234 Oliver W. Johnson et al.
Implementation risks
Figure 13.5 highlights the risks to implementation of sustainable charcoal. The
financing risks relate to covering the cost of forest management interventions and
supporting the purchase of improved technology for charcoal production (kilns)
and charcoal consumption (cookstoves). Charcoal production is widely considered to be a significant cause of deforestation and forest degradation, although
the precise causal pathway is distorted by links to other drivers of forest degradation such as timber extraction, grazing of livestock, and clearing of forests to make
way for crop production (Bailis et al., 2017; Hosonuma et al., 2012). According to
many stakeholders, there is almost no financing available to fund the farm forestry
and reforestation interventions necessary to establish a sustainable supply of
biomass for charcoal production and to maintain forest cover. Meanwhile, charcoal producer associations note that efficient charcoal production technologies
present a considerable financial expenditure for their members, who typically earn
a low and unstable income and have little formal access to credit. Innovative
financing mechanisms were widely considered vital to facilitating purchase of
these improved production technologies, but stakeholders acknowledged that
making formal lending solutions work within a largely informal sector presents a
considerable obstacle. Those working on the charcoal demand side noted greater
success in consumer- financing schemes for efficient charcoal consumption technologies, such as improved cookstoves, but warned of a distribution market marred
by a wide variation in product quality. The irony of these financial risks is that, if
the sector were streamlined, the government would retain about US$60 million
with a 16% VAT rate, which potentially could be reinvested into the sector and
thus used to manage financial risk (Ministry of Environment, Water and Natural
Resources, 2013; Mutimba and Barasa, 2005).
Another risk is weak enforcement of the formal permitting system under the
2009 Forest (Charcoal) Rules. The system has done little to disincentivise production, transport, and use of charcoal from unsustainable sources. Kenya’s
informal system of bribes – so well- established that producers, transporters, and
wholesalers have come to view it as an acceptable component of the charcoal
trade – exacerbates the situation. Meanwhile, the formal permitting system is
new, and the compliance requirements are often misunderstood by the traffic
police and Kenya Forest Service officers tasked with verifying the validity of all
movement permits. Officers are often individual beneficiaries of bribes and thus
may have little incentive to enforce a formal permit system that instead benefits
the local or national government. Since devolved county governments were
created in 2013, counties with charcoal production hotspots – such as Kitui,
Narok, and Kajiado counties – have started to establish and enforce their own
regulations with which local charcoal producer associations and transporters
have to comply. It is yet to be seen if they will prove more effective and enforceable than the national regulations.
The third risk is associated with competition from alternative cooking fuels.
While a sustainable charcoal sector is an attractive proposition to some, others
Implementation risks
Figure 13.5 highlights the risks to implementation of sustainable charcoal. The
financing risks relate to covering the cost of forest management interventions and
supporting the purchase of improved technology for charcoal production (kilns)
and charcoal consumption (cookstoves). Charcoal production is widely considered to be a significant cause of deforestation and forest degradation, although
the precise causal pathway is distorted by links to other drivers of forest degradation such as timber extraction, grazing of livestock, and clearing of forests to make
way for crop production (Bailis et al., 2017; Hosonuma et al., 2012). According to
many stakeholders, there is almost no financing available to fund the farm forestry
and reforestation interventions necessary to establish a sustainable supply of
biomass for charcoal production and to maintain forest cover. Meanwhile, charcoal producer associations note that efficient charcoal production technologies
present a considerable financial expenditure for their members, who typically earn
a low and unstable income and have little formal access to credit. Innovative
financing mechanisms were widely considered vital to facilitating purchase of
these improved production technologies, but stakeholders acknowledged that
making formal lending solutions work within a largely informal sector presents a
considerable obstacle. Those working on the charcoal demand side noted greater
success in consumer- financing schemes for efficient charcoal consumption technologies, such as improved cookstoves, but warned of a distribution market marred
by a wide variation in product quality. The irony of these financial risks is that, if
the sector were streamlined, the government would retain about US$60 million
with a 16% VAT rate, which potentially could be reinvested into the sector and
thus used to manage financial risk (Ministry of Environment, Water and Natural
Resources, 2013; Mutimba and Barasa, 2005).
Another risk is weak enforcement of the formal permitting system under the
2009 Forest (Charcoal) Rules. The system has done little to disincentivise production, transport, and use of charcoal from unsustainable sources. Kenya’s
informal system of bribes – so well- established that producers, transporters, and
wholesalers have come to view it as an acceptable component of the charcoal
trade – exacerbates the situation. Meanwhile, the formal permitting system is
new, and the compliance requirements are often misunderstood by the traffic
police and Kenya Forest Service officers tasked with verifying the validity of all
movement permits. Officers are often individual beneficiaries of bribes and thus
may have little incentive to enforce a formal permit system that instead benefits
the local or national government. Since devolved county governments were
created in 2013, counties with charcoal production hotspots – such as Kitui,
Narok, and Kajiado counties – have started to establish and enforce their own
regulations with which local charcoal producer associations and transporters
have to comply. It is yet to be seen if they will prove more effective and enforceable than the national regulations.
The third risk is associated with competition from alternative cooking fuels.
While a sustainable charcoal sector is an attractive proposition to some, others