Le changement climatique, contrainte nouvelle pour les acteurs du développement
Le Président du Groupe d’Experts Intergouvernemental sur l’Evolution du Climat appelle ... Kemal Dervis was prescient on the point that oil prices that go up might well come down. Development aficionados ... Although the negative impacts of the financial crisis are taking a toll on the real economies of many developing countries, ... My shop is finalizing the preparations for a two-day brainstorming session on the future of European aid. It is a good occasion to open the floor to its participants (and beyond: as always anyone should feel free to join in!) to reflect on the way Europeans envisage their development policy
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I recently came across a post by Nancy Birdsall on a new instrument promoted by the Center for Global Development, called ‘Cash on Delivery’ aid. In a way (Nancy, whose Center is a partner of ID4D, might wish to correct me if I am wrong, or complete if need be) it is conceptually close to ‘output-based aid’, except that governments rather than non-governmental actors are in charge of delivering the output, and that aid comes as a form of reward upon delivery rather than a direct payment of the costs incurred. The novel philosophy in this approach is that donors are as ‘hands-off’ as possible - leaving it up to recipient countries to find the most appropriate ways to reach given objectives. In a nutshell, under this type of program donors would commit ex ante to pay a specific amount for a specific measure of progress on a specific objective. In education, for example, donors could promise to pay 100€ or so for each additional child who completes primary school and takes a standardized competency test.
I find this concept appealing in three important ways:
- first, it is serious about ownership: by targeting a specific goal but not interfering in the policy choices, it leads governments to think through the most appropriate ways to reach this objective in their specific national context. Experience has shown that donors don’t always know best.
- second, it shifts incentives away from inputs (how much money do we give?) towards outputs (what concrete results do we achieve?), and clearly places the onus of results on governments. If pilot projects are set up, they will teach us important things about how public choices are made within governments, and to what extent they influence performance. For one thing, there is likely to be more public scrutiny and debate on the decisions made to ‘win’ the challenge - which may be a positive result in itself.
- this leads me to a third interesting dimension, which is the underlying ambition of changing the structure of the incentives. Cash on delivery works on supply-side incentives. Other initiatives (targeted at young girls in India, but also at public school students in Washington DC!) have worked on education through the demand-side, by paying children to attend and get good grades. Comparing the successes of demand-side and supply-side incentives in the field of education could teach us a lot on the determinants of progress.
Yet I also have my concerns (aside from obvious technical difficulties of finding agreed and verifiable benchmarks of ‘success’, which are important to think through but can probably be overcome):
- how will the governments attain results if aid isn’t there in the first place? This is a typical ‘chicken and egg’ problem: some countries do not have the budgetary space to ‘invest’ in the big push that would be needed to attain the objectives initially. These programmes would therefore need to be complementary to existing programs (such as the Fast Track initiative in education).
- secondly, Cash on delivery is a form of (ex-post) conditional aid. As a reward to good performers, it risks imposing a double penalty on populations whose governments are incapable of delivering. And by penalizing ‘poor performers’, it makes the implicit assumption that they are responsible for their bad results. Although this may be the case, it cannot be taken for granted. Like many good ideas, it should therefore probably be consumed moderately; we cannot hope to apply it uniformly and across the board.
In any case, this is interesting new stuff, which definitely merits to be discussed in the columns of this blog. Dear fellow blog members, guest commentators and readers, the floor is yours!
JMS
My apologies for not writing for nearly a year. I foresaw in my last two blogs that we were entering an intensive busy period in the WTO negotiations. The talks did indeed keep me busy this year, not least before, during and after the meetings in July that were so close to a breakthrough. What none of us foresaw was all the other issues that would come up during the year, culminating in the global financial crisis …
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During the past two months we have seen Governments commit more than USD 3000 billion towards stabilizing financial markets. A further USD 2000 billion have already been announced for economic stimulus packages. Never in the history of humankind has so much money been allocated with so little preparation and strategic analyses.
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Exchange with the members of the blog, live from the 3rd edition of the European Development Days, Europe’s first meeting of development cooperation practitioners and decision-makers that will take place in Strasbourg on the 15-17 November. On this occasion, laptop computer will be available on the French Presidency stand so you will be able to participate to the debate. The members present in Strasbourg will come to the stand to react in live to your comments. Come and share your thoughts on the topic.
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Oil prices have gone down in recent weeks from the peak reached in mid-summer, but they are still much higher than at the beginning of the decade. With high oil and coal prices, there are stronger incentives to use less fossil fuels. Alternative energies become financially more attractive. These developments can bring about reductions in greenhouse emissions and contribute to mitigate climate change. But it all can go away if the price of oil comes down substantially. So we could seize the opportunity of high oil and coal prices to lock-in these incentive effects on climate change mitigation. This could be achieved by introducing an internationally harmonized floor to the user cost of emitting carbon by using oil and coal. To implement this floor, a variable carbon levy could be enacted by a group of participating countries. The levy would kick in if and when the price of oil and coal were to fall below a pre-agreed threshold. No additional costs would be imposed on anyone above those already being paid now. And this would create certainty to guide consumers and investors in their behavior and resource allocations towards less greenhouse gases emitting activities.
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The failure of the recent WTO Ministerial to achieve its objective of agreeing on modalities for negotiations in agriculture and NAMA is a setback for the Doha Round. The latest in a series of failed attempts, the breakdown of the July talks has led to concerns about the demise of the entire Round. A recent Financial Times editorial even coined the unfortunate but catchy phrase, “dead as a Doha”.
Does this latest setback really mean the end of the Round?
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Images of the Beijing sky-line, seemingly bathed in a soup of smog and haze have been never far from the world’s TV screens over recent days and weeks.
International reporters with hand-held air pollution detectors have been popping up on street corners checking the levels of soot and dust.
Everyone seems keen to prove that the city’s air will be a decisive and debilitating factor for one of the world’s most high profile sporting events.
Without doubt Beijing is facing a huge challenge. There are real and understandable concerns for the health of competitors, especially those in endurance and long distance events such as cycling and the marathon.
But the current frenzied focus is marked by a modicum of amnesia—air pollution was a major concern in Los Angeles 24 years ago.
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The failure to reach an agreement in Geneva has severely weakened the Doha round. What could be the consequences of a collapse of the Doha negotiation from the perspective of developing nations? Read more…
Last month, I spoke to a group of British parliamentarians who sit on something called the International Development Committee. Their role is to scrutinise the work of the Department for International Development. ”DFID” – as it is known - is the arm of the British government concerned with promoting development, supporting the alleviation of poverty across the globe, and funding multilateral organisations like the UN World Food Programme.Members of the International Development Committee asked me to travel to London to speak to them as part of their inquiry into the work of the World Food Programme (WFP) and the support it receives from DFID. As part of the inquiry, an open invitation was issued to any organisation or individual with an interest in global food security to contribute written evidence.
It was an opportunity for organisations like Oxfam, who work with WFP, and others who have an opinion about the way we do our work, to express their opinion, and to influence the line of inquiry. Reading the input from these organisations and individuals is a bit like discovering the comments of your teachers after the headmaster has asked them to contribute to your end of term report.
What has been really interesting, is that a lot of the inputs are encouraging, recommending and cajoling WFP into doing more of something that is already very much part of the fabric of our work: the local procurement of food for the hungry.
It is always comforting to hear independent voices recommend something that is so central to WFP’s policy, and in promoting local procurement in developing countries, I think we have been ahead of the curve. Where I would admit we may have been slower – until more recently – is in promoting the extent of WFP’s involvement in local procurement, the fact that we have been doing it for decades, and explaining the reasons why we think it is so important.
As a major player on global food markets, WFP has been in the business of buying basic food commodities from one source or another for pretty much the past forty years. One of our guiding principles is to get the best price for the food we buy, so we can stretch the precious money we receive off donor governments and use it in the most efficient way to feed the world’s hungry.
The experts who run WFP’s food procurement unit realised fairly early on that there were obvious advantages if food could be purchased close to where it is going to be used. Food that is sold by small farmers in regions like sub-Saharan Africa, might not be as cheap as that which you find in the sophisticated North American and European markets, but if you buy locally, you can cut down dramatically on the costs of transport and storage.
More importantly, these savings are among a number of positive advantages that come with local procurement. Foremost among these is the opportunity to use WFP’s local procurement policy as a way of investing in the sometimes fragile agricultural economies of the developing world.
With our “purchasing power” we can make a real difference. In 2007 that meant ploughing US$612 million into developing countries where we purchased more than 1.6 million tonnes of food from small farmers. To put this in perspective, by virtue of our local procurement policy, WFP put more money into
Africa in 2007 than the World Bank.
The question we are now asking ourselves is how we can use this big “purchasing footprint” - that stretches from Uganda and Ethiopia to Pakistan, Colombia and beyond – to support small farmers in a way that helps their business grow and contributes to the evolving economies of the developing countries where they live.
Our first step has been to set up a “Purchase for Progress” unit at WFP headquarters in Rome, which is launching a set of pilot activities – primarily in Africa – to explore how we can take this exciting concept further. We want to work with a broad range of partners, including governments, UN agencies, non-governmental organisations, farmers, traders and research institutions to see how we can use WFP’s purchasing power to sustainably develop the agricultural sector.
With the escalation in global food and fuel prices, and the tremendous impact this is having on the hungry in the developing world, this initiative really could not have come at a more vital time. Now is the moment when we can really benefit from a local procurement policy that cuts down on transportation costs and helps to connect farmers in the most vulnerable communities to markets.
The timing of the International Development Committee’s inquiry into WFP’s work coincided with this extraordinary era of high food commodity prices, and gave us a welcome platform to explain not just the role that local procurement can play in helping us to reach our goals, but also the other factors that are making WFP’s mission yet more challenging.
But for everything that local procurement offers, we have to remain realistic that the capacity among the agricultural economies of the developing world is not yet sufficient to support the needs of an agency like WFP which aims to feed more than 70 million people this year. We will continue to focus efforts on using our funding wisely to support small farmers wherever we can and to help them improve their crop yields.
For now though, we have to accept that even in the ideal situation where WFP receives its full budget in untied cash, we would still have to purchase some of our food from markets in North America, Europe and the industrialised economies of Asia.
These are challenging times for the world’s hungry and for the agencies that have been set up to help them. If we are going to protect them we will need to confront these challenges with a variety of tools. Local procurement is one powerful tool among the many we need to use.
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