Bio-Based Energy, Rural Livelihoods and Energy Security in Ethiopia

by Dawit Guta (Author)
©2016 Thesis 246 Pages


This study explores issues of biomass energy use in relation to household welfare and it assesses Ethiopia’s future energy security with a focus on long-term model of the energy sector, and institutional arrangements required for decentralized energy initiatives. Data from Ethiopian rural households reveal negative welfare effects associated with traditional biomass energy utilization, while increases in the opportunity cost of fuelwood collection is associated negatively with allocation of labour to agriculture and fuelwood use. It appears that investment on integrated energy source diversification improves sustainability and resilience, but increases production cost. Innovations that improve alternative sources reduce production cost, improve energy security, and thus serve as an engine of economic growth.

Table Of Contents

  • Cover
  • Title
  • Copyright
  • About the Author
  • About the Book
  • This eBook can be cited
  • Abstract / Zusammenfassung
  • Table of Contents
  • List of Tables
  • List of Boxes
  • List of Figures
  • Acknowledgments
  • Abbreviations
  • Chapter One: Introduction
  • 1.1. Background
  • 1.1.1. Energy and sustainable development
  • 1.1.2. Biomass energy use and related challenges in developing countries
  • 1.1.3. Background and the energy situation in Ethiopia
  • 1.1.4. Fuelwood scarcity, household energy use, and related welfare effects
  • 1.1.5. The nexus of water, energy, and food
  • 1.1.6. The bioeconomy concept
  • 1.2. Research problem
  • 1.3. Research objectives, questions and hypothesis
  • 1.4. Conceptual and theoretical background
  • 1.5. Organization of the study
  • Chapter Two: Household bio-based energy utilization and energy mix behaviour, and related linkages with food security and welfare effects
  • 2.1. Introduction
  • 2.2. Study site characteristics
  • 2.3. Agricultural Household Model, bio-based energy production and utilization, drivers and welfare effects
  • 2.3.1. Conceptual framework
  • 2.3.2. Relationships between poverty, rural household energy use, and environmental degradation in developing countries
  • 2.3.3. Determinants of household bio-based energy use in developing countries
  • 2.3.4. Theoretical framework of the Agricultural Household Model
  • 2.3.5. Empirical econometric strategy
  • 2.4. Description of the data and sampling technique
  • 2.5. Descriptive statistics
  • 2.6. Regression results and discussion
  • 2.6.1. Probit model of household livelihood activity choices
  • 2.6.2. Fuelwood scarcity, cross-wage effects, and their welfare implications
  • Household labour allocation by activities
  • Household joint labour allocation to livelihood activities
  • Household joint labour share allocation to livelihood activities
  • Cross-wage effects and other determinants of household labour allocation and related empirical underpinnings
  • 2.6.3. Effects of fuelwood scarcity on household energy and food expenditures, and related energy mix and welfare implications
  • Fuelwood scarcity and household food and energy expenditures
  • Fuelwood scarcity, energy purchase choice, and related determinants
  • Discussion of the welfare implications
  • 2.6.4. Household bio-based energy utilization and welfare effects of fuelwood scarcity
  • 2.7. Conclusion and recommendations
  • Chapter Three: Energy sector model for assessing Ethiopia’s future energy security, uncertainties, and renewable energy resource options
  • 3.1. Introduction
  • 3.2. Energy security indicators and measurability
  • 3.3. Overview of Ethiopia’s energy sector: energy resource potential and consumption
  • 3.4. Ethiopia’s energy resource diversity, energy mix, and energy security
  • 3.5. Power production sources
  • 3.6. Energy consumption
  • 3.6.1. Electricity consumption
  • 3.6.2. Biomass energy consumption trends
  • 3.6.3. Energy consumption by sectors
  • 3.7. Ethiopia’s energy system: framework of existing energy use and prospective contributions of renewables to future energy security
  • 3.8. Bioenergy demand and prospective development applications
  • 3.8.1. Types of modern bio-based energy and their prospects for application in Ethiopia
  • 3.8.2. Sustainability dimensions of bio-based energy
  • Political aspects
  • Economic aspects
  • Social aspects
  • Environmental impact
  • Role of technological innovation and efficiency
  • 3.9. Review of the energy sector model
  • 3.9.1. Top-down energy models
  • 3.9.2. Bottom-up energy models
  • 3.9.3. Hybrid energy models
  • 3.10. Model choice and description
  • 3.11. Data and parameters used in the Ethiopia energy sector model
  • 3.12. Description of alternative scenarios
  • 3.13. Model validation
  • 3.14. Model results and discussion
  • 3.14.1. Electricity demand projection
  • 3.14.2. Shadow price of peak electricity demand
  • 3.14.3. Electricity production composition in the baseline model
  • 3.14.4. Implications of technological and efficiency innovations on energy security
  • Effects of technological and efficiency innovations on Ethiopia’s electricity production mix
  • Effects of technological and efficiency innovations on energy production cost
  • Effects of technological and efficiency innovations on shadow prices of energy resources
  • 3.14.5. Energy security implications of climate change or drought
  • Effects of drought on Ethiopia’s electricity production mix
  • Effects of drought on energy production costs
  • Energy source competitiveness: the Levelized cost of energy
  • 3.14.6. Capital subsidies for alternative renewable energy technology development
  • 3.14.7. Sensitivity analysis for fuel-switching effects on power capacity expansion
  • 3.15. Discussion of the limitations of the model and policy implications
  • 3.16. Conclusion and policy recommendations
  • Chapter Four: Institutional arrangements, collective actions, and national strategy options for decentralised clean energy generation and use in remote communities of Ethiopia
  • 4.1. Introduction
  • 4.2. Energy access in rural Ethiopia
  • 4.3. Technological and institutional issues
  • 4.3.1. Decentralized renewable energy technologies
  • 4.3.2. Institutions and collective action theories
  • 4.4. Bottlenecks and barriers to rural renewable energy use
  • 4.5. Strategies and institutional arrangements for decentralized modern biomass energy use, participatory forest management, and climate change mitigation
  • 4.5.1. Evolution of participatory forest management, energy, and climate change policies
  • 4.5.2. Critical challenges and opportunities: climate change mitigation, agriculture, and biomass energy
  • 4.6. Lessons from case studies on participatory forest management
  • 4.7. Lessons for decentralized renewable energy investment
  • 4.7.1. Insights from focus group discussions
  • 4.7.2. Lessons from institutional biogas experiences
  • 4.8. Supply and demand of decentralized bio–based energy and other renewable energy sources
  • 4.8.1. Biomass supply
  • 4.8.2. Energy end users or consumers
  • 4.9. Legal framework, institutions, and the role of government
  • 4.10. Conclusion and recommendations
  • Chapter Five: Summary, conclusion and policy recommendations
  • 5.1. Summary and conclusion
  • 5.2. Future research needs
  • References
  • Appendices
  • Annex 3.1. Technical annex of model constraints
  • Series index

List of Tables

Table 2.1.       Locations of the Ethiopian study sites

Table 2.2.       Demographic and geographic characteristics of the study site woredas (districts) in Ethiopia

Table 2.3.       Ethiopian study areas and sample sizes (number of households)

Table 2.4.       Sources of annual sample household earnings by village and year (shares)

Table 2.5.       Labour activity shares by village and year among Ethiopian sample households

Table 2.6.       Descriptive statistics of the household variables used in the analyses

Table 2.7.       Probit model results for household participation in livelihood activities (used for predicting the inverse Mills ratios used in the FE-2SLS model)

Table 2.8.       Probit model results for household participation in livelihood activities (used for predicting the inverse Mills ratios for predicting wages used in the SUR and AIDS models)

Table 2.9.       FE-2SLS model regression results for annual household labour allocations, corrected for both endogenieity and selectivity

Table 2.10.     Shadow wage estimates by household livelihood activity based on Wooldridge (1995) panel data, corrected for selectivity

Table 2.11.     SUR model regression results for household joint labour allocation

Table 2.12.     Almost Ideal Demand System model estimates of the household joint labour share equations

Table 2.13.     Own- and cross-wage elasticity of household labour shares among livelihood activities

Table 2.14.     Household energy purchase composition over time

Table 2.15.     First-stage wage equation results for the total per capita household energy expenditures from the FE-2SLS model, corrected for selectivity

Table 2.16.     Final-stage FE-2SLS model results for per capita household energy and food expenditures, corrected for selectivity ← XV | XVI →

Table 2.17.     Multinomial logit model results of purchased energy mix among Ethiopian sample households

Table 2.18.     Descriptive statistics of the variables used in the household energy consumption model

Table 2.19.     Household biomass energy use determinants

Table 2.20.     Price, income and expenditure elasticity of household energy consumption in Ethiopia

Table 3.1.       Major energy security considerations in Ethiopia

Table 3.2.       Current and potential or projected renewable energy resource capacity

Table 3.3.       Overview of renewable energy resources in Ethiopia

Table 3.4.       Strengths and weaknesses of top-down and bottom-up modelling approaches

Table 3.5.       Main data sources used to establish Ethiopia energy sector model parameters

Table 3.6.       Estimated declines in the cost of renewable energy options due to technological and efficiency innovations

Table 3.7.       Validation of installed capacity (MW) and power generated (GWh per year) results from different resources, Ethiopia energy sector model

Table 3.8.       Predicted declines in the minimised total cost of power generation due to the effects of changes in technological and efficiency innovation, and land rental costs compared to the baseline scenario, Ethiopia energy sector model (%)

Table 3.9.       The estimated minimised cost of energy production for different standard deviation levels of water availability variability with an annual electricity demand growth rate of 9 %, Ethiopia energy sector model (US$ millions)

Table 3.10.     Estimated capital subsidies required to make alternative renewable technologies competitive with hydroelectricity (US$ millions/kW) and the levelized cost of energy (US$/kWh), Ethiopia energy sector model

Table 4.1.       Rural Ethiopian household energy resource use for cooking and illumination over time (%), 2005–2011

Table 4.2.       Review of literature on decentralized renewable energy technology

Table 4.3.       Barriers to renewable energy use in Ethiopia and proposed policy measures to overcome them

Table 4.4.       Comparative descriptions of different power supply schemes ← XVI | XVII →

Table 4.5.       Challenges and opportunities presented by community-based participatory forest management initiatives

Table 4.6.       Estimated household expenditures on energy in Ethiopia (US$)

Table A 3.1.    Ethiopia’s existing power plants, 2010

Table A 3.2.    Final energy consumption in Ethiopia in tonnes of oil equivalent by energy type, 2005–2009

Table A 3.3.    Final energy consumption in Ethiopia in tonnes of oil equivalent by energy type, 2005–2009

Table A 3.4.    Ethiopia’s sectoral distribution of power consumption, 2000/01–2011/12 (GWh)

Table A 3.5.    Investment cost and capacity of selected hydroelectric plants in Ethiopia

Table A 3.6.    Ethiopia’s prospective hydroelectric projects

Table A 3.7.    Cost and technical data of selected existing hydroelectric plants in Ethiopia

Table A 3.8.    Cost and technical data for the Ethiopian energy sector model

Table A 3.9.    Cost and technical data for the biomass energy model ← XVII | XVIII → ← XVIII | XIX →

List of Boxes

Box 3.1.   Equations used in the Ethiopia energy sector model

Box 3.2.   Variables and parameters used in the Ethiopia energy sector model

Box 3.3.   Baseline scenario parameter values used in the Ethiopia energy sector model

Box 3.4.   Scenarios in the Ethiopia energy sector model ← XIX | XX → ← XX | XXI →


ISBN (Hardcover)
Publication date
2015 (December)
Biomass energy Econometric analysis Labour allocation Decentralized energy Alternative renewable energy
Frankfurt am Main, Berlin, Bern, Bruxelles, New York, Oxford, Wien, 2015. XXX, 246 pp., 45 tables, 34 graphs

Biographical notes

Dawit Guta (Author)

Dawit Diriba Guta holds a Master of Science in Natural Resource and Environmental Economics from Addis Ababa University, Ethiopia, and a PhD in agricultural economics from the University of Bonn, Germany. He is conducting his postdoctoral research at the University of Bonn.


Title: Bio-Based Energy, Rural Livelihoods and Energy Security in Ethiopia