The economic importance of charcoal to rural livelihoods: Evidence from a key charcoal-producing area in Ghana

Charcoal is the main source of energy for urban households and a key source of income for rural households in many developing countries. We used survey data from 400 charcoal- and non-charcoal-producing households and results from participatory rural appraisals to demonstrate the economic importance of charcoal to rural livelihoods in a key charcoal-producing area in Ghana. Income from charcoal is the second-most important source of income, after crops. Contrary to findings of previous studies, high-income households obtain higher income from charcoal than do low-income households. We quantify charcoal's role as a cash income provider and found it to be the highest source of cash income to rural households. We find trading in charcoal to provide substantial income to rural households, albeit for a small section of our sample population. We also demonstrate the important role of charcoal as seasonal income gap-filler and as safety-net for households that face economic shocks. Low-income households use charcoal to fill seasonal income gaps because they do not have other sources of income, or their sources of income are not sufficient at certain periods of the year. High-income households on the other hand seasonally produce charcoal when it becomes more profitable. Although rural households use multiple strategies to cope with economic shocks, charcoal production appears to be a dominant strategy. Albeit an important source of income for many households in the study area, the highest income levels are obtained by the relative few members involved in charcoal business/trade. In view of this and a projected increase in charcoal consumption in Ghana and throughout sub-Saharan Africa and indications of a dwindling resource base, there is an urgent need for careful policy interventions to secure both the economic and environmental sustainability of charcoal production.