Cost/benefit analysis of biomass energy supply options for rural smallholders in the semi-arid eastern part of Shinyanga Region in Tanzania

This study analyzes the economic feasibility of sustainable smallholder bio-energy production under semi-arid conditions. The eastern part of Shinyanga region in Tanzania was chosen as a case study area. Three different sustainable biomass energy supply systems were compared by means of cost/benefit analysis: a small-scale forestation project for carbon sequestration, a short rotation woodlot and a Jatropha plantation, thereby using the produced Jatropha oil as a substitute for fuelwood or diesel. Rotational woodlots are most profitable with a Net Present Value of up to US$2007 1165/ha, a return on labour of up to US$2007 6.69/man-day and a fuelwood production cost of US$2007 0.53/GJ, compared to a local market price of US$2007 1.95/GJ. With a production cost of US$2007 19.60/GJ, Jatropha oil is too expensive to be used as an alternative for fuelwood. Instead it can be utilized economically as a diesel substitute, at an observed diesel cost of US$2007 1.49/l. The mean annual biomass increment (MAI) in semi-arid East Shinyanga is too low to collect sufficient benefits from trading forestation carbon credits under the Clean Development Mechanism (CDM) to cover the costs of forestation and forest management.