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Ghana Priorities: LPG Cooking

The Problem

Over 1.6 million people died globally in 2017 from harmful exposure to PM2.5 emissions from household use of solid fuels such as wood, coal, charcoal, and agricultural residues for cooking according to estimates by the Global Burden of Disease 2017 (GBD 2017) Project.  This makes household air pollution (HAP) one of the leading health risk factors in developing countries.  
Nearly 10,000 people died from HAP in Ghana in 2017 according to GBD 2017.  As many as 78% of the population in Ghana relied on solid fuels as primary cooking fuels in 2017, while 21% used LPG according to the Ghana Maternal Health Survey 2017. Charcoal is the predominant solid fuel used in urban areas and fuelwood is the predominant fuel in rural areas.  While 35% of the urban population used LPG, only slightly over 6% used LPG in rural areas. 
The adoption of improved cookstoves is low in Ghana with very few households using improved charcoal stoves. Currently, the popular and most used improved cookstove is the Gyapa coal port stove while others are the Toyola stove, Kenya Jiko stove as well as improved wood stove such as Philips and environfit wood stoves. Judging from exposure studies around the world, household members’ average exposures to PM2.5 may be on the order of 100-200 µg/m3 among households cooking with solid biomass fuels, depending on cooking location in the household environment (Larsen, 2017).  These exposure levels are 10-20 times the WHO’s outdoor annual air quality guideline (AQG) of 10 µg/m3, and cause serious health effects including heart disease, stroke, lung cancer, respiratory diseases and diabetes.
In order to reduce the burden of the use of harmful cooking methods in Ghana, three interventions are evaluated in this paper in terms of their benefits and costs:
  1. Promotion of improved fuelwood and charcoal cookstoves.
  2. Expanded distribution of LPG in rural areas
  3. Elimination of taxes on LPG fuel for cooking.
Benefits and costs are presented as a ratio of the present value of benefits and the present value of costs (benefit-cost ratios (BCRs) over a ten-year intervention horizon.
It should be noted that a comparison of benefits and costs of the three interventions does not imply that the interventions are mutually exclusive.  However, a ranking of the interventions in terms of high to low benefit-cost ratios (BCRs) provide valuable information as to setting priorities when facing limited resources.

Intervention 1: Improved Biomass Cookstoves

Overview

Improved biomass cookstoves are designed to be more energy efficient and to generate less smoke than traditional cookstoves or cooking over open fire.  Such stoves, therefore, have the potential to reduce harmful PM2.5 emissions over the life of the stove.

Implementation Considerations

The success of improved cookstove promotion programs – i.e., high household adoption rates, sustained use of the cookstoves, and proper functioning of the stoves - depend on factors such as household acceptability of the characteristics of the stoves being promoted, stove financing arrangements, household perceptions of benefits of the cookstoves, and program follow-up in terms of monitoring and promotion of sustained use of the stoves as well as proper stove maintenance and repair.

Costs and Benefits

Costs and benefits are estimated based on a sustained user rate of 65% of households that initially adopt the improved cookstoves, as some households invariably will discontinue the use of the improved stoves for various reasons.
No specific stove adoption rate has been assumed.  Benefits and costs are rather estimated per household adopting the stoves.
Costs
The total costs of the intervention included initial cost of stove, cost of stove maintenance over its useful life, and stove promotion program cost. The present value of cost per household for the use of the intervention (Gyapa stoves) is estimated at GHS 459 (BCR Summary Table).
Benefits
The quantified benefits of the intervention are the value of health improvements (“disability adjusted life year” (DALY) valued at 1.3-1.6 times GDP per capita), biomass fuel savings resulting from the higher energy efficiency of the stoves (40% for improved fuelwood stoves and 30% for improved charcoal stoves), reduced cooking time resulting from the improved cookstove, and reduced CO2 emissions. Value of fuel savings is time savings from reduced fuelwood collection in rural areas (with time valued at 50% of wage rate), and reduced purchase of fuelwood in urban areas and reduced purchase of charcoal in both rural and urban areas valued at market prices. The present value of total benefits per household that adopts the use of improved cookstoves in rural and urban areas is estimated respectively at GHS 4,156 and GHS 6,125 for improved wood stoves and at GHS 2,665 and GHS 3,705 for improved charcoal stoves (BCR Summary Table).

Intervention 2: Expanded Distribution of LPG in Rural Areas

Overview

An impediment to the adoption of LPG for cooking in rural areas is household travel distance to LPG refilling stations for the refilling of household LPG cylinder.  A cylinder recycling program with Motorking (motorcycle with smaller trailer) distribution from refilling stations to local village retail outlets could improve this situation.  This will reduce the cost of LPG (net of household travel time to refill stations) for rural households currently using LPG, increase the user rate of LPG among rural households currently within reach of a refill station, and more than double the number of rural households with access to LPG. Overall, we estimate the intervention will increase the number of households using LPG from about 350 thousand households to nearly 800 thousand households.

Implementation Considerations

Expanded distribution through a cylinder recycling program with village retail outlets can potentially be viewed with opposition by existing refilling stations.  The expanded distribution proposed here, therefore, builds on existing stations rather than replacing them.

Costs and Benefits

Costs and benefits are estimated based on a sustained user rate of 65% of households that initially adopt LPG, as some households invariably will discontinue the use of LPG for various reasons.
Costs
For new rural users of LPG resulting from a new distribution system, the main household cost is the cost of LPG fuel representing 85-90% of total costs.  Other costs are the cost of LPG stove; cylinder and connection equipment; stove maintenance; and an LPG promotion program. The total present value of cost per household for expanded distribution of LPG in rural areas over a ten-year intervention horizon is estimated at GHS 3,869 for new users of LPG.  
For current rural users of LPG, the present value of cost is simply the new cost of distribution, or GHS 347 per household, while the benefit is the savings from no longer having to travel to a refill station (BCR Summary Table).
Benefits
The quantified benefits of the intervention are the value of health improvements, biomass fuel savings resulting from switching to LPG or increased use of LPG, reduced cooking time resulting from the LPG cookstove, travel cost savings for rural household currently refilling their LPG cylinder at a refill station (and not having to incur this travel with an expanded distribution to local retail outlets), and reduced CO2 emissions relative to the use of fuelwood and charcoal of which a share of wood harvesting is considered unsustainable.  Biomass fuel savings are valued by the same method as in the first intervention.  The travel cost savings are about six times larger than the incremental cost of Motorking distribution to local village retail outlets. The total present value of benefits per household for expanded distribution of LPG in rural areas was estimated at GHS 7,064 for new users of LPG and as much as GHS 2,177 in travel cost savings for current rural users of LPG (BCR Summary Table).

Intervention 3: Elimination of Taxes on LPG Fuel for Cooking

Overview

The recent implementation of 23% taxes on LPG fuel by the government of Ghana is seen as having a negative effect on LPG consumption for cooking, and thus a drawback on the government’s LPG penetration objectives.  Removing the taxes will lower end-user prices of LPG and this, in turn, increase the use of LPG for cooking in both urban and rural areas. It is here estimated that removing the 23% tax on LPG will increase the number of households using LPG by 23% if the price elasticity of demand for LPG is -1.0, thus from currently 2.05 million households to 2.5 million.

Implementation Considerations

Elimination of taxes on LPG fuel for cooking has implications on the finances of the government of Ghana. That notwithstanding, the imposition of taxes on LPG has negative implications for households that are already using LPG as well as those intending to switch to LPG. An implementation consideration is therefore to identify designs that protect households from increased expenditure on LPG as well as improving health and the environment from the harmful effects of the use of biomass. 

Costs and Benefits

Costs
The main household cost of switching to LPG as the price of LPG declines from the removal of LPG taxes is the cost of LPG fuel.  This is followed by the cost LPG stove, cylinder and connection equipment for users who may not previously have used LPG; and stove maintenance cost. The present value of cost per household over the ten-year intervention horizon is estimated at GHS 3,744.  If the government tax revenue loss is included as a cost, then the cost is GHS 6,445 per household (BCR Summary Table).
Benefits
The quantified benefit of eliminating taxes on LPG fuel for cooking, and resultant increased use of LPG instead of biomass fuels, is the value of health improvements, biomass fuel savings resulting from switching to LPG or increased use of LPG, reduced cooking time resulting from the LPG cookstove, and reduced CO2 emissions, as in the case of expanding LPG distribution in rural areas. The present value of benefits per household with the intervention of eliminating taxes on LPG was estimated at GHS 9,770.  If the tax removal is included as a benefit to households, then the total benefit is GHS 12,471 per household (BCR Summary Table). 

Benefit-Cost Ratios

Benefit-cost ratios (BCRs) are found to be the largest for the promotion of improved fuelwood cookstoves among households that currently use traditional wood stoves or open fire (BCR=9-13) and for promotion of improved charcoal cookstoves among households that currently use traditional charcoal stoves (BCR=6-8).  This is followed by the expanded distribution of LPG in rural areas (BCR=2-6) and the elimination of taxes on LPG fuel for cooking nationwide (BCR=1.9-2.6). The BCRs are larger in urban areas than in rural areas primarily because of the higher value of fuel savings and household valuation of time savings in urban areas.  The quality of evidence associated with the estimated benefits and costs of the interventions range from “medium” to “medium-strong”. 
While the BCRs for promotion of improved charcoal and fuelwood cookstoves are several times larger than for the interventions for expanded use of LPG and LPG tax removal, the health benefits of using LPG is roughly 50% larger than the health benefits of improved cookstoves.  Thus, in order to make a substantial dent in the huge health effects of solid fuels used for cooking in Ghana, predominant and sustained use of LPG or other clean cooking solutions need to be achieved.  However, improved biomass cookstoves can serve as an intermediate solution for households that elect to do so.