. 1977 and 1986 are given in Table 3. The average annual growth of price of fuelwood during 1960-77 was 7.35% whereas during 1977784 the growth rate was 12.87%. For example, the price of fuelwood in Nyderabad increased from KS. 66 to Rs. 243 per ton during lY6&77 and reached Rs. 667 in 1086. The changes in consumer price indices in 41 cities have been analyzcd. and (i) consumer price index for major

in millions.

urban centers; (ii) food price index; (iii) fuel and light price index: and (iv) fuelwood price index compared to the base price index (1Y60 = 100) are given in Table 4. The average consumer price index in 1986 was 640, the food price index was 638. and the fuel and light price index was 924, whereas the fuelwood price index had reached 1060. The ratio of price index of fuelwood to food was 1.64 whereas this ratio for price index of fuelwood to fuel and light was only 1.14. To understand the dynamics of the fuelwood price index in India, the price indices of various items






Mapping On I : I million scale for three consecutive years I Information



ium resolution

Figure 2. Schemutic

nationul fbrrst

are studied over the years. The annual growth rate of fuelwood has been substantially higher compared to that for wood, electricity and food grains. To understand the dynamics of change of price of wood relative to other commodities over the years, the dynamics of ratios of fuelwood prices with other commodities are analyzed. The ratio of price index of fuelwood to consumer price index has increased from 1.16 to 1.66 during 1977 and 1986. The ratio of price index of fuelwood to food has also increased from 1.099 to 1.64 during the same period. This indicates that price of fuelwood has risen sharply relative to other commodities. Actual price of wheat (rice), fuelwood, kerosene, coal and electricity in three selected urban centers are presented in Table 5. The growth rate of price of fuelwood has been substantially higher than all other items (fuels and food grains). Tables 4, 5, 6 and 7 clearly indicate that fuelwood prices are showing a sharp increase in relation to other commodities. This is.the result of simultaneous increases in demand and decreases in supply. The price of food as well as fuelwood is determined by market forces and the



relative increase in the price of fuelwood is a consequence of the depletion of forest resources as well as the degradation of the forests. The indirect consequences of the relative increase in the price of fuelwood have been that (i) it has induced unemployed persons to extract fuelwood and to sell it in urban markets; (ii) the fuelwood market which has a large element of collection is becoming increasingly monetized and this increases the flow of fuelwood from rural to urban markets, further increasing the shortage of fuelwood in rural areas. The price of various species of round wood, compared to other commodities. has risen in India. The situation in one state is given in some detail in Table 8. The striking feature of this is that the price of common varieties of wood used as fuelwood has risen sharply in Karnataka state compared to that of varieties like teak which are used for furniture and house construction. This supports the earlier statement that the pressure on fuelwood in the market has been rising rapidly. All these factors will work so as to hasten the extraction of forest resources. Though there is a growing tendency to plant trees, because of





Open torust km’


Ahmedabad Ajmer Alleppey Ammathi Amritsar Balaghat Bangnlore Bhavnagar Bhopal Bombay Calcutta and Chikmagalur Coimbatore Darjeeling Delhi Gudur Guntur Gwalior Hydcrahad Indore Jaipur Jamshedpur Madras Madurai Monghyr Nagpur Sambalpur Srinagar Varanasi Yamunanngar

Years I972 - 75


7’) 772 s4.t 37.5 8 67.5 766 213 YXO 1.YX3 1,231 Y2S 1.375 7hY 126 33X 152 3x7 454 s-17 396 YXX YS JOY 525 I.635 82’) x09 3x5 1,421


1Y72-75 Closed forest km’ 2SY 2.724 8,275 208 Y.043 3.x53 112 3,031 S.h3Y 5s 7,912 5,525 3,331 254 3.813 x32 1,353 40 3.770 1.s34 4.67.5 91x 2.x.31 1.OhY 3.116 6.912 9.756

1.7x5 3.08’)

Total forest km’

Open forest km’

79 27 1.03 1 309 3,268 667 X.750 1.350 216 57 Y,7lY X.56 1,6lY 1,240 325 213 4,011 1,SYY 7.632 2,3x’) 1.2X6 1,171 X.X37 1,37S h.YOO 1.Y3X ‘I.100 1.356 3x0 11X ‘4,151 1.213 9x4 7x 1.7JO 436 4Y4 259 4,317 73’) I ,Y30 516 S.663 1,ri63 1.013 286 3.530 X96 1.539 750 3.75 1 1.10’) 7.741


lO.ShS 2.170 S.410

sxx 1,05x 1.355

19X%X2 Closed Total forest forest km’ km’ 121 2,163 5,625 111 7,YXX 2,762 Y 1,417 3.672 41 6.175 1.700 4.363 101 2.513 73s 51s 26 1.070 7X6 3.750 S6X 2.033 x75 2.05 I 5.475 X.433 1.072 3.110

27 52.3 2.x3-l 6.Y75 16X X.8-H 1.01 1 222 3,016 hl.hhl 1.212 J.SSO 6.63X 5.719 219 3.726

Xl3 YSI 2x5 1,XOY 1,302 S.413 xs1 2.02Y

I .a5 3.360 7.x00 Y.032 2.130 3.S6S

Years I980 - 82




Figure 4. Forest ureu in the vicinity of Ajmer.

the lead time necessary to make back the initial investment, farmers prefer agricultural crops with immediate payback potential.

6. IMPLICATIONS FOR INTERFUEL SUBSTITUTIONS The relative increase in price of fuelwood has implications for interfuel substitutions. In reality. the consumers using fuelwood are paying more per unit of energy delivered (net energy consumed). In 1960 and 1977 the cost of unit energy for kerosene and fuelwood were similar. In 1987 the consumer has to pay twice as much per gigajoule of useful energy for fuelwood as for kerosene. In Delhi the consumer has to pay four times more to get one unit of useful energy from fuelwood than from kerosene. This is due to a number of factors: (i) poorer sections of population consider fuelwood to be a cheaper fuel; (ii) in a fuelwood burning stove it is possible to use other biomass fuels and agricultural wastes and this is

done by many poorer income groups; (iii) fuelwood stoves are very inexpensive and kerosene stoves are almost 10 times as expensive (capital market is very imperfect for poorer sections of society); (iv) kerosene is an item which is controlled by government and the maximum quantity sold to one household is 18 liters per month (it is difficult to manage one month’s cooking and lighting needs with this); (v) those residing in temporary squatter settlements prefer not to invest in items that have to be taken with them when they shift their squatter settlements. Fuelwood is costlier since the efficiency of burning is of the order of 7 to 10% (Bhatt, 1983; Gellar, 1983; Gupta, Rao and Prema. 1983), whereas a kerosene burning stove has an efficiency of 30 to 40%. One major policy implication is that countries with a low land (Benamann. 19X0; Bowonder, 1983) to population ratio (e.g. Korea. Bangladesh, India, Pakistan, Sri Lanka, Philippines. or Rwanda) may have to derive the total energy policy taking this into consideration. For ex-



(:. .., ,. ._ 42






Table 3. Prices of fuelwood in urban centers Fuelwood price (Rs. Center (1) Ahmedabad Ajmer Alleppey Amritsar Balaghat Bangalore Bhavnagar Bhilai Bhilwara Bhopal Bombay Calcutta Chindwara Chikmagalur Coimbatore Darjeeling Delhi Goa Gudur Guntur Gwalior Howrah Hyderabad Indore Jaipur Jalpaiguri Jamshedpur Kothagudem Madras Madurai Monghyr Nag& Rourkela Sambalpur Srinagar Varanasi Yamunanagar Average price per 37 urban centers


per ton) 1977 1986

AnnLlal growth rate [email protected] (%)

Annual growth rate 1977-86 (%)






90.00 91.00 42.00 80.00 34.00 47.00 81.00 65.00 92.00 55.00 84.00 93.00 31.00 34.00 73.00 39.00 101.00 92.00 69.00 66.00 64.00 90.00 66.00 57.00 79.00 47.00 57.00 50.00 85.00 73.00 47.00 60.00 56.00 39.00 35.00 60.00 83.00

306.00 320.00 200.00 290.00 84.00 225.00 250.00 150.00 250.00 180.00 362.00 275.00 113.00 156.00 240.00 109.00 400.00 220.00 157.00 250.00 225.00 289.00 243.00 258.00 298.00 169.00 175.00 100.00 283.00 179.00 200.00 150.00 150.00 146.00 161.00 272.00 262.00

740.00 825.00 700.00 700.00 350.00 657.00 425.00 500.00 550.00 666.00 1232.00 1040.00 340.00 357.00 750.00 338.00 1000.00 667.00 500.00 700.00 811.00 1094.00 667.00 700.00 669.00 463.00 700.00 240.00 728.00 650.00 600.00 608.00 600.00 541.00 272.00 883.00 800.00

7.46 7.68 9.62 7.87 5.46 9.65 6.85 5.04 6.06 7.22 8.97 6.58 7.91 9.37 7.25 6.23 8.43 5.26 4.95 8.15 7.68 7.08 7.96 9.29 8.12 7.82 6.82 4.16 7.33 5.42 8.89 5.54 5.96 8.07 9.39 9.29 7.02

10.31 11.09 11.94 10.28 17.18 12.64 6.07 14.31 9.16 15.65 14.58 15.92 13.02 9.64 13.39 13.39 10.72 13.12 13.74 12.12 15.31 15.98 11.87 11.73 9.40 11.85 16.65 10.22 11.07 15.41 12.98 16.83 16.65 15.66 6.00 13.98 13.16






ample. in India, kerosene is priced above the international market price. and one has to consider the shadow cost of foreign exchange to examine the economics of kerosene usage in relation to the social cost of raising plantations. In countries with a low land to man ratio, the opportunity cost of raising energy plantations may be high. The policymakers in developing countries have to assess various options before

selecting policy options and some of the options are: (i) distributing kerosene to poorer sections by cross subsidization; (ii) stimulating the use of efficient fuelwood burning stoves (efficiency of 30%); (iii) promoting fuelwood plantations (especially fast growing species) instead of importing kerosene;





Fuel and light (3)

Ahmedabad Ajmer Alleppey Amritsar Balaghat Bangalore Bhavnagar Bhopal Bombay Calcutta Chikmagalur Coimbatore Darjeeling Delhi Gudur Guntur Gwalior Howrah Hyderabad Indore Jaipur Jalpaiguri Jamshedpur Madras Madurai Monghyr Nagpur Sambalpur Srinagar Varanasi Yamunanagar

617 656 695 6.51 644 691 707 667 735 617 611 700 513 674 570 640 686 600 623 701 703 47 6.56 652 695 660 667 591 674 693 608

Average for 41 urban centers


Urban center (I)









Ratio Fuelwood to food

of price indices Fuelwood Fuelwood to to fuel consumer and light (8) (7)




730 750 1,326 769 x94 1.286 547 930 891 I.128 YO6 953 772 X54 706 931 919 1,092 889 1.068 7X6 832 911 788 782 1,193 Y35 I.190 721 1,317 912

x24 852 1.667 X71 1,037 1.3Y7 s44 1.14x I .496 1.121 1.oso 1.027 X6.5 995 708 I .oo‘l 1.137 I.211 I .OlO 1.227 x72 9x1 1.233 X.57 8Y7 I .270 1.022 1.279 7x3 I .472 968

608 640 617 633 713 669 717 672 616 627 688 52’) 664 SSY 670 633 5x5 653 6XX 662 so0 591 656 658 635 635 642 765 70 I 633

1.34 I.30 2.40 I.34 I.61 2.02 0.77 1.72 1.95 1.82 I .72 1.47 1.69 1.48 1.24 I .s7 I.67 2.02 1.62 I.75 I.24 2.06 1.X8 1.31 1.2Y 1.Y2 1.53 2.33 1.16 2.02 I .SY

1.36 1.33 2.39 I.42 I.64 1.96 0.x1 1.hO 2.13 I.82 1.67 1.39 1.63 1.4Y 1.27 I.39 I.81 2.07 I..55 1.7x 1.32 I.96 2.09 1.31 I.36 2.00 1.61 2.15 1.1’) 2.0’) 1.53

I.13 I.14 1.26 1.13 1.16 I. 1-t O.Y9 I.23 I.61 0.‘)‘) I. I6 1.0X I.12 1.17 1.oo I .0x I.25 I.11 1.14 I.15 I.1 1 I.lX I.35 1.OY l.lS 1.06 1.09 1.16 1.0x 1.12 I .Oh







lY60 =



(iv) increasing the kerosene supply to poorer sections of the population; (v) taking up intensive high density energy plantations to optimize use of land resources; (vi) taxing the fuelwood to make the users conserve fuelwood; (vii) stimulating the use of fuel efficient kerosene stoves among the poorer sections of the population; and (viii) integrating forestry and agriculture in the form of agroforestry. These optlons may have to be evaluated and implemented after suitable public awareness

programs. To highlight the point, take the example of Hyderabad city (Bowonder, Prasad and Prasad 1985). There are about 1.000 bakeries in Hyderabad city. and the average consumption per bakery in hY kgs of fuelwood per day. Since fuelwood is mostly obtained from the fuelwood market, through rigorous customer education it may be possible to substitute fuelwood with either electricity of LPG. Comparative costs of these options in 1958 and lYX7 (given in Table Y) indicate that electricity, kerosene and coal are likely to be cheaper options than fuelwood and charcoal. One of the basic reasons for lack of efforts for interfuel substitution away from fuel-






rate (%)













2.09 2.40 2.31

1.79 I.75



0.85 I.os 1.09

0.58 0.85

0.45 0.47




1.45 1.46

0.37 0.28 0.37

1.38 1.03 I.38









(per kg)

(per kg)




Bombay Coal




1.80 1.85 2.03

I.61 1.66

1.30 1.39



I.06 O.Y6 I.21





1.61 I.95 2.01

I.03 1.42

U.XX 0.9X



0.78 0.63 U.7U





0.62 0.63 0.77

0.47 0.5')

0.34 0.3x



0.34 0.34 0.34




3.40 3.42 3.36

2.47 2.9x

1.77 2.01



2.56 2.21 1.96



(per kg)




0.50 0.55 0.62

0.41 0.47

U.2Y 0.36



0.21 0.19 0.21



(per kg)





l.Y6 I.99 2.18

1.72 I.79

1.40 I.53



1.10 I.01 1.27



13 33


1.0s 1.39 1.50

0.x5 I.04

0.63 O.XI



0.50 0.47 0.50





0.50 0.44 0.44

0.50 0.50

0.50 0.50



0.35 0.35 0.35



(per lit) (per kg) (per kWh)





2.15 2.70 3.00

1.88 2.74

1.x4 I.67

I 70


2.53 1.57 2.07



(per kg)


(Rs. per wzi/) in urban centm


Prices of fuelslriceiwheat



(per Iit) (per kg) (per kWh)





0.61 0.67 0.70

0.33 0.51

0.21 0.21



0.20 0.16 0.18



(per kg)





1.94 I.95 2.20

I.80 l.Y7

1.4s 1.61




1.21 1.15





0.74 U.YO 1.00

0.62 0.74

0.41 0.44



0.30 0.3') 0.30





(per lit) (pa




0.47 0.47 0.47

0.39 0.46

0.39 0.39



0.34 0.34 0.36




Electricity (pa




B w


: u





6. Trends of con.s~un~r price indices




General consumer price index*

Price index of coal

Price index of fuelwood

Price index of kerosene

Price index of electricity

Price index of wheat and rice

208.29 241.47 304.88 321.53 325.42 331.23 33X.41 360.71 404.35 458.35 491.24 552.65 595.65 631.76 682.47

230.14 259.86 404.36 345.36 321.17 352.36 382.50 498.50 550.50 683.18 761.50 823.1X 992.09 1,066.OO 1,094.00

216.71 236.17 317.00 356.76 370.76 392.00 411.00 497.47 558.00 664.24 801.47 846.06 984.71 1.101.37 1.169.50

188.29 196.06 2X2.6.5 313.76 358.35 357.65 363.35 393.3s 426.94 481.35 503.65 532.24 542.00 571.47 626.31

130.75 135.06 143.63 1.53.88 164.56 166.69 173.88 17x.25 190.63 199.44 206.00 228.56 231.4X 25X. 10 262.94

203.41 254.47 320.53 375.5’) 297.47 2’)‘). 18 295.1X 306.59 33 I .X2 364.47 426.94 513.1x 491.35 496.18 525.00



1972 1973 1974 1975 1976 1977 197X 1979 1980 lY81 1982 1983 lY84 1985 1986 Annual growth rate (“/o) 1972 to 1986 *Base


of consumer








Consumer price index* Food price index Fuel and light price index Fuelwood price index Ratio of fuelwood to fuel and light price index

327 347 34x 3x0

403 409 493 553

640 64X 924 1,060













1960 = 100.

wood and charcoal has been lack of institutionalized efforts to wean users away from fuelwood.




1960 = 100.

7. C’hanges in price indices in 41 urban centers

Ratio of fuelwood to food price index Ratio of fuelwood to consumer price index



The sharp rise in the price of fuelwood and the fuelwood shortage will have a significant impact on deforestation. Though the impact is more in

urban areas it is likely to have repercussions on fuelwood markets in rural areas as well. In the short run it will induce illegal extraction of fuelwood and induce monetization of the rural fuelwood market. A major consequence of the rise in the price of fuelwood will be a draining away of the fuelwood from rural markets causing severe fuelwood shortage (Pasta, 1981; de Montelambert and Clement, 19X.3). This will affect the lowincome and small landholding population with no fuelwood sources of their own. Two surveys of I8 rural communities in India (Bowonder et al., 1985: Bowonder et al., 1986) indicate the existence of a considerable extent of monetization of fuelwood markets. The lower income population in India is facing a severe fuelwood shortage (Agarwal and Narain, 1985). Some of the lowincome population are switching over to the use of agricultural residues. The trend of fuelwood shortages along with the conversion of common grazing lands and common community woodlots will induce further shortage of fuelwood in India and other developing countries. Policy interventions for arresting deforestation have to be part of a comprehensive package involving administrative, economic, technical and institutional arrangements, covering both urban

738 893 1,124 1,045 1,137 1,131 1,712 2,358 2,525 3,632 4,243 4,239 4,381 5,576


Annual growth rate (%) 13.


1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985

1 US$ = Rs.


Year 135


158 216 303 168 189 337 312 695 867 969 1,486 1,706 2,022 2,562


Matti (Terminalia tomentosa) 83


198 169 358 363 520 670 851 1,286 1,283 1,906 2,035



Jamba (Xylia colabriformis) 161


251 268 430 227 352 537 506 743 875 1,184 1,492 1,680 2,389 2,677


Nandi (Lagerstromia lanceolata)


803 876 1,279 1.277 1,963 1,426

676 982 1,263 1.242 1,907 2,368


272 409 -



Dhaman (Grewia oppositifolia)

186 392 -



Kindal (Terminalia paviculata)

Table 8. Average wholesale price of wood (Rs. per cubic meters of round wood)



256 236 507 634 824 784 1,154 1,355 1,396 2,070 2,097

298 -




528 408 656 784 1,167 960 1,823 1,975 3,473 3,106 2,606


223 -

Honne (Pterocarpus marsupium)



274 437 526 664 709 886 1,204 2,018

207 234 -


Other jungle woods



Table Energy Units


Electricity Fuelwood Charcoal Petrol Diesel Kerosene Coal Agricultural residues Animal wastes LPG *GJ tMJ

kWh kg kg Iii lit lit


9. Energy content MJt


3.59 16.74 25.31 32.97 34.33 33.67 20.93



kg kg

10.55 50.00

costs of



per unit (Rs.) 1958 1987 (June) 0.10 0.09 0.22

0.38 0.07

0.50 0.80 2.50 9.00 4.13 2.45 1.10


Cost per GJ* of the energy supplied (Rs.) 1958 1987 (June) 36.64 31.62 31.03 23.5 11.97

0.25 0.05

0.65 4.64

182.76 285.08 352.77 496.31 300.76 154.34 167.69 181.09


587.95 156.35

= Gigajoules. = Megajoules.

and rural areas. Shortages of woodfuels in developing countries are generated by a complex interaction of many factors - including environmental, economic, demographic, sociopolitical and cultural - leading to a site specificity that defies generalizations (Goodman, 1987). Pure market solutions cannot correct the imbalances since fuelwood in rural areas has a large public good element in the form of collections. Since most of the fuelwood is grown in rural areas, this point needs special attention. Common pool resources will be depleted rapidly under conditions of increasing population density (Hardin. 1977; Ostrom, 1977; Berks, 1985). Only coercive solutions (Anderson, 1977) or community control of the use of these resources can protect them. In other words, one of the major policy interventions will be to strengthen the institutional arrangement for monitoring and protecting the existing forest resources. By far the greatest cause of woodland destruction still remains the globally ubiquitous clearance for cultivation (Goodman, 1987). The major action has to be to control rigidly the process of conversion of forest lands into other purposes and clearfelling forest areas. The administrative machinery and institutional arrangements for protecting forests have to be reorganized and rigorous action has to be initiated against illegal forest conversions. Some community-involved institutional arrangements for guarding forests may have to be initiated. The dimensions of the problem have grown to such an extent that marginal changes in policies may not reverse the deforestation trends. A drastic reorganization of the forest function with

clearly distinct objectives for (i) forest programs for generating raw materials for industries and fuelwood; (ii) forest programs for preserving delicate areas vulnerable to soil erosion; (iii) forest programs for protecting watersheds and (iv) agrisilvicultural programs for producing wood in farms along with agricultural practices may have to be planned. A major prerequisite for implementing such a change in the existing program has increased bureaucratic and political commitment for protecting the existing forests and stimulating the growth of new plantations. Many government officials, working as they do in the city, consider woodfuel programs as uncommercial and unmodern and as perpetuating a subsistence existence (Goodman, 1987). This view of the role of forests has to be changed; in tropical areas economic development and ecological stability are interlinked as they are not in temperate areas (Bowonder, Prasad and Unni, 1987; Pearce, 1985; Warford, 1986). Only an understanding of the holistic view of environment and development in tropical areas can pave the way for forest conservation. The most critical aspect seems to be increasing the commitment of political and bureaucratic decisionmakers. Along with the protection of existing forests a number of steps are to be initiated. First, the most effective way of reducing the existing fuelwood demand without changing the structure of economic activities is to introduce fuel efficient cookstoves. Currently used cookstoves have fuel efficiencies of only 7 to 10% (Geller, 1983: Gupta. Rao and Prema, 1983). Relatively small improvements can increase efficiencies to 20 to



30%, i.e., by a factor of two to three. Widespread dissemination of fuel efficient cookstoves has not been achieved for the following reasons: -


absence of an effective institutional framework for widespread dissemination; little or no systematic government support; lack of funds for implementation of extension programs on stoves (Bowonder, Prasad and Unni, 1987; Meier and Munasinghe, 1987). use of designs unacceptable to the intended users; lack of women’s participation in the extension programs; lack of trained personnel; and lack of a general awareness of the need for fuelwood conservation.

Introduction of fuel efficient stoves has the lowest marginal cost among the options for saving forests (Meier and Munasinghe, 1987). The savings to investment ratio of fuel efficient stoves is high. The constraints seem to be availability of designs and a proper manufacturing arrangement. Though India has the traditional skills for making cookstoves, they are not fuel efficient. The program for cookstoves has to have a component for training of stove builders and potters at the community level. Yet another missing component in the fuel efficient stove program is an implementation strategy which involves the existing village level institutional infrastructure. This approach will avoid the necessity for a new organization for dissemination activities but will also permit the use of the authority, experience and close relationship of the existing institutions with the villagers (Meier and Munasinghe. 1987). Along with the introduction of fuel efficient cookstoves, all subsidies to forest products which promote inefficient use of forest resources should be withdrawn. Normal market pricing practices should be stimulated. A proper pricing of forest products will go a long way toward reducing overuse and inefficient use. Also it will induce desirable changes in the form of fuel substitutions. The magnitude of the efficient cookstove dissemination program also needs attention. The Seventh Five Year Plan envisages an introduction of one million efficient stoves per annum in India. In India about 48 million households use fuelwood. At the existing rate of cookstove dissemination, it will take 48 years to reach all users. The ideal short-term solution for saving forests is the efficient stove program, but the size of the national plan for introduction of stoves seems to be small in relationship to the number of people to be reached.



Three long-term policy interventions are needed: (i) enabling people to switch to commercial fuels such as kerosene or low temperature carbonized coke (softcoke), by increasing income levels; (ii) stimulating agroforestry among farmers in order to satisfy fuelwood demands and (iii) promoting intensive wasteland plantations and energy plantations. The implications of these interventions are examined below. Recent studies confirm that wood fuel availability in many areas of India is greatly reduced (Agarwal and Narain, 1985). This process, if properly directed, can induce people to switch from fuelwood to commercial fuels. Subsidies on fuelwood, supplying wood to forest-based industries at below market prices, and allowing large institutional users to continue using fuelwood should all be discontinued through a package of policies. Higher income households and institutional and commercial users must be made to shift to commercial fuels by appropriate economic and administrative arrangements. This will require increasing levels of awareness and a proper demand management plan. For each area an energy plan should be prepared covering a period of five to 10 years as a part of the regional plan. In regional development plans traditional fuels have so far not found a place. In other words, for each region a long-term energy demand and supply plan has to be prepared in which the long-term objective must match the supply and demand. Another major strategy is the promotion of a comprehensive agroforestry program. If a properly designed agroforestry system were to be implemented and if trees and shrubs were to be grown along farm boundaries and paths, with they would not necessarily compete or, except for labor time, represent an opportunity cost against food grain crops (Goodman, 1987). What is lacking today is an integrated agricultural extension system which can satisfy sitespecific needs of farmers. This step requires stimulating wood generating land use (Arnold, 1987; Goodman. 1987; Nair, 1987; Winterbottom and Hazelwood, 1987) which is compatible with agricultural and fodder needs, such as -


promoting agrisilvicultural practices; encouraging tree individual planting schemes in hedges, boundaries and waste species; starting common woodlots or agripastoral schemes; developing peri-urban forests as commercial enterprises; involving women, children. voluntary agencies and youth in agroforestry.




This may necessitate changing land use regulations and relaxing existing rules to direct a land use movement which can balance the foodfodder-fuelwood needs. The food-fodderfuelwood demand is interlinked and any neglect of one component will prove non-sustainable in the long run (Bowonder and Prasad, 1987; Bowonder, Prasad and Unni, 1987; Pearce, 1985). Agroforestry must be promoted in the form of agrisilvicultural systems, silvopastoral systems and agrosilvopastoral systems (Prior, 1987; Arnold, 1987). The fragmented approach to agricultural planning has to be changed into a food-fodder-fuelwood planning system with proper linkages and governmental support. Another major policy intervention is to stimulate tree plantations in wastelands, degraded lands and high density energy plantations. The major missing steps for achieving this are: - absence of village level nurseries for generating seeds and seedlings; - absence of forestry extension education to farmers; - training experts for plantation forestry; - institutional arrangements for providing finance (credit is provided for agriculture but not forestry); - institutional planning systems at the district level for implementing forest plantations in wastelands; - institutional arrangements for involving large industries in wood plantations; - institutional arrangements for stimulating green belts in and around urban centers in the form of urban forestry schemes; - institutional arrangements for reserving a portion of irrigated command areas in irrigation projects for fodder and fuelwood species. Fuelwood shortages and deforestation are increasing and unless a comprehensive program is planned and implemented, reversing the existing trends is unlikely.

8. CONCLUSION Fuelwood prices have risen sharply in India relative to prices of other commodities. This has been the result of increases in demand for fuelwood and decreases in supply of fuelwood due to the degradation and depletion of forests. The sharp rise of price of fuelwood in urban markets will induce a flow of wood away from rural areas; this will cause shortages of fuelwood in rural areas and the monetization of fuelwood markets in rural areas. Policy interventions for alleviating the shortage of fuelwood fall into three categories: (i) increasing the commitment to saving existing forests from degradation and depletion; (ii) stimulating the use of fuel efficient cookstoves to contain fuelwood demand, and using other economic instruments to manage the fuelwood demand; (iii) stimulating agroforestry systems and wasteland plantations, and inducing substitutions to match supply and demand in the long run. To conclude, it is necessary to move away from marginal solutions or incremental changes if deforestation is to be reduced. Use of purely administrative instruments will not solve the problem. Hence administrative instruments have to be






(such as community control, increased extension services, voluntary protection and arrangements, and integrating forestry and agricultural practices) and economic instruments (reduced subsidies for forestry products, pricing wood at its real resource cost and providing financial assistance or incentives for tree plantations). This may not be possible without a strong political commitment to managing wood resources on a sustainable basis. and without increasing the awareness of farmers of the need to adopt agroforestry in order fo stabilize incomes.

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