IDEAS home Printed from https://ideas.repec.org/a/gam/jecomi/v12y2024i2p46-d1338306.html
   My bibliography  Save this article

Assessing the Relationship between Fuel and Charcoal Prices in Uganda

Author

Listed:
  • Grace Alinaitwe

    (School of Economics and Business, Norwegian University of Life Sciences, 1432 Ås, Norway
    Department of Management Science, Makerere University Business School, Kampala P.O. Box 1337, Uganda)

  • Olvar Bergland

    (School of Economics and Business, Norwegian University of Life Sciences, 1432 Ås, Norway
    School of Economic Sciences, Washington State University, Pullman, WA 99163, USA)

Abstract

Charcoal is a dominant energy source in urban areas of Uganda, and increases in retail prices in the past have led to social unrest. This paper assesses the relationship between charcoal and fuel prices to determine whether fuel prices influence the retail price of charcoal. We specify a transportation cost model for charcoal supply and derive the reduced-form equilibrium price function. We estimate an error-correction model for the equilibrium price with monthly data from July 2010 to January 2021 to determine whether there are long-term and/or short-term relationships between the retail and supply prices of charcoal and the prices of diesel and other fuel types. As the price data are integrated of orders zero and one, the autoregressive distributed lag (ARDL) bounds test is used. The results show that there is a long-term relationship (cointegration) between the retail price of charcoal and the supply price of charcoal and the price of kerosene, which is a substitute energy source for the end users. The prices of firewood and diesel are not statistically significant in the model. The long-term equation includes a positive trend, indicating that the retail price of charcoal is increasing more over time than implied by the supply price of charcoal and the price of kerosene. The increasing demand from a growing urban population and the reduced supply from deforestation are trends that will increase the equilibrium price of charcoal, as observed.

Suggested Citation

  • Grace Alinaitwe & Olvar Bergland, 2024. "Assessing the Relationship between Fuel and Charcoal Prices in Uganda," Economies, MDPI, vol. 12(2), pages 1-18, February.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:2:p:46-:d:1338306
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7099/12/2/46/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7099/12/2/46/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Von Cramon-Taubadel, Stephan, 2017. "The analysis of market integration and price transmission – results and implications in an African context," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 56(2), March.
    2. Hosier, R. H. & Kipondya, W., 1993. "Urban household energy use in Tanzania : Prices, substitutes and poverty," Energy Policy, Elsevier, vol. 21(5), pages 454-473, May.
    3. Fackler, Paul L. & Goodwin, Barry K., 2001. "Spatial price analysis," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 17, pages 971-1024, Elsevier.
    4. Angeliki N. Menegaki, 2019. "The ARDL Method in the Energy-Growth Nexus Field; Best Implementation Strategies," Economies, MDPI, vol. 7(4), pages 1-16, October.
    5. Robert Engle & Clive Granger, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    6. Monika Roman & Zdeňka Žáková Kroupová, 2022. "Spatial Market Integration: A Case Study of the Polish–Czech Milk Market," Economies, MDPI, vol. 10(1), pages 1-27, January.
    7. Hofstad, Ole, 1997. "Woodland Deforestation by Charcoal Supply to Dar es Salaam," Journal of Environmental Economics and Management, Elsevier, vol. 33(1), pages 17-32, May.
    8. Khundi, Fydess & Jagger, Pamela & Shively, Gerald & Sserunkuuma, Dick, 2011. "Income, poverty and charcoal production in Uganda," Forest Policy and Economics, Elsevier, vol. 13(3), pages 199-205, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ioannis Katsampoxakis & Stylianos Xanthopoulos & Charalampos Basdekis & Apostolos G. Christopoulos, 2024. "Can ESG Stocks Be a Safe Haven during Global Crises? Evidence from the COVID-19 Pandemic and the Russia-Ukraine War with Time-Frequency Wavelet Analysis," Economies, MDPI, vol. 12(4), pages 1-20, April.
    2. Nathan Kasanda Mukendi & Heritier Khoji Muteya & Bienvenu Esoma Okothomas & Dieu-donné N’tambwe Nghonda & John Tshomba Kalumbu & Laurent Ngoy Ndjibu & Fabio Berti & Yannick Useni Sikuzani & Jules Nkul, 2025. "Marketing Strategies and Production Profitability of Charcoal in the Rural Zone of Lubumbashi, Democratic Republic of the Congo," Sustainability, MDPI, vol. 17(9), pages 1-22, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. D'Agostino, Anthony L. & Urpelainen, Johannes & Xu, Alice, 2015. "Socio-economic determinants of charcoal expenditures in Tanzania: Evidence from panel data," Energy Economics, Elsevier, vol. 49(C), pages 472-481.
    2. Felix, Mwema, 2015. "Future prospect and sustainability of wood fuel resources in Tanzania," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 856-862.
    3. Alejandro Acosta & Rico Ihle & Stephan Cramon-Taubadel, 2019. "Combining market structure and econometric methods for pricetransmission analysis," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(4), pages 941-951, August.
    4. Theodosios Anastasios Perifanis, 2022. "The Macroeconomic Results of Diligent Resource Revenues Management: The Norwegian Case," Energies, MDPI, vol. 15(4), pages 1-14, February.
    5. Chelanga, Philemon & Jensen, Nathaniel & Muendo, Kavoi Mutuku, 2022. "Pastoral livestock market integration amidst improvements in physical and communication infrastructure: Evidence from northern Kenya," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 17(4), December.
    6. Thompson, Stanley R. & Bohl, Martin T., 1999. "International Wheat Price Transmission And Cap Reform," 1999 Annual meeting, August 8-11, Nashville, TN 21705, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Baffes, John & Gohou, Gaston, 2005. "The co-movement between cotton and polyester prices," Policy Research Working Paper Series 3534, The World Bank.
    8. Abdul-Malik Abdulai, 2023. "The impact of remittances on economic growth in Ghana: An ARDL bound test approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2243189-224, June.
    9. Ijambo, Bertha Deshimona, 2017. "An econometric analysis of spatial market integration and price formation in the Namibian sheep industry," Research Theses 334744, Collaborative Masters Program in Agricultural and Applied Economics.
    10. Ofentse, Goetswamang Phankie, 2022. "Evaluation of the prospects of hedging Botswana's maize prices against the Johannesburg Stock Exchange Commodity Market Derivative," Research Theses 334751, Collaborative Masters Program in Agricultural and Applied Economics.
    11. Traub, Lulama Ndibongo & Myers, Robert J. & Jayne, Thomas S. & Meyer, Ferdinand H., 2010. "Measuring Integration and Efficiency in Maize Grain Markets: The Case of South Africa and Mozambique," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 96644, African Association of Agricultural Economists (AAAE).
    12. Nzuma, Jonathan Makau & Kirui, Patrick Kipruto, 2021. "Transmission of global wheat prices to domestic markets in Kenya: A cointegration approach," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 16(01), March.
    13. Félix Badolo, 2012. "Chocs de prix internationaux et transmission : cas du marché du riz au Burkina Faso," L'Actualité Economique, Société Canadienne de Science Economique, vol. 88(3), pages 317-346.
    14. Brosig, Stephan & Yakhshilikov, Yorbol, 2005. "Interregional Integration Of Wheat Markets In Kazakhstan," IAMO Discussion Papers 14921, Institute of Agricultural Development in Transition Economies (IAMO).
    15. Djuric, Ivan & Gotz, Linde & Glauben, Thomas, 2011. "Effekte der Staalichen Marktintervention auf den Weizenmarkt in Serbien während der Nahrungsmittelkrise in 2007/2008," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114485, German Association of Agricultural Economists (GEWISOLA).
    16. Vladimír Hajko & Jaroslav Bil, 2013. "The Relevant Markets for Meat Production and Processing in the Czech Republic: Analysis of the Price Movements," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 7(3), pages 178-197, November.
    17. Barry K. Goodwin & Matthew T. Holt & Gülcan Önel & Jeffrey P. Prestemon, 2018. "Copula-based nonlinear modeling of the law of one price for lumber products," Empirical Economics, Springer, vol. 54(3), pages 1237-1265, May.
    18. Ha Junsheng & Yuning Mu & Muhammad Mehedi Masud & Rulia Akhtar & Abu Naser Mohammad Saif & K. M. Anwarul Islam & Nusrat Hafiz, 2024. "Navigating the nexus: unraveling technological innovation, economic growth, trade openness, ICT, and CO2 emissions through symmetric and asymmetric analysis," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-13, December.
    19. John Baffes & Varun Kshirsagar & Donald Mitchell, 2019. "What Drives Local Food Prices? Evidence from the Tanzanian Maize Market," The World Bank Economic Review, World Bank, vol. 33(1), pages 160-184.
    20. Livat, Florine & Alston, Julian M. & Cardebat, Jean-Marie, 2019. "Do denominations of origin provide useful quality signals? The case of Bordeaux wines," Economic Modelling, Elsevier, vol. 81(C), pages 518-532.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jecomi:v:12:y:2024:i:2:p:46-:d:1338306. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.