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CID Research Fellow and Graduate Student Working Paper No. 56

January 2012

Socio-Economic Sustainability of Biofuel Production in Sub-Saharan Africa: Evidence from a Jatropha Outgrower Model in Rural Tanzania

Elisa Portale

Abstract

Energy services can boost social and economic well-being, and access to energy is a crucial component to relieving poverty, improving human welfare, and raising living standards. In Africa, there is a growing interest for biofuel projects by foreign private investors, as well as increasing support from bilateral and multilateral donors towards incorporating biofuels into Governments’ development plans and energy policies. Biofuels have the potential to provide a new market, income opportunities, and economic growth in rural areas. However, many disadvantages are related to biofuel development, such as food competition and land displacement. Hence, to maximize benefits, the promotion of biofuels needs to be carefully planned and sustainably implemented. This paper investigates whether an outgrower scheme for a Jatropha production project in Tanzania is capable of developing “socio-economic sustainable outcomes for farmers.” The answer relies on an analysis of the farmers’ material benefits and subjective perceptions about the overall welfare contribution of the outgrower scheme, on top of an economic sustainability analysis of the investment by the foreign company. This research broadens the measurement of sustainable development by enlarging the domain of its measurement to include non-material goods such as relationships, well-being, and perceptions. This study is the first to propose a practical way to operationalize such an analysis and to apply it to a concrete investment project.

Keywords: sustainable development, rural development, biofuel, renewable energy

JEL subject codes: Q01, Q42

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