Archive for the ‘Incentives’ Category

Community conservation needs to be meaningful for communities

Some good stuff pumped out by CIFOR as part of a big comms effort around the latest round of international climate change talks, that this year took place in Lima. Much of the best stuff has a relevance far beyond just the UNFCCC negotiations bubble. One thing that particularly caught my attention was this story about what conditions are required for the successful involvement of local people in monitoring, reporting and verification (MRV) of carbon savings achieved through REDD+ activities. Manuel Boissière, a CIFOR researcher, boils it down to four things:

  1. Relevance – “if something about the project is not seen as relevant to their daily lives, local people might not be willing to commit to such a project.”
  2. Skills – not just technical capacity and literacy, but “is it always clear to local people what it is they are measuring?”
  3. Reporting systems – how do you get the data back to HQ? (An important consideration, but the least interesting lesson.)
  4. Quality validation – “the ability to check whether the data that have been collected are correct.”

The 4th is the hardest, Boissière reckons. Just using some remote sensing in the office doesn’t cut it, because it is a one-way street: the scientists can check their data, but it doesn’t provide any useful feedback to communities, and any good quality control system involves rapid feedback. Instead Boissière recommends an approach based around participatory maps that are meaningful to the local communities.

“If you look at academic literature [on community participation in MRV], it’s all about cost-efficiency—how to get local communities participating in tree measurement and what is the cost of it, and are they doing a good job compared to scientists or not? And that has been really the limitation.”

I couldn’t agree more, and it’s not just on the monitoring side. I don’t have a problem with those people who first come to the conclusion that they need to work with communities to deliver conservation goals because the resources just aren’t there to deliver ‘command and control’ conservation. It’s a valid observation, and often critically important in persuading officious bureaucracies to loosen up a little bit.

But if that is your sole basis for doing community conservation you are in trouble. If you want to succeed with community-based conservation you absolutely need to make your work meaningful and relevant to the communities. Providing a steady stream of recognisable benefits is very important, and without which you are likely to struggle, but beyond that communities need to be engaged as full partners. They need to have a basic comprehension of what they are doing and why. If they are truly going to (help) manage their local natural resources they need to be empowered to make informed decisions upon bases that they understand.

In short, community conservation will only work when the communities involved actually care. And how do you persuade anyone to care about something?

I am an economist therefore I assert

About a decade ago, as a relative development aid neophyte I read Bill Easterly’s White Man’s Burden. Despite a few flaws, I loved it, not least since it validated a number of opinions that had been steadily growing in my mind. I was worried that my view was rather narrow but here was a world renowned economics professor saying almost exactly the same things. Aha!

Such, alas, was not quite my primary reaction upon reading Acemoglu and Robinson’s recent tome Why Nations Fail. Not that there isn’t something compelling about their central thesis that ‘institutions’ (defined very broadly) matter hugely for economic development. The book is quite argumentative – which I am fine with, indeed I often write like that – but for a piece of popular science it often seemed somewhat lacking in supporting facts to bolster its arguments. For instance they repeatedly reject Jared Diamond’s hypothesis, as set out in the excellent Guns, Germs & Steel, that the natural geography of the various continents had a big impact on the history of economic development. Indeed I came away thinking, that they had rather failed to demolish Diamond’s proposition, and that in all likelihood both theses were relevant, but neither sufficient on their own.

Reading their book it seemed to me that they had simply written down the words they would use in a lecture without the footnote that appears on the slide indicating the source of their conclusion. For two more world renowned economist professors it seemed a surprising omission, especially since a book format gives you more than adequate space to set out your arguments in detail.

Imagine my pleasure, then, upon recently reading Dietz Vollrath’s rather sceptical review of the academic literature on ‘institutions’. It seems the evidence is actually a bit flimsy. He concludes that in fact what really matters is path dependence, a concept broad enough to also include Jared Diamond’s work, and not so useful as a theory, in that it doesn’t give many pointers as to what approaches to take in addressing under-development in the modern world, except perhaps for the importance of understanding context, something upon which all development veterans will agree.

Hat tip: Terence

Fair Trade: from oppressed to oppressors?

Fairtrade accused of failing to deliver benefits to African farmworkers screams the Guardian headline. Alright, the headline doesn’t exactly scream, but if they can use journalistic clichés then so can I. Either way it’s certainly not good news for Fair Trade.*

So where’s that precious premium going, then, you might ask? Why into the hands of that holy grail of much development aid: the “rural capitalist” smallholder. That terminology comes from the conclusions of the the DFID-commissioned SOAS report behind the headline. That conclusion, however, switches the quotation marks, putting quotes around “smallholder” (presumably on the basis that are not all farmers so classified have operations that are especially small) and not around “rural capitalist”. It is an interesting indicator of possible cognitive bias.

But a premium for smallholder farmers is exactly what I always thought was the main point to Fair Trade, so what’s the problem? I see a whole raft of issues bundled up here, not all of which necessarily reflect badly on Fair Trade, but which nonetheless do lead to some uncomfortable questions about where now.

  1. Have FLO and their brethren just become too successful for their own good? The bigger you are, the harder it is to maintain the highest standards everywhere. Especially when you are relying on economies of scale to make the business proposition feasible.
  2. The myth of the noble peasant. I suspect most people in FLO know it’s nonsense, but their marketing plays right up to it.
  3. Even if they knew the myth is codswallop, how much did FLO, its senior people and backers, know about the high prevalence of wage labour in some of their agricultural producer sectors? Not much presumably because the report claims to demolish another myth: that “very little wage employment has been created by smallholders in Africa.” One might suggest that, given their business, FLO ought to have understood better, but it seems the failing might be rather more widespread than just the FLO.
  4. Who better to hold down the wages of casual labourers than people living in the same village, who know exactly how much work you can extract from someone for a few shillings, and know exactly how desperate their fellow villagers are for work?
  5. Lots of aid projects try to stimulate rural capitalists. Why? Because every project needs to identify local leaders and other agents of change: local entrepreneurs are highly prized. (Who do you think all those micro-financiers are lending to?) Plus, other things being equal, a greater proportion of profits earned by such people is likely to stay in and circulate within their communities. Newly minted capitalists may spot other business opportunities in their communities, and invest, which would be missed entirely by outsiders. Conversely, it is hard to design economic development projects that specifically benefit the poorest of the poor that aren’t either incredibly expensive or just hand-outs in disguise.
  6. What’s the counterfactual? According to the report many of these labourers are amongst the very poorest in local society, and often disadvantaged for other reasons. Maybe they struggle to get employment on other farms with better wages and employment conditions? They might be no better off as a result of Fair Trade, but it seems hard to argue they are any worse off.
  7. All of which might suggest a storm in a teacup were it not for the fact that the Fair Trade Foundation say fair trade is “about better prices, decent working conditions, local sustainability and fair terms of trade for farmers and workers in the developing world” (my emphasis added). Whoops! Did they over-reach?

So what now? The report contains a whole raft of recommendations for fair trade organisations, donors and governments, and yet many of these recommendations, especially to the latter groups, the authors themselves acknowledge are highly difficult if not downright infeasible to implement in the setting of smallholder agriculture. For FLO they include a bunch of technical corrections which may help to a degree, but which will probably also make the whole Fair Trade standard that much more complicated, and therefore more intimidating to smallholders.

The authors also suggest fair trade organisations should invest more in research (now there’s a surprise coming from a bunch of professional researchers!), and better monitoring. However, where will the money come from? The report implies where it thinks there is some fat that could be trimmed:

“These recommendations are unlikely to be welcomed by Fairtrade organisations, or by the supermarkets that profit from the important public relations and product differentiation opportunities that certified products provide.”

And so we’re back to one of the main criticisms of fair trade over the years: a great proportion of the consumer product price premium stays with supermarkets, and only a very small proportion makes its way back to the farmers. As indeed is true for the non-premium bit of the price. The trouble with much fair trade labelling, alas, is that it implies that this normal law of economics is somehow reversed in the case of the price premium on fair trade labelled products.

Would fair trade work without those excess profits for supermarkets? I know too little to tell, but one has to guess that market penetration would surely be lower if it were less profitable for the supermarkets, and so, at the very least, there is a trade-off that fair trade organisations need to weigh up.

Ultimately, the bigger problem seems to be the question: can fair trade live up to all its claims reliably on a tiny slice of the product price? If fair trade organisations take a bigger slice how ethical will that be judged? Do we view this as money taken from the consumers (who are paying more) or from the producers (who could receive more if the fair trade organisations’ slice was smaller)? Fair traders have a real problem any time the debate shifts towards the latter consideration.

Many economists think the basic premise behind ‘fair trade’, namely paying a higher price than you have to, is just plain poppycock. But the many achievements of the fair trade movement to date suggest that its rationale is no more poppycock than assumptions of rational economic decision makers, and indeed that it fits very well that gap between theory and reality. The problem is that those assumptions of economic theory work well enough in so many other cases to suggest the gap (and thus its market value) is quite thin.

That does not bode so well for fair trade, but I would not write off the power of human willing self-delusion so quickly. Yes we might all be better off buying the cheaper coffee and then sponsoring a child, but consumers like to think they are doing good when they buy ethically labelled products. It’s part of the modern feel-good sales pitch. If someone is going to trade off that, better they have the moral intentions of the FLO and its peers. The next time I have the option, I’ll probably choose to buy fair trade. There are far worse ways to indulge oneself in this world.

* The Fair Trade Foundation have their own response alleging some methodological flaws in the study. Through the grape vine I gather the researchers are pushing back strongly. I am not in a position to judge how serious is the flaw nor how significantly it might affect the final conclusions.

On the horn of a dilemma

A few years ago a report by TRAFFIC entitled Rhino Horn Stockpile Management: Minimum standards and best practices from east and southern Africa was a strong contender for the most ridiculous book title that year. The oxymoron seemed obvious. With the South African government now considering legalising the trade in farmed rhino horn that conclusion is rather less clear cut.

“According to a study supporting the South African proposal, existing ‘demand’ could be met by moving 2000 adult rhinoceros – 10% of the wild population – to fenced enclosures covering a total of 400,000 ha. These a poor animals would then have their horns ‘humanely’ removed once every two years over their lifespan of 35 to 50 years.”

That is Paula Kahumbu writing in the Guardian. However she is opposed. She goes on to argue:

“But in reality there is no way that the supply from farmed rhino could come remotely close to meeting the demand, which is growing exponentially as consumers in the principal markets in Southeast Asia become richer.”

This seems something of a non sequitur: yes if demand does continue to rise exponentially and farmed stocks do not increase then clearly this solution will not suffice. But when protected from the threats of living wild and given proper veterinary care then animal populations can also increase exponentially. (Although it should be noted that rhinos breed quite slowly, so that exponential growth might not be of the most impressive sort. But with another 90% of the population still in the wild, early short falls could be met by moving more of the wild population on to farms.) Conversely the potential for market demand to continue increasing exponentially rather depends on how much unmet latent demand there is, and how that might react to a rare ‘status symbol’ luxury good becoming that comparatively common place.

However, instead of focusing on the economics, Paula’s article focuses on the emotional, with distressing tales of the fate of poached rhinos. Her biases are clear in the above description of farmed rhinos as ‘’poor animals”. She should check out Gerald Durrell’s defence of zoos* in relation to the Hobbesian reality to life in the jungle (or savannah). And why is it ok to farm cattle and chickens (and ostriches and kangaroos these days), but not rhinos? (Especially since de-horning is rather less fatal than a trip to the abattoir!) This seems to be drifting dangerously close to much debunked Victorian romantic notions of the noble savage.

Of course, I am with Paula in my abhorrence for poaching and a preference for rhinos to live free. But if the choice is between extinction and managed trade then such principles do not get us very far. There are far better arguments against farming rhino horn in the lessons learned from attempting legal trade in ivory a few years ago (it provided plausible cover for poached ivory and undermined moral arguments against the use of ivory amongst consumers). It is also unclear whether farmed rhino horn would have the same cachet as wild stuff: economic conditions need to be right for farming to work.

I suspect some conservationists do not like to engage with such arguments because they fear that in doing so they concede the point that this is a question of economics, when for them it is a moral issue. However, we are a long way from global consensus at present, and the ‘enlightened’ minority for the most part recognise the limits to which they are prepared to impose their morals on others. And while I can happily agree that maiming rhinos is clearly immoral, such moral arguments have fuzzy enough philosophical edges (especially for meat eaters) that our pleas for a more moral approach may cut little ice with those who see the world differently.

So I think we need this debate. As with the War on Drugs, strictly prohibitionist approaches to poaching and the illegal trade in animal parts seems to be getting us nowhere. Populations continue to decline, and species are ending up extinct. Whether the South African plan could ever work is another question.

* In one of his books. Alas I cannot recall which one, and for once the interwebs have let me down.

Whose goal is it anyway?

The post-2015 world is supposed to see some kind of merging of the international development and environmental worlds in the Sustainable Development Goals. As the writer of a blog on the conservation-development nexus I am very much in favour of this direction of travel, but the sceptic in me does question a little the political viability of all this given the entrenched positions at climate change talks. Most countries appear to favour goals that primarily concern changes to be made by others rather than changes they themselves have to make.

I found an echo of this in Ben Ramalingam’s new book Aid on the Edge of Chaos (review coming soon): he says some EU evaluation report found ‘a sense of lack of ownership of the MDGs in developing countries … [which] are often seen as instruments for the developed countries’. No great surprise there: you can understand that most country officials would be rather more concerned about how development initiatives impact their own country over any contribution to a notional global goal.

Conversely there is an interesting counterpoint in that now some developing countries reportedly prefer MDGs v2.0 (i.e. continued focus on economic development issues over environmental ones) over the mooted SDGs. I suppose their reasoning goes that if we must have pesky goals and performance targets, better they relate to their primary concerns than how many trees have or have not been cut down. I suspect most, however, would just prefer to take the cash (which supposedly the MDGs helped rally support for) to spend on their own priorities.

Anti-corruption efforts: perfecting the art of isomorphic mimicry

UNDP has launched a portal on Anti-Corruption for Development. (To distinguish it from anti-corruption efforts that are anti-developmental??) It includes an anti-corruption poster for REDD programmes that, I am sure, is guaranteed to reduce rent-seeking and improper uses of funds.

Anti-corruption commissions and their ilk seem to me to be one of the worst uses of aid money out there. Because they almost never deal with the politics they only ever address a few low level symptoms (disposable scapegoats) and abysmally fail to tackle causes. And yet they are legion, and probably persist now quite happily without donor money, both for the sinecures they provide, and because, from time to time, they may be politically useful to chastise the opposition. Are anti-corruption commissions therefore the pinnacle of isomorphic mimicry? I think it could be so.

How about a Cash on Delivery solution? $10,000 for every successful prosecution (where the accused have had a fair chance to defend themselves), rising to $100,000 and $1million for more senior officials. Make the bounties high enough and in themselves they may even start to provide an incentive against corruption, because even if the current government are not inclined to follow through, the next one might be …

What’s stopping action on climate change?

Many things apparently. One developing country, I hear today, has no budget code for climate change so officials have no incentive to provide budget for climate change adaptation.

More on monetising nature

Last week I blogged about how, despite all its drawbacks, monetising nature has a lot to be said for it in its ability to tap into the global system of values. As luck would have it I was not the only person pondering these questions that day; David Bent was also struggling with the challenges of lack of clarity over sustainability issues, but his dilemma was that of a consumer unsure as to which was the most “sustainable” carpet to buy.

David’s challenge was to determine which was the most sustainable carpet, what forms of sustainability were good value for money versus which primarily worked by appealing to middle class faddishness, and that the complexity in this field was such that the salesperson struggled to explain the differences and thus to make a well-informed recommendation. When confronted with these multiple interacting and complex variables on top of the standard set of consumer choices, such as colour, pile, look, pattern of the carpet, it is not surprising that even an expert can quickly become bewildered.

However, if each of these different variables could be priced then the problem would be rapidly reduced to the standard choice of which products do you like most (in a subjective sense) versus their respective prices. For instance if carbon were taxed or otherwise priced, those manufacturers who sought to reduce their carbon footprint would benefit from lower prices compared to their competitors. They need not directly reduce their carbon footprint, however, they might find it cheaper to buy offsets off the shelf, e.g. from forest protection. Water and biodiversity can be similarly priced and thus incorporated into our economic decision making. Yes having the wrong price can be harmful, but it is easier to adjust a price once you’ve agreed the principle, than it is to agree it in the first place as has been highlighted by the entrenched opposition to global climate change negotiations.

I think part of the problem is that many environmentalists hope or assume that biodiversity and landscape conservation can all be marketed like ecotourism. While some tourists will always opt for the simple pleasures of the Costa del Sol or the bright lights of the nearest shopping paradise, there is a very substantial market of tourists who want to go somewhere different, that feels a bit special, makes them feel a bit special, and is away from the beaten track. The hotels that appeal to such tourists are all unique in their own particular way, little of which boils down to price, although accessibility can have a big impact on the price at which services can be delivered in remote wild locations. Ultimately, such tourists are choosing a place, with all its attendant charms and flaws: more than anything else, it is an emotional choice.

A shopper in need of a carpet, however, is in a totally different position. They have no access to the sort of  detailed information about the sources of the products they are comparing or glossy photographs of the landscapes, and even if they did would unlikely to be motivated enough to want to peruse it all in detail. Instead they want a mechanism that makes their life easy. This doesn’t have to be entirely monetary, e.g. the energy efficiency star ratings system is rarely translated into the dollar cost to run the device concerned over its expected life span, but internalising such costs as carbon emitted or biodiversity lost into the product price, is the only guaranteed way to ensure the consumer pays attention (or pays the price for not).

Will monetising nature lead to distortions in how certain landscapes are managed? Without doubt. Will it be a shame if some unique characteristics are lost as a result? Yes. But if those unique characteristics are not sufficiently well appreciated to merit more stringent protection then that is s decision that society has collectively made. Moreover such distorted landscape management will almost certainly be better than converting the whole place to mechanised agricultural production.

At the end of the day the choice for society is very simple: pay for it, one way or another, or lose it.

Wherefore art thou Aid?

Nancy Birdsall and William Savedoff have an excellent piece over at CGD about one of the hidden pitfalls that lie in wait putting into practice a Cash on Delivery aid programme. In it they describe how targets, often a good thing for benchmarking performance, can fatally undermine implementation of COD. The problem boils down to this: if the donor government expects to disburse $2m through a COD programme and the recipient government expects to receive $2m through said programme, then it can be very difficult to deviate from that even though in practice one would expect variance either positive or negative, with negative deviation being the trickier but more likely scenario.

One can understand the recipient government’s situation; they would surely always want to get the full $2m even when, according to the agreed formula, their performance only merits $600k. But, what I find particularly disappointing is the tendency for the donor to want to disburse the cash any way. There are explanations of a sort: the donor has budgeted that amount, so returning it to their home treasury can mean reduced budgets in future, and maybe the desk officer find themselves in a tricky situation in their relationship with the beneficiary government, which is most easily resolved by giving in, and handing over the full amount. But none of these are very satisfactory. Pressure to disburse can be resisted with a little bit of backbone, and donor governments seem able to cope with varying budgets for things like unemployment benefit, so surely ought to be able to cope with aid budgets that fluctuate?

In my opinion the real issue, and one which fatally undermines so much of official development aid, is that the whole international aid system is constructed around the needs of the donors, not the recipients. Hence the desire to push out the $2m regardless. If we can agree that COD aid is at least an idea good enough to be worth trying, why are we trying to shoe-horn it into a rigid budgeting framework that will not support it?

The problem is that it is the act of giving which has come to be celebrated, not the outcomes of that giving. Politicians get the media coverage they crave when they announce the donation, not when (if?!?) the programme delivers on its promises. Why else the ridiculous focus on aid budgets reaching 0.7% of GDP?

If we wanted to design a system to actually deliver useful benefits to poor people world wide, rather than to reward donors, we would never come up with the system we have now. Cash on Delivery seems like an eminently sensible step in the right direction, but I fear that the required wholesale reform of the aid system is unlikely to occur before market forces and economic conversion over time remove it much of its original raison d’être, as has happened recently with the cessation of British government aid to India.

But in the meantime, if the mainstream media, in developing as well as developed countries, could learn a little self-restraint, and refuse to report any announcements of aid, just maybe we might start to have a chance …

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