Gas produced by decaying human waste is a potentially major source of energy that could provide electricity for millions of homes while improving sanitary conditions in developing countries, according to a UN report.

Biogas is produced when bacteria break down human feces. And it would be worth the equivalent of $9.5 billion in non-renewable natural gas, the United Nations Institute for Water, Environment and Health said on Tuesday.

Residues from treated waste could yield two million tons a year of "solid" fuel worldwide that could reduce charcoal use and the number of trees being felled, which would help in global warming reduction efforts, the report added.

In low-income countries, the use of biogas could finance development, it said.

"When it comes to creating misery and poverty, human waste mismanagement has few rivals," Zafar Adeel, UNU-INWEH director, said in a statement.

Almost a billion people around the world do not have access to toilets, about 60 percent of them in India, and have to relieve themselves outdoors, according to the U.N.

If their waste was collected and used to produce biogas, it could generate electricity for 10 million to 18 million households and be worth $200 million to $376 million per year, the UNU-INWEH report said.

Bringing toilets to so many areas also will improve hygiene and public health in these countries. Poor sanitation is to blame for 10 percent of illnesses in developing countries, the researchers said.

"Challenges are many, but clearly there is a compelling, multi-dimensional financial case to be made for deriving energy from waste," said Chris Metcalfe, one of the authors of the study.

Wire services