My Research

This blog organizes my research on developing a fuelwood plantation near Diriamba on 100 manzanas of my friend's land. Hopefully someone will read it and weigh in.

Success of others: Prolena and the Madilena project have already demonstrated the viability of providing sustainable fuelwood to industries that use it such as lime and brick makers. These industries (Leon, San Rafael ,Tipitapa) are not far from Diriamba.

How to do it: Form a Forest Replacement Association and trade USE of land + seed livestock with local farmers for oversight of the fuelwood / teak crop and small share of the farmer's produce and livestock. The crop would be viable within 7 years and would require little maintenance besides trimming. Build goodwill and security by giving briquettes to locals for free.

How to Pay For Start Up: Apply for grants, obtain technical assistance from ProLena, have the FRA members pay a share of fencing, seedling cost, property utility infrastructure, and provide labor for other projects such as tilapia farming using the Israeli method in exchange for rights to the crop.

Have farmers trade produce / livestock products with other farmers; build a bodega on the property for their produce; Produce charcoal briquettes for the luxury charcoal market (export) and for locals.

Why: Currently, 50% of Nicaragua relies on fuelwood. That number is somewhat lower in Managua.Improvements in stove design ARE being made to reduce the amount of fuelwood use.

Good overview of fuelwood versus other fuels in developing countries http://www.fao.org/docrep/r6560E/r6560e03.htm

Fuelwood and deforestation in Nicaragua http://www.hedon.info/DeforestationAndForestDegradationByCommercialHarve...

Prolena http://prolenaecofogon.org/Englisheco/Organizacion.html

The FRA concept http://www.fao.org/DOCREP/ARTICLE/WFC/XII/0380-C2.HTM

The threat of substitute products - almost none, unless a large investment is made in the utility grid or gas distributio

buyer propensity to substitute - yes, fuelwood is cheap and readily available on the road or at natural forests. Nobody has to buy sustainably grown fuelwood

buyer switching costs - none, fuelwood burns the same whether it sustainbly grown or not

perceived level of product differentiation - my research shows that some species are preferred in the dry season; some of these are endangered natives

The threat of the entry of new competitors - fuelwood supply is provided by clandestine timber merchants - no large plantations exist, but a movement is underway by Prolena to encourage farms to provide sustainably grown fuelwood

the existence of barriers to entry - yes, you need land and capital to start a plantation

capital requirements - can be dispersed by using Forest Replancement Associations such has been done by Prolena

access to distribution - this is challenging, it seems like the major fuelwood markets are in Masaya or where Prolena is currently supplying. Still the emphasis of the fuelwood project is free local distribution as opposed to profit. Profit will come from bodega, services, and teak crop in very long term.

The intensity of competitive rivalry - very tough; price point is very low ($.25 per kilo and one person uses at least a kilo a day) and the government cannot protect natural forests so the supply is very high, although it's dwindling. Nicaragua is currently 42.7% forested and losing 1.53% of its forest every year which will increase the price of fuelwood.

The bargaining power of customers - none, they depend on fuelwood. The bargaining power of suppliers - pretty strong