Development Paradox: Economic Growth and Inequality

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On completing one year in office, Modi government in India reported that India’s economy grew by 7.3 per cent during 2014-15.  The International Monetary Fund has projected that India will outpace China during the current fiscal year. This is very encouraging news. From the point of view of broader policy-making India is still a recovering economy.  The prime drivers of the growth were the significantly stronger performance of ‘manufacturing’, ‘electricity, gas, water supply and other utility services’ and the ‘financial, real estate and professional services’.

However, this is a development paradox. Indeed, this development paradox is applicable as a truth into most of the developing and least development countries economics; both in Asia and Africa. Taking the example of India, it is true that India has attracted global attention for rapid economic growth. India accounts for nearly 80% of the regional GDP of South Asia, and is the largest country in the region, is seen as an emerging economic powerhouse. Other countries in the region are also well advanced in the transition from low income to middle income status. But this progress doesn’t mask the fact that India in particular and South Asia in general is home to the largest concentration of people living in debilitating poverty and social deprivation on planet earth[1].

The geography of poverty has changed over the last two decades[2]. More than 70% of the world’s poor now live not in low income but in middle-income countries. Indeed, there are more poor people living in South Asia than in Sub-Saharan Africa. This pattern of concentration of the poor living in the middle income countries is likely to continue over the next decade[3]. This raises two big questions. Firstly, why could we not able to reduce poverty despite of the impressive income growth and secondly, does this income growth provide socio-economic development to society? The direct responses to these fundamental questions are not positive.

The number of poor people (defined as those living under $1.25 per capita per day) in Sub-Saharan Africa increased and Poverty headcount ratio for Africa is 46.8%[4]. In case of Asia, the poverty rate is nearly 50%[5]. Inequality has been raised and according to a recent report of Asian Development Bank, it has been increased in Asia two folds in last 10 years[6]. Inequality is an important dimension of development in its own right, but it also has consequences for governments’ fight against poverty and efforts to sustain growth. Both poverty reduction and the foundations for future growth can be strengthened by ensuring that the benefits of development are shared broadly and equitably.

The paradox of economic growth is that it has been instrumental in reducing poverty rates, but poverty rates have not fallen fast enough to reduce the total number of poor people. Poverty reduction in India, China (LDCs which aspires to be in the middle income status) are precisely in line with what economic growth would predict. Although inequality increased more rapidly and an inclusive development remains are dream to be fulfilled. Unfortunately, this is real world development paradox of the contemporary time. Policy makers need to address this paradox strategically, if we do not act on this urgently, it could impair growth and those with low incomes suffer poor health and low productivity as a result. It could threaten public confidence in growth-boosting policies like free trade, or it could sow the seeds of crisis!

Keshav C Das

Addis Ababa

June 1, 2015

[1] Is growth incomplete without social progress? Ejaz Ghani, 2011.

[2] Sumner, A (2010), “Global Poverty and the New Bottom Billion: Three-quarters of the World’s Poor Live in Middle-income Countries’”, IDS Working Paper 349, Brighton: IDS

[3] Chandy, L and G Getz (2011), “Poverty in Numbers: The Changing State of Global Poverty from 2005 to 2015”, Brookings.

[4] http://povertydata.worldbank.org/poverty/region/SSA

[5] http://www.economist.com/news/economic-and-financial-indicators/21614146-poverty-asia

[6] http://www.adb.org/sites/default/files/publication/41630/inequality-asia-and-pacific.pdf

Transforming SDGs into realities

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Development Landscape of Vietnam- Photo Credit:Anna-Selina Kager

Global leaders, think tanks and development practitioners are working tirelessly to agree “a truly transformative agenda” in a new set of development goals that will improve the lives of all people. These new global targets will replace the millennium development goals (MDGs), which reach their deadline at the end of this year. But, how are we moving in achieving a grossly agreed [consensus based] development agendas?  Will the new sustainable development goals [SDGs] have the strategic focus and necessary strengths, which could benefit almost 1 billion people, still living in abject poverty; would the hundreds of thousands of women, dying each year during pregnancy and childbirth be able to overcome this? Could it be able to provide clean cooking and lighting to 3 billion people, who have been still relying on traditional biomass for cooking and heating and 1.2 billion have no access to clean lighting? Similar questions also go for the global health, sanitation, education and human rights. Indeed, a draft set of 17 sustainable development goals (SDGs), with 169 targets have been developed. The proposed goals cover the broad themes of the MDGs – ending poverty and hunger, and improving health, education and gender equality – but also include specific goals to reduce inequality, make cities safe, address climate change and promote peaceful societies. It is hoped that the goals will encourage a more holistic approach to development at national and international level, and offer a chance for more partnerships and collaboration. However, unfortunately, we have not yet seen a universal buy-in of the SDGs by national governments as well as international donor’s communities. There is a general perception that the goals are too many and ‘having too many targets means no targets’. Hence, there is an urgent need to develop a consensus on the targets and goals. Crucially, the next set of goals should be universal, which means all countries would be required to consider them when crafting their national policies.  Indeed, this will be a major challenge. We will also need endorsement of bilateral donors, philanthropists and private sectors on the proposed SDGs and perhaps, private sectors will also be interested to see a focus on market externalities, resources and/or capital. We must not forget that the real test of UNs, global leaders, think tanks, donors and governments’ commitment isn’t the loftiness of the goals; but, it is what they are prepared to do to reach them!

Keshav C Das Senior Advisor SNV Netherlands Development Organisation Kathmandu, February 03, 2015

Financing Innovatively: What can we do in Renewable Energy Sector?

There is widespread recognition that renewable finance needs to be scaled up from its current levels. However, there is no clear view on how developing countries like Nepal can efficiently and effectively mobilise further finance to meet the needs of its increasing energy economics from new and innovative sources of financing. Jan.

While the demand for renewable energy technologies keeps growing, the cost of such devices remains an important barrier for a majority of households and small businesses, slowing down their potential dissemination in developing countries.

The International Energy Agency (IEA) has reported in its recent Global Energy Demand Report that the world requires $48 trillion investment till 2035 in order to meet the growing need for energy. To meet this increasing energy demand, countries need to diversify sources of energy production and means of energy distribution and countries must invest $40 trillion in energy supplies over the next 21 years, according to the same report of IEA. Economic growth and rising living standards have been fuelling the global energy demand, forcing governments to find ways and money to increase supplies. The world has invested $1.6 trillion in 2013 for energy supply, more than double the amount in 2000. Until 2035, the annual investment figure is expected to reach $2 trillion, report says.

In the recently published Global Status Report on Renewable 2014 it is stated that that total investment in renewable power and fuels (excluding large hydro-electric projects) fell for the second year running in 2013, reaching $214 billion worldwide, some 14% lower than in 2012 and 23% below the 2011 record. That means, there is a significant gap between financing need and the existing financing, which is more than $50 billion investment gap (23% of the $214 billion).

In this context, the key question is- where from such a big investment can be generated to meet the growing needs of financing, while the global economy is affected with financial crisis? Indeed, this difficult situation has stimulated increased interest in innovative financing to help deliver more and better aid.

Seeking to overcome this barrier, we need further works and demonstrations on innovative finance for designing a range of innovative financing mechanisms for the renewable energy sector with a particular focus on the domestic cooking and lighting markets.  Key activities under this work could be conducting field based assessments to understand renewable energy users’ perceptions and preparedness for new financing methods, and evaluating the applicability and readiness of various result based finance instruments in the domestic cooking and lighting markets.  On this front, I will welcome inputs and partnership for this important works!

Keshav C Das

New Delhi, January 03, 2015

Why does ‘not for profit’ pathetically fail in business development?

October.BlogThere is a paradigm shift in accepting ‘business development’ as one of the core activities in not for profit organisations in recent days. This ‘shift’ is mainly triggered due to the reasons that funders and donors are demanding more accountability, traditional forms of funding are becoming smaller and less reliable, donors are focusing for an increasing engagement with private sector instead of not for profit entities and hence, for-profit businesses are competing with non-profits (not for profits) to serve community needs and lastly needs of community are growing in size and diversity!

In the face of this new reality, an increasing number of forward-looking non-profits are beginning to appreciate the increased revenue, focus and effectiveness that can come from adopting “for profit” business approaches. Increasingly, they are reinventing themselves as social entrepreneurs, combining “the passion of a social mission with an image of business-like discipline, innovation, and determination.”[1]

For many not for profit organisations, this new reality is still a surprise and struggling in a confusing state of operations to survive; taking up quick-fix based remedies like reducing size of human resources, cutting cost, merging with other organisations or merging it multi-country operations into a regional operations. Will this change bring brighter days to them? Answer is clearly NO!

To survive in the present competitive development market, not-for profit companies really need to look for a systemic change in its overall process of business model, orientation and strategies. Non-profit organisations now need to carry out a serious self–reflection and identify its key strengths and services (offerings), which are unique, competitive, affordable and having a ‘brand ’ of these offerings in market. To formulate its services, accurate understanding of community and development needs to be ensured so that organisation can offer higher quality of services by focusing on what it does best, which will eventually enhance credibility with clients and funders. Needless to say that such transformation will happen in organisation only through a continuous learning and improvement.

We have several myths on pursing business development activities; such a business development is a team work, funding can be mobilised with a smart and innovative business proposal or even for many non-profit workers; business development can also be done over an informal beer meeting. These beliefs are relative and its success is also isolated, but it can’t be considered as organisational business development strategy.

In the contemporary competitive environment, non-profit business development should be built upon five key principles:

  • Identifying a set of best mission-related earned income opportunities, where fund raising will be smooth and there is a better chance of winning (it could be water, health, energy or agriculture and any other opportunities). A continuous researching on feasibility of these opportunities is crucial, based on which organisation can select the most appropriate ones to develop realistic business plans
  • Identifying the major assets and capabilities that organisation has to invest in its business development. These asset could be a team of experienced ‘warrior’ for business development or internal fund to invest for business development
  • Recognising that organisation’s vision, mission and strategic goals represent the purpose and context for business development.
  • Gaining a better understanding of the motivations and support for doing business development, both within the organisation and in peers, and, at the last
  • Leadership in the organisation, to drive business development with proven knowledge and skills. We must remember business development is a specialised job.

Sad part is that most organisations do not consider these principles, instead take up business development activities without a clear strategy and plan of actions. Outcome of such initiatives is ‘A Bad Dream’.

Keshav C Das

Senior Advisor

SNV Netherlands Development Organisation

[1] “The Meaning of Social Entrepreneurship” by J. Gregory Dees.

THE NEXUS: SUSTAINABLE FOOD SECURITY THROUGH WATER SECURITY

ImageMy objective of this blog is to highlight this inter-linkage between food and water security in the special context of India and in general, formulating a few strategic options to enable the players of this sector for adopting appropriate adaptation and mitigation measures in the aegis of climate change.

To begin with, I would like to introduce you to the Emissions Scenarios of the IPCC Special Report.  IPCC has developed a set of scenarios to represent the range of driving forces and emissions in the scenario literature so as to reflect current understanding and knowledge about underlying uncertainties. These scenarios could be summarized as below.

A1. The A1 storyline and scenario family describes a future world of very rapid economic growth, global population that peaks in mid-century and declines thereafter, and the rapid introduction of new and more efficient technologies. Major underlying themes are convergence among regions, capacity building and increased cultural and social interactions, with a substantial reduction in regional differences in per capita income. The A1 scenario family develops into three groups that describe alternative directions of technological change in the energy system. The three A1 groups are distinguished by their technological emphasis: fossil intensive (A1FI), non fossil energy sources (A1T), or a balance across all sources (A1B) (where balanced is defined as not relying too heavily on one particular energy source, on the assumption that similar improvement rates apply to all energy supply and end use technologies).

A2. The A2 storyline and scenario family describes a very heterogeneous world. The underlying theme is self reliance and preservation of local identities. Fertility patterns across regions converge very slowly, which results in continuously increasing population. Economic development is primarily regionally oriented and per capita economic growth and technological change more fragmented and slower than other storylines.

B1. The B1 storyline and scenario family describes a convergent world with the same global population, that peaks in midcentury and declines thereafter, as in the A1 storyline, but with rapid change in economic structures toward a service and information economy, with reductions in material intensity and the introduction of clean and resource efficient technologies. The emphasis is on global solutions to economic, social and environmental sustainability, including improved equity, but without additional climate initiatives.

B2. The B2 storyline and scenario family describes a world in which the emphasis is on local solutions to economic, social and environmental sustainability. It is a world with continuously increasing global population, at a rate lower than A2, intermediate levels of economic development, and less rapid and more diverse technological change than in the B1 and A1 storylines. While the scenario is also oriented towards environmental protection and social equity, it focuses on local and regional levels.

This illustration depicts that food and water security is major concern under the A2, B1 and B2 scenarios. The reasons for this could be the attributes like continuous population growths, slow technological innovations, low energy utilization and slower economic development.

The vulnerability of these scenarios could be further differentiated based on the physical impacts of climate change. The United Nations Development Programme (UNDP) warns that the progress in human develop­ment achieved over the last decade may be slowed down or even reversed by climate change, as new threats emerge to water and food security, agri­cultural production and access, and nutrition and public health. The impacts of climate change – sea level rise, droughts, heat waves, floods and rainfall variation – could, by 2080, push another 600 million people into malnutrition and increase the number of people facing water scarcity by 1.8 billion (UNDP 2008). 

Agriculture constitutes the backbone of most economies of developing countries. It is the largest contributor to GDP; the biggest source of foreign exchange, accounting for about 40% of the foreign currency earn­ings; and the main generator of savings and tax rev­enues. In addition, about two-thirds of manufacturing value-added is based on agricultural raw materials. Agriculture remains crucial for pro-poor economic growth in most developing countries, as rural areas sup­port 70-80% of the total population. More than in any other sector, improvements in agricultural perform­ance have the potential to increase rural incomes and purchasing power for large numbers of people to lift them out of poverty (Wiggins, 2006).

And, climate change, however, is causing the greatest threat to agriculture and food security in the 21st century, particularly in many of the poor, agriculture-based countries of sub-Saharan Africa (SSA), Asia with their low capacity to effectively cope (Shah et al., 2008; Nellemann et al., 2009).  The agriculture of these countries is already under stress as a result of population increase, industrialization and urbanization, competition over resource use, degradation of resources, and insufficient public spending for rural infrastructure and services. The impact of climate change is likely to exacerbate these stresses even further.

The outlook for the coming decades is that agricul­tural productivity needs to continue to increase and will require more water to meet the demands of grow­ing populations. Ensuring equitable access to water and its benefits now and for future generations is a major challenge as scarcity and competition increase. The amount of water allocated to agriculture and water management choices will determine, to a large extent, whether societies achieve economic and social development and environmental sustainability (Molden et al., 2007).

For both rain-fed and irrigated agriculture, the spatial and temporal variation of precipitation is the key. The short-term variability of rainfall is a major risk factor. Soil moisture deficits, crop damage and crop disease are all driven by rainfall and associ­ated humidity. The variability in rainfall intensity and duration makes the performance of agricultural systems in relation to long term climate trends very difficult to anticipate. This is particularly the case for rain-fed production.

Although the different climate change models are not clear with respect to rainfall and periods of drought, temperature projections are generally more reliable. Increased evaporation and evapotranspira­tion with associated soil-moisture deficits will impact rain-fed agriculture (Bates et al., 2008). Recent esti­mates show that for each 1°C rise in average tempera­ture dry-land farm profits in least developing countries will drop by nearly 10% (FAO, 2008). In addition, increased evaporation of open water storage can be expected to reduce water availability for irrigation and hydropower generation.

Despite considerable uncertainty related to the impacts of climate change, the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPPC) predicts decreasing rainfall in northern and southern part of the globe and increasing rainfall over the Ethiopian/East African Highlands and a considerable increase in frequency of floods and drought. In India a similar fashion of variation in rainfall pattern and temperature fluctuation is also expected. This signifies that some part of the country will face serious consequences owing to climate change induced water scarcity.

The severity of climate change on food security is prominently visible in four dimensions, viz.,

  1. a.      Food production and availability: Climate affects food production directly through changes in agro-ecological conditions and indirectly by affecting growth and distribution of incomes, and thus demand for agricultural produce. Changes in land suitability, potential yields (e.g. CO2 fertilization) and production of current cultivars are likely. Shifts in land suitability are likely to lead to increases in suitable cropland in higher latitudes and declines of potential cropland in lower latitudes.
  2. b.      Stability of food supplies: Weather conditions are expected to become more variable than at present, with increasing frequency and severity of extreme events. Greater fluctuation in crop yields and local food supplies can adversely affect the stability of food supplies and food security. Climatic fluctuations will be most pronounced in semi-arid and sub-humid regions and are likely to reduce crop yields and livestock numbers and productivity. As these areas are mostly in sub-Saharan Africa and South Asia, the poorest regions with the highest levels of chronic undernourishment will be exposed to the highest degree of instability.
  3. c.       Access to food: Access to food refers to the ability of individuals, communities and countries to purchase food in sufficient quantities and quality. Falling real prices for food and rising real incomes over the last 30 years have led to substantial improvements in access to food in many developing countries. Possible food price increases and declining rates of income growth resulting from climate change may reverse this trend.
  4. d.      Food utilization: Climate change may initiate a vicious circle where infectious diseases, including water-borne diseases, cause or compound hunger, which, in turn, makes the affected population more susceptible to those diseases. Results may include declines in labour productivity and an increase in poverty, morbidity and mortality.  [Source: Schmidhuber and Tubiello; 2007].

With this background, one can visualize that food security, and rural livelihoods are intrinsically linked to water availability and use. Food security is determined by the options people have to secure access to own agricultural production and exchange opportunities. These opportunities are influenced by access to water. Making these water-livelihoods linkages is impor­tant for a more complete understanding of the nature of vulnerability of households to climate-related haz­ards such as drought, and the multi-faceted impacts that water security has on food and livelihood secu­rity. In order to highlight such linkages, there has been a move in recent years towards looking at water issues through sustainable livelihood frameworks (ie. Calow, 2002; Nicol and Slaymaker, 2003). One main feature of climate change adaptation at local level is its attempt to increase the resilience of populations to climate-related hazards. This means assessing the populations at risk of water and food insecurity. Risk is determined by, first, the external hazard and, second, the characteristics of the popu­lation that increase or decrease their susceptibility to the harm caused by the hazard.

Increasing the understanding of water use and livelihood strategies is an important part in the assessment of water stress and drought impacts and, as such, will be key in the assessment of climate change impacts. The concept of ‘water security’ is increasingly used to describe the outcome of the relationship between the availability of water, its accessibility and use. Water security is defined as ‘availability of, and access to, water in sufficient quantity and quality to meet livelihood needs of all households throughout the year, without prejudicing the needs of other users’ (Calow et al., n.a.).

Calow et al. (n.a.) distinguish three links between water, health, production and household income. First, lack of access to adequate water supply, both in quality and quantity, for domestic uses can be a major cause of declining nutritional status and of disease and morbidity. Second, domestic water is often a pro­duction input. Such production is essential for direct household consumption and/or income generation. Third, the amount of time used to collect water, and related health hazards, can be immense, especially for women and girls, and has been well documented (e.g. Magrath and Tesfu, 2006).

Water management for agricultural production is a critical component that needs to adapt in the face of both climate and socio-economic pressures in the coming decades. Changes in water use will be driven by the combined effects of (i) changes in water avail­ability, (ii) changes in water demand for agriculture, as well as from competing sectors including urban development and industrialization, and (iii) changes in water management.

With regard to agricultural production and water, climate change adaptation may include (Bates et al., 2008):

  • Adoption of varieties and species of crops with increased resistance to heat stress, shock and drought. For example, a private-public partnership under the leadership of the African Agricultural Technology Foundation called Water Efficient Maize for Africa (WEMA) intends to develop drought-tolerant African maize. This initiative, though, is not uncontested as it uses biotechnology besides conventional breeding and marker-assisted breeding techniques (www.aatf-africa.org);
  • Modification of irrigation techniques, including amount, timing or technology (e.g. drip irrigation systems);
  • Adoption of water-efficient technologies to ‘harvest’ water, conserve soil moisture (e.g. crop residue retention, zero-tillage), and reduce siltation and saltwater intrusion;
  • Improved water management to prevent waterlogging, erosion and nutrient leaching;
  • Modification of crop calendars, i.e., timing or location of cropping activities;
  • Integration of the crop, livestock, forestry and fishery sectors at farm and catchment levels;
  • Implementation of seasonal climate forecasting;
  • Additional adaptation strategies may involve land-use changes that take advantage of modified agro-climatic conditions.

Water-related adaptation strategies will also affect the livestock sub-sector. Adaptation strategies include improved rotation of pastures, modification of times of grazing, changing animal species and breeds, inte­gration of the crop and livestock systems, including the use of adapted forage crops, and provisions of adequate water supplies.

It is widely believed – and many Climate Change National Adaptation Plans (NAPAs) emphasize that irriga­tion will be a major adaptation approach in the agricultural sector. The problem with this strategy, however, is that adaptation practices that involve increased irrigation water use may place additional stress on water and environmental resources on the one hand, and will be influenced by changes in water availability resulting from climate change on the other.

The IPCC (Bates et al., 2008) concludes that, if widely adopted, adaptation strategies in agricultural production systems have a substantial potential to offset negative climate change impacts and can even take advantage of positive ones. At the same time, they can contribute to an increase in agricultural pro­duction sustainably. They further conclude, however, that not much is known about how effective and widely adopted the different adaptation strategies really are. Reasons for this include complex decision making processes; the diversity of responses across regions; time lags in implementation; and possible economic, institutional and cultural barriers to change. Government support that would help poor smallholders to adapt is very limited. On top of this, developing countries have received less than 10% of the money promised by rich countries to help them adapt to global warming (Vidal, 2009).

Policy attention, by national governments and trans-national bodies will, increasingly, have to focus on the coordination of water uses across transbound­ary river-basins and across different sectors, and arbi­tration in increasing conflicts over water.

If precipitation decreases, and the demand for additional irrigation water is to be satisfied, then other demands (e.g. manufacturing, industry, urban consumption, etc.) will become much more diffi­cult to satisfy. Climate change and increased water demand for agriculture in future decades is antici­pated to be an added challenge to transboundary framework agreements, increasing the potential for conflict.

Unilateral measures for adapting to climate-change-related water shortages by, for example, increasing storage capacity upstream, increas­ing investment in irrigation infrastructure and efficient water-use technologies, or revising land tenure and land use arrangements, can lead to increased competition for water resources. Regulation at national and trans-national levels needs, therefore, to be enhanced to deal with the unintended consequences of increased consumptive water use upstream, resulting in downstream users being deprived of the water on which they depend for their livelihoods.

To sum up, a number of adaptation options in agriculture face a dilemma. Increasing water availability and increas­ing the reliability of water in agriculture, i.e. through irrigation, is one of the preferred options to increase productivity and contribute to poverty reduction. In addition, the interrelations between adaptation and mitigation need to be carefully considered (Bates et al., 2008). At best, adaptation and mitigation strat­egies exhibit synergies. Positive examples include many carbon-sequestration practices involving reduced tillage, increased crop cover, including agro-forestry, and use of improved rotation systems. These lead to production systems that are more resilient to climate variability, thus providing good adaptation in view of increased pressure on water and soil resource. In the worst case, they are counter-productive. In relation to water, examples of adaptation strategies that run counter to mitigation are those that depend on energy to deliver water and, therefore, produce additional greenhouse gas emissions. On the other hand, some mitigation strategies may have negative adaptation consequences, such as increasing the dependence on biofuel crops, which may compete for water and land resources, reduce biodiversity and increase mono-cropping, increasing vulnerability to climatic extremes.

Short-term plans to address food insecurity pro­vide access to water resources, or encourage eco­nomic growth must be placed in the context of future climate change, to ensure that short-term activities in a particular area do not increase vulnerability to climate change in the long term. Policy attention is needed in the following areas:

  1. Developing long-term water policies and related strategies, taking into account country-specific legal, institutional, economic, social, physical and environmental conditions
  2. Increasing water productivity by promoting efficient irrigation and drainage systems
  3. Improved watershed and resource management, integrating the different natural resources – water, soil, flora and fauna
  4. Enhancing water availability through better use of groundwater storage, enhancing groundwater recharge where feasible, and increasing surface water storage.
  5. Institutional and governance reforms that balance demand and supply across sectors and that mainstream climate change adaptation;
  6. Enhancing stakeholder participation in water development and climate change adaptation;
  7. Improve information and early warning systems to provide land and water users with timely and adequate information and knowledge about availability and suitability of resources to promote sustainable agriculture
  8. Human resource, capacity and skills development of policy makers and end-users to help them deal with new challenges;
  9. Increase investments in agriculture and rural development.

References:

  1. Bates, B.C., Kundzewicz, Z.W., Wu, S. and Palutikof, J.P. (eds) (2008) ‘Climate Change and Water’. Technical Paper of the Intergovernmental Panel on Climate Change. Geneva: IPCC Secretariat.
  2. FAO (2008) ‘Hunger on the rise’ http://www.fao.org/newsroom/EN/news/2008/1000923/index.html, accessed 20/02/2009).
  3. FAO (2008) ‘Water for Agriculture and Energy in Africa: The Challenges of Climate Change’. Ministerial Conference on Water for Agriculture and Energy in Africa: The Challenges of Climate Change. December. Sirte, Libyan Arab Jamahiriya.
  4. FAO (2008) ‘Water for Agriculture in Africa: Resources and Challenges in the Context of Climate Change’. Ministerial Conference on Water for Agriculture and Energy in Africa: The Challenges of Climate Change. December. Sirte, Libyan Arab Jamahiriya.
  5. IPCC (2007). Fourth Assessment Report, Working Group-I, II and III
  6. Magrath, P. and Tesfu, M. (2006) Meeting the needs for water and sanitation of people living with HIV/AIDS in Addis Ababa, Ethiopia. Addis Ababa: WaterAid Ethiopia.
  7. Molden, D. (ed.) (2007) Water for Food, Water for Life. London: Earthscan and Colombo: International Water Management Institute.
  8. Nellemann, C., MacDevette, M., Manders, T., Eickhout, B., Svihus, B., Prins, A. and Kaltenborn, B. (eds) (2009) The Environmental Food Crisis. The environment’s role in averting future food crises. A UNEP rapid response assessment. Arendal, UNDP.
  9. ODI (2009) Climate change and Water.
  10. Schmidhuber, J. and Tubiello, F. N. (2007) ‘Global food security under climate change’, PNAS 104 (50): 19703-08.
  11. Shah, M., Fischer, G. and van Velthuizen, H. (2008) Food Security and Sustainable Agriculture. The Challenges of Climate Change in Sub-Saharan Africa. Laxenburg: International Institute for Applied Systems Analysis.
  12. UNDP (2008) Fighting Climate Change – Human Solidarity in a Divided World. New York: UNDP.
  13. Vidal, J. (2009) ‘Rich nations failing to meet climate aid pledges’, The Guardian, 20 February.
  14. Wiggins, S. (2006) Agricultural growth and poverty reduction: A scoping study. Working Paper No. 2 on Globalization, Growth and Poverty. Ottawa: IDRC.
  15. Wiggins S. (2008) ‘Rising Food Prices – A global crisis’. Briefing paper No 37. London: ODI. 

Keshav C Das

Senior Advisor, SNV Netherlands Development Organsiation

Energy Demand and Low Emission Pathway-Is it compatible in LDCs?

The relationship among energy consumption, economic growth, standard of living is an interesting subject of research.  Famous Brazilian physicist Jose Goldemberg wrote in Science magazine[1] in 1995 that 75% of the world’s population during 1993, living in the less developed countries (LDCs), used only about 30% of the world’s commercial energy. Conversely, the 25% of the population that live in industrialized countries accounted for 70% of global energy consumption. But Goldemberg projected that by about 2010-12 energy consumption in the LDCs will surpass that in the industrialized countries because of high population and economic growth in the LDCs.

Interestingly, the current scenario of energy consumption in LDCs is now exactly the same as project by Goldemberg. For developing and less developed countries, development means satisfying the basic human needs of the population, including access to jobs, food, health services, education, housing, running water, and sewage treatment. And, to fulfill these needs, we need huge amount of energy sources.

The important aspect is that most of the energy sources in LDCs are inefficient, ill-planned, fossil intensive and un-sustainable, resulting massive green house gas emissions, which is contrary to the global compact for ‘green growth’ or mission to develop low emission economic development philosophy.  The World Bank’s datasheet on CO2 emissions in LDCs exhibits that the emissions (kg per 2000 US dollar of GDP) in LDCs was at 0.62 in 2008-09 and these emissions are stemming from the burning of fossil fuels. They include carbon dioxide produced during consumption of solid, liquid, and gas fuels and gas flaring. A historical trend of CO2 emissions in LDCs is provided below.

Image

 Political statesmen believe that this emission is necessary for economic growth and ‘development’ of LDCs. If this is true, then, the rationality of the climate resilience, mitigation and developed aid may not be so justified for LDCs.  This also proofs a dual nature and ambiguity of the economic model of LDCs. In short, low emission development pathway at the cost of promoting fossil fuel intensive energy technologies would not be a convincing growth paradigm. And, this shows the incompatibilities of the policies and aspirations of LDCs for development.

How could we then make it compatible? A simple and straightforward answer to this question may be difficult. But, we could think about of adopting clean and renewable energy based economic development model and at the same time, accepting the accountability to keep GHGs emissions at its low throughout the industrial and economic activities in LDCs. Technically and economically it is possible. But, we need a strong political mandate to adopt it. Interestingly, in April this year (2013), the 49-strong group of LDCs agreed to accept binding cuts on emission reduction. This is a clear message on flexibilities of LDCs and its leadership, which is grossly absent in case of China, India and even in case of USA. This development was most desirable to demonstrate that nation needs political will for creating a real and tangible green economy. Unfortunately, many of the key negotiators of UN talks are still in a fictitious world of low emission growth model and green economy, which is far away from the real word assumptions.

It is pertinent to highlight here that over a quarter of a century ago, also in Science[2], Roger Revelle described the historical contribution of energy in shaping the human condition. Roger said : “All ancient civilizations, no matter how enlightened or creative, rested on slavery and on grinding human labor, because human and animal muscle power were the principal forms of energy available for mechanical work. The discovery of ways to use less expensive sources of energy than human muscles made it possible for men to be free.”

It is critical here to note such freedom from energy poverty, economic poverty and freedom from intellectual fallacies is now need of the hour. UN system needs to take a note of this.

 Keshav C Das


[1] Goldemberg, Jose; “Energy Needs in Developing Countries and Sustainability,” Science, Volume 269, 25 August 1995, page 1058.

[2] Revelle, Roger; “Energy Use in Rural India,” Science, Volume 192, 4 June 1976, page 969.

Why environmental issues are important for business?

Jan2013Business can’t sustain without a sustainable production and consumption value chain development. Environmental sustainability is now conceived and implemented in regular business operations of companies not merely as a ‘green washing’ approach, rather, for most companies these days; sustainability is the core of corporate strategy. The rationale for this paradigm shift in the corporate strategy [from the old school of thoughts-produce more with less cost] is mainly powered with energy efficiency, process management, introduction of cleantech, green growth etc.

In one of the recent global survey of McKinsey[1], it is stated- companies know that consumers and employees care about the environment, and their interest often presents real business opportunities and risks. According to the survey, an emerging key environmental concern is biodiversity, or the diversity of species, variety of ecosystems, and variability of genes. The survey found that a majority of executives (59 percent), see biodiversity as more of an opportunity than a risk for their companies. They identify a variety of potential opportunities, such as bolstering corporate reputations with environmentally conscious stakeholders by acting to preserve biodiversity and developing new products or ideas from renewable natural resources. The positive outlook on biodiversity is in stark contrast to executives’ views on climate change in late 2007, when only 29 percent saw the issue as more of an opportunity than a threat[2]. Perhaps, addressing climate change over the past few years has changed some executives’ views on the potential upside of environmental issues.

Based on the ongoing discussion in the World Economic Forum (Davos) and the deliberations of Lord Stern, author of the government-commissioned review on climate change that became the reference work for politicians and green campaigners as well as the stern warning of Jim Yong Kim, the new president of the World Bank, are two significant statements in the beginning of 2013, which reaffirms the severity of the climate change problem and necessities to take up this issue as a market determinant, and perhaps, also as a business’s core activities. While Mr. Kim pledged to make tackling climate change as a priority of his 5 year term, he stated that “there will be water and food fights everywhere”. Lord Stern regretted that he underestimated the risks of climate change in his much referred Stern Review Report of 2006 and he now believed that he could have been more ‘blunt’. He said: “Looking back, I underestimated the risks. The planet and the atmosphere seem to be absorbing less carbon than we expected, and emissions are rising pretty strongly. Some of the effects are coming through more quickly than we thought then.”

With these concerns of two world leaders, the critical question for companies and businesses is: should they capitalize on this increasing threat of climate change and aligned their corporate environmental sustainability strategy? The answer is certainly YES. The corporate strategy should be to engage in these environmental value chains through market-based solutions that can quickly and effectively deploy capital to appropriate projects. The companies should use the market more effectively, and look for options with new climate finance mechanism and tools (like nationally appropriate mitigation actions-NAMAs), which will not only bring new investment opportunities to fund private sector sustainability and carbon reduction projects but also create new windows for profits. With corporate strategy ever more sensitive to climate risks and environmental sustainability, the business can adopt for greening of supply chains as a bright spot of opportunity for corporate investment in offsetting – and in some cases “insetting” – particularly in the realm of agriculture[3].

Keshav C Das, Senior Advisor, Climate Finance, REDD, and Renewable Energy

SNV Netherlands Development Organisation