Pricing carbon again

Here is a blog from Tim Harford that illustrates the point made by Stavins about why it is lower cost to address climate change through pricing than traditional regulation like standards.

Professor Stavins in Geneva

Last night I attended a lecture by Professor Stavins of Harvard. He started with some basics on climate change and economics.

The fundamental obstacle to introducing measures to reduce carbon usage in our economies is that climate change is a global commons problems. It does not matter is carbon is emitted by a car in Geneva or lawnmower in Wisconsin. The damage is the same. However, actions to reduce emissions incur costs for a national economy even those the benefits of that action are shared globally – the free rider problem.

Economists like Stavins favour market-based instruments because there are millions of emissions sources (from cars to lawnmowers to power station) with hundreds of millions of decision-makers. Each source has a different short term marginal cost to reduce emissions.

Conventional command and control policies (e.g. emission standards) are not cost effective because they impose a regulation that requires compliance in different marginal costs.

Market-based instruments like a carbon tax or cap and trade controls emissions at the same marginal cost. In the longer term, pricing sends signals for low carbon technology development.

Why is carbon pricing a hot political issue?
Because it makes the costs transparent. Politicians want to make constituents think they have something for nothing. Win-win policies don’t exist. For example a gas tax is transparent. A fuel efficiency standard not, so more acceptable politically.

He said a carbon tax not likely in next few years, but that there is some climate policy in the US, e.g.
• 80 billion commited for renewable and energy efficiency
• Energy efficiency standards for auto and appliance
• US Supreme court decision. EPA endangerment findings and CAA triggered to put in place for CO2
• Air pollution leg

He said that carbon pricing is a necessary but not sufficient incentive for low carbon tech development. Why? Because R and D is eventually a public good, even with strong IP systems. For example, Apple spent millions on developing the smart phone. New entrants to the market (Android) have enjoyed the benefits of that development. Apple did not capture all the benefits of their investments. So positive externality mean that low carbon technology development will be undersupplied without government funding.

He then described the prospects for Durban. These are covered in his blog but essentially because of the pressure to extend Kyoto Protocol, the conference risks failure like Copenhagen. He noted that keeping KP going is v important to DCs. Why? They get benefits (reduced damage) but at no cost.

Interesting point about how carbon regulation can develop outside the UNFCCC process. We are now seeing decentralized approaches like the EU ETS and the Australian carbon tax. These can be linked through equivalence schemes (like with private standards). There is pressure to do that to reduce overall costs, market power and price volatility. Systems are already linked when they are both linked through use of the CDM offsets.

Trade and Naomi Klein

This week Naomi Klein issued her "climate agenda" as a response to the Tea Party deniers to climate change. The six "arenas" for change include one on international trade, in which production is "relocalized". A few thoughts on this:

Production and trade has always involved large distances, or least since man worked out animals could carry things and that ships with sails can go long distances. Economists show that trade brings about an efficient use of resources because of the theory of comparative advantage, whereby two countries trade with oneanother the things that they are respectively better at producing more of.

"Re-localizing" food production as Klein advocates would make food more expensive, which would be a bad thing for people on low incomes (who spend proportionally more of their budget on food than the rich). It would also be bad for the climate in some cases - certain foods are imported from warmer regions not just because it is cheaper to produce there but the emissions (even when you include transport) can be considerably lower, for example for fruits imported in the winter.

Freakonomics sums it up nicely today with this post.

Links for the weekend

Just in time for the weekend, here are some of the links that fascinated, entertained and depressed me this week (in no particular order):

1. Richard Muller, climate "skeptic", concludes the world is warming,
2. The Daily Show's take on the Muller story and science skepticism in general (the second segment is particularly funny though the whole show is worth watching),
3. Mitt Romey on Global Warming (not to be confused with America Warming),
4. News that 2010 levels of GHG are higher than the worst case scenario outlined by climate experts just four years ago and China's emissions now exceed US emissions by 50%,
5. Mark Halle of IISD and his Rio+20 perspective,
6. And lastly, Tim Haab of Environmental Economics nicely summarizes why "Blaming economists for our current economic situation is like blaming psychologists because people are crazy". His post is in reaction to an "Occupy Walkout" of Greg Mankiw's Ec10 class this week.

Happy Reading!

More on coffee and cocoa

More on challenges facing the coffee and cocoa sectors.

From CIAT on impact of climate change on cocoa

By 2050, a rise of 2.3 degrees Celsius will drastically affect production in lowland regions, including the major cocoa-producing areas of Moyen-Comoe, Sud-Chttpand Agneby in Cote d'Ivoire, and Western and Brong Ahafo in Ghana. Farmers in these areas are particularly vulnerable since cocoa production is often their primary source of income.

"Many of these farmers use their cocoa trees like ATM machines," said CIAT's Dr. Peter Laderach, the report's lead author. "They pick some pods and sell them to quickly raise cash for school fees or medical expenses. The trees play an absolutely critical role in rural life."

And

Example from CIAT of Climate Smart Agriculture from a smallholder in Kenya

Film on its impact on coffee in Colombia

Taxing fat

Dave Pannell posts on the Danish fat tax - he argues that it is ineffective, regressive and potentially with high transaction costs. On the plus side, the revenue raised could be used to make it less regressive.
Are there parallels with a carbon tax?

Greg Mankiw argues that a carbon tax is not regressive as the poor use less on carbon than the rich (who own more cars for example). Although presumably proportionally more of their income is spent on meeting basic needs which are carbon related expenditures (like food and heating).

Mankiw and Hansen both argue the regressive element of carbon can be reduced through paying dividends to the poor from the revenue raised.

Coffee and Climate Change

Last week I attended a conference in Lausanne organized on the topic of Climate Change Adaptation and Mitigation in the Kenyan Coffee Sector. Attending the conference were representatives from all parts of the coffee supply chain, from producers to traders to brands as well as standard setters, NGOs, governments, international organizations, and academics. Having all of these players in the same room was enough to convince me of the severity of climate change for the coffee sector.

The context for such a conference is straight forward: coffee yields per hectare have been shrinking in the past years in the face of more variable climate. (For instance, variation in rainfall is directly related to variability in production). Incomes have been falling, coffee quality has become less reliable, and producers are going out of business. Because falling coffee yields and quality affect actors all along the value chain, the coffee sector as a whole has an interest in addressing climate change and helping producers adapt to its impacts. Producers need to adapt to changing climatic conditions. Industry needs to secure long-term quantity and quality of their product, as well as respond to national, regional and international climate legislation. And standards organizations need to incorporate climate change into the sustainability aspects of their work. While the impacts for each actor may be different, they all agree that intervention is necessary.

In this regard, a number of cooperative projects have been carried out in the past few years including the Development Partnership (PPP) between Sangana Commodities Ltd. and the German International Cooperation (GIZ) to support Kenyan coffee smallholders in adapting to climate change and incorporating climate change mitigation where possible. The project worked to support coffee producers to adapt their production to the changing climate, namely through the development of an additional component to the existing 4C Code of Conduct taking into account climate aspects. Coffee is a very versatile plant and with adequate support, producers can learn to adapt their production systems.

In addition to the 4C climate module, other standards systems such as Rainforest Alliance and UTZ Certified have also been actively involved in helping producers adapt to and mitigate climate change impacts. For instance, UTZ Certified is piloting a project where waste water from coffee production is converted into biogas through the use of bio-digesters. The biogas is either used for electricity or heat , or in large scale operations generates CO2 credits to offset emissions downstream in the value chain. Other projects have focused on the use of the Cool Farm Tool, developed by the University of Aberdeen with financial support from Unilever. This online, open source tool uses the PAS 2050 methodology and assists farmers in calculating the carbon footprint of their production. All farmers have to do is enter the data into the tool which then calculates their carbon footprint for them.

Overall, some interesting conclusions came out of the conference:

• In the coffee sector, adaptation of climate change impacts should have a higher priority than mitigation. The coffee sector is responsible for less than 0.1% of global GHG emissions while climate change is already having serious negative impacts on the livelihoods of coffee producers in developing countries.



• Coffee brands and consumers tend to view mitigation more favourably than adaptation since mitigation projects sell, while adaptation requires investment. However, through partnerships with other actors along the supply chain, modest investment in adaptation for coffee producers has been possible.



• Much more investment will be needed to scale up adaptation projects to the necessary level. The supply chain will need to continue to work together and with local government authorities to come up with innovative solution and more importantly, agree on exactly where the needed funding will come from.



• Finally, regarding mitigation in the coffee sector, it will be difficult to engage coffee producers when there is no clear benefit for them to measure and reduce their carbon footprint. Explaining the technical terminology, improving the ease and reducing the cost of data collection (for example through use of the Cool Farm Tool) can all prove beneficial. Above all though, mitigation projects need to be made inclusive of producers (e.g. generation of carbon credits that could be sold to fund adaptation projects).

Steve Jobs

From his Stanford Commencement Speech - three lesson for life

1. You have to believe the dots will connect in the future

2. You got to find what you love...the only way to do great work is to love what you do...keep looking don't settle

3. Remembering you are going to die is the best way to avoid the trap of being afraid of what you do...death is life's change agent...Don't follow dogma, it is other people's thinking...don't live other people's lives...stay hungry, stay foolish

Rearranging chairs on the Titanic

Part of my job is to coordinate a UN agency's Greenhouse Gas Emissions Reduction Strategy. This is part of a UN wide initiative. At the annual meeting of all the Environmental Focal Points of the UN recently at FAO in Rome, I had the chance to share some ideas and hear what other UN organizations are doing to reduce emissions. The Greening the Blue website presents some of these.

Giving up business class

Here is a non official, voluntary idea - instead of the business class we are entitled to in the UN, we will forego the privilege to travel business and head to the back of the plane instead.

Like international chef David Chang, I really LOVE travelling business class but travelling business has around twice the carbon footprint than economy because of the extra space taken up in the plane.

Today, I will blog about the environmental case for going economy and why you shouldn’t worry too much about how much paper you print…

Why is climate change a serious issue?

On current projections, the Earth will be around 9C warmer in places by the end of the century. This means mass extinctions of species (50%+) are likely. For humans it also means billions of people living (and dying) in misery through destroyed agriculture, coastal flooding, lack of water, increased spread of tropical diseases.

The very scary thing though is feedback effects (already being observed) when increasing temperatures unleash further emissions of gases such the release of methane from the tundra of Siberia which further speeds up the warming effect and melts more tundra…(a vicious cycle).

So on current projections of economic growth, there is, as like to say, a nonnegliable risk of catastrophe….or put another way, it is possible that Plant Earth will not be somewhere worth living in the life of our children and grandchildren.

Why bother being a climate altruist?

Taking voluntary actions like flying less or taking the bus to work are seen as futile acts to many. Paul Krugman argues that climate altruism is pointless because you are simply freeing up space for someone to emit carbon. This is partially true and a strong argument for why we need carbon taxes to make markets work in favour of the environment not against it.

But change isn’t happening fast enough - bottom up initiatives are needed to signal to those in power that we will vote for them if they introduce strong green measures.

Rearranging the deck chairs on the Titanic

How do we know what is the best action to take to reduce emissions? Everyone is telling us what is best. Supermarkets label food for its carbon to reduce our shopping basket’s carbon footprint. At work we are reminded to reduce printing and turn off lights. But are these actions really that effective or do they just make us feel like we have done something useful?

Simple calculations reveal where we should concentrate our efforts where we work:

In one UN organization (fairly representative of many), emissions per staff member per year are coming from
Lighting an office - around 0.1t CO2 eq
Paper - around 0.2t CO2eq
Travel - one business class to South Africa from Europe equals 3.0t CO2 eq (the per staff average is 9t CO2eq from travel in many UN agencies)

If just one flight to Africa emits 50 times more carbon than a year’s worth of printing, doesn't it makes sense to think more about alternatives to flying than fretting about lights and paper?

Training on project design

Results orientated Project Design

This week I attended an in house training on project design. It was a big commitment of time but valuable for learning more on how to strengthen project design.
This type of exercise should help us to move towards stronger results based management and strengthening accountability in Aid for Trade delivery (see my July in house blog after the A4T Review).
Here are some snapshots of the discussions. It is far from exhaustive - just several “takeaways” that I found interesting.
Outcome and outputs
What is the difference?
There was an exercise to work out what the difference between outcomes or outputs. It became evident that there was a grey area (and thus confusion) between the two. The training was useful to clarify the difference.
The definition used initially in the training was:
Output: a deliverable from the project in terms of a product (e.g. a market guide) or a service (e.g. a training event)
Outcome: the effect of using the output (e.g. a company enjoys greater sales from having used the guide or attending a training event).
Confusion arose due partly to the definition used by the OECD in which the output is not just a deliverable but it “may also include changes resulting from the intervention”. Outcome is described as “the likely…effects of an intervention’s outputs”. There is strongly similarity between these two definitions making it more likely that we will interpret definitions differently.
Committing to outcomes entails risks
We learnt from Irene that one agency (GIZ) does not commit to outcomes – presumably as such a commitment think that means unacceptable levels of risk – an agency has considerably more control over achieving outputs than outcomes.
However, as someone pointed out, it is surprising that the German parliament accepts this. Generally speaking, the taxpayer is paying for outcomes (“poverty reduction “ educating women” “ protecting children from diseases”). Indeed, the MDGs are stated outcomes and the UN and donors are signed up to delivering these.
Agencies making commitments on outcomes (like the UN) have therefore to make a risk assessment of the linkage between outputs and outcomes and preparing the appropriate indicators and baselines for measuring if they have been achieved. Also:
• Sharing best practice and experience, publishing evaluation etc. ensuring feedback loops helps us to learn about these linkages.
• To what extent do linkages vary according to different economic, social and cultural contexts?
• Buy-in or co-financing to the project from national stakeholders can demonstrate that outputs lead to positive outcomes.
• Evaluations of cost effectiveness should measures the ratio between inputs and outcomes (not outputs).
• “the more specific (in defining the outcome and outputs) you are, the better you can manage a project”

Indicators
The value of my Friends and Links
An indicator is a factor that shows evidence of an outcome being achieved. (e.g. sales increase of an entrepreneur). We reviewed weak and strong indicators, again from project documents.
The IMDIS type indicators explain outputs but are not so useful indicators of outcomes. For example reporting on the number of workshops organized does not tell us anything about outcome (i.e. companies learning about market trends and changing their business strategy as a result).
Related indicators being used by projects like “Number of buyers contacted” also provide an incomplete picture. The number of buyers is not that informative. For example, when an agency takes companies to a trade fair, we want to know the quality of buyers’ enquiries (i.e. ones that lead to business) from buyers, not the number of enquiries. One high quality enquiry can be worth more in terms of sales or a long term partnership than 10 vague or low value enquiries.

Social networking indicators are analogous. Having lots of “Friends” on Facebook doesn’t tell me anything about the quality of those friends. Similarly, a job-seeking graduate would prefer to be to one influential executive than 10 low level employees.
Assessing risk
We reviewed risks and assumptions from project documents according to
• measures for the level of probability (of the assumption holding) and
• the likely impact on the project if the assumption doesn’t hold.
If you can apply a quantitative value (say from 1-4), multiplying the two gives a rating of risk, thus allowing Management to get a snapshot of risk. An appealing idea, but shouldn’t be a substitute for careful analysis of the risks and assumptions.
Re-planning
Logframes do not need to be written in stone.
They can be revised during implementation. If, for example, external factors changed (e.g. if market conditions change).
In the 90s changing the logframe was viewed negatively by evaluators. Now evaluators take the reverse opinion, that changes are welcome, shows that project is flexible and adaptive to changing conditions (e.g. in the market, socio-economic conditions). Do we have the scope for that, particularly with respect to what we have agreed with donors? Yes, if they are agreeing to outcomes – how we get there (the type of activities and outputs or the “road” we follow) should allow for flexibility. The mid-term evaluation is an opportunity to re-evaluate the planned outputs and even outcome.
Poorly designed projects can be approved for political, disbursement pressures. However, the organization will pay the price later (outcomes not achieved, financial problems etc)
A step too far? Applying logframes to family life
We heard from several participants anecdotes that logframes were being applied to personal lives, including:
• An assessment of whether it was a good idea to get married – risks and assumptions revolved around the fact the two were from very different cultures. His fiancée wasn’t impressed.
• Used for planning a family weekend
• Used for resolving a family conflict between in-laws (“Outcome”: harmony between in laws “Outputs” Built capacity of in-laws to show kindness and understanding etc etc?)

Other takeaways
“we must be in learning mode, not punishment“
“project management is a learnable skill”
“evaluation is mainly a learning exercise, not policing”
Having a scoring system based on a World Bank type checklist would be “instructive and bring transparency” to the review process.

Beekeeping project in Helmand

The US and UK armies are promoting beekeeping as an alternative to growing opium. The main challenges are
does the income generated compare well with opium production? maybe if combined with other crops
is there enough pollen in this desert area? yes as it draws on poppies and helps stimulate new planting of trees and crops
are the Taliban a threat? yes, the men turning up to be trained in beekeeping are potential targets for the Taliban as they are cooperating with the West. gives you an idea of how desperate people there are to find a way to earn a living

http://www.youtube.com/watch?v=0XDzjgFlgrE&feature=player_embedded

Using the F word in a Swiss bank

Today I went to my bank in Geneva and they were playing Fxxx You by Lily Allen. Does this mean that the F word is ok to use in a bank? More likely is that Lily Allen has de powered it to such an extent that respectable places like Swiss banks are happy to play it out loud to accompany your request for an overdraft...

Impact evaluation in trade projects

The first chapter of Where to Spend the Next Million presented at the A4T Review and edited by World Bank staffers is an essential primer for those interested in Impact Evaluation in trade. Here is an overview of what the authors said.

Impact Evaluation (IE) is challenging to carry out in the trade context but A4T is not exempt from using IE methods. Trade exceptionalism – the notion that trade related interventions are inherently not amenable to IE – is…”groundless”.

The primary concern that the authors address is the attribution problem of project outcomes, i.e. to come up with workable methodologies that can show the impact of the project and what would have happened in the absence of the intervention.

This is a difficult exercise because many outside influences can confound the identification of a programme or policy’s impact. For instance, an export promotion scheme put in place in 2007 would see its positive impact confounded by the negative impact of the global crisis of 2008-9; a simple before-after comparison of outcomes is likely to suggest a negative impact of the programme.

How do you filter out these influences? We would want to know how beneficiary firms would have performed in the absence of the programme (presumably worse). For this we need a data set of firms that benefited from the programme (“the treatment group”) and non-beneficiaries (the control group).

Randomised control experiments (the “gold standard”) can be used when evaluation is built into the design of programs. However, the authors stress that we need not be wedded to RCTs. They discuss the use of Difference in Differences, a methodology that compares differences in outcomes instead of comparing levels. These have been applied for example by the IADB to assess the effectiveness of TPOs in six Latin American countries as well as their agricultural sector projects.

The picture that emerged from the IADB study (in Chapter 2 of the book by Christian Volpe Martincus, listed on the TPO Network) was that export promotion was effective in facilitating export expansion along the “extensive margin” i.e. resulting in greater diversity of exports and they were more useful for SMEs rather than large companies (who did not face such severe information asymmetry problems).

Also of interest is the reference to a study by Lederman on the performance of Export Promotion Agencies which showed through a survey of EPAs across 88 developed and developing countries that EPA services were very important for “overcoming foreign trade barriers and solving asymmetric information problems associated with exports of differentiated goods…” and that there were strong diminishing returns, suggesting “small is beautiful” as far as EPAs are concerned.

The study ends by advocating the “mainstreaming” of IE into trade projects.

“Trade interventions have so far escaped the rising tide of evaluation methods and there is no justification for trade exceptionalism”

The key barriers to progress are not conceptual. Rather they concern incentive issues, as IEs are costly, burdensome, lengthy and not necessarily aligned with project managers’ incentives. In order to overcome these barriers, four avenues must be explored

1. The burden imposed on project managers should be relieved by making IE a separate exercise carried out by specialists, albeit in collaboration with project managers
2. Beneficiary governments must buy into the process
3. Costs should be reduced, for example through building local IE capacities
4. IE results should prioritize learning over monitoring

“Care is needed in the interpretation of IE results because premature conclusions could easily provoke backlash and because a considerable accumulation of evidence is needed to yield truly valuable new knowledge”

Evaluation and counter bureaucracy

Following the thread from my blog Monday….

World Bank evaluation expert Aaditya Mattoo warned the Aid for Trade meeting against the tyranny of measurement in evaluation. That we should not avoid programme evaluation simply because we can not perfectly measure the impact of activities.

Former USAID chief Andrew Natsios draws a similar conclusion in his much quoted paper ‘The Clash of the Counter-bureaucracy and Development’ and highlighted today from Oxfam blogger Duncan Green.

Natsios refers to the tension in the development world between the compliance side of aid programs (the counter bureaucracy) and the technical program side and that this “imbalance threatens program integrity”.

He continues that the “counter bureaucracy ignores a central principle of development theory—that those development programs that are most precisely and easily measured are the least transformational, and those programs that are most transformational are the least measurable.”

What makes this report fun to read is not just the lively debate in the main document but the inclusion at the beginning of an ironic memo from the Duke of Wellington complaining about England’s own version of the counter bureaucracy during the time of the Napoleonic Wars.

“Gentlemen,

Whilst marching from Portugal to a position which commands the approach to Madrid and the French forces, my officers have been diligently complying with your requests which have been sent by His Majesty’s ship from London to Lisbon and thence by dispatch to our headquarters.

We have enumerated our saddles, bridles, tents and tent poles, and all manner of sundry items for which His Majesty’s Government holds me accountable. I have dispatched reports on the character, wit and spleen of every officer. Each item and every farthing has been accounted for with two regrettable exceptions for which I beg your indulgence.

Unfortunately the sum of one shilling and ninepence remains unaccounted for in one infantry battalion’s petty cash and there has been a hideous confusion as to the number of jars of raspberry jam issued to one cavalry regiment during a sandstorm in western Spain. This reprehensible carelessness may be related to the pressure of circumstance, since we are at war with France, a fact which may come as a bit of a surprise to you gentlemen in Whitehall.

This brings me to my present purpose, which is to request elucidation of my instructions from His Majesty’s Government so that I may better understand why I am dragging an army over these barren plains. I construe that perforce it must be one of two alternative duties, as given below. I shall pursue either with the best of my ability, but I cannot do both:

1.) To train an army of uniformed British clerks in Spain for the benefit of the accountants and copy-boys in London or, perchance…
2.) To see to it the forces of Napoleon are driven out of Spain.
Your most obedient servant,
Wellington”

Natsios summarizes the problem with the current compliance system as:

• Excessive focus on compliance requirements to the exclusion of other work, such as program implementation, with enormous opportunity costs
• Perverse incentives against program innovation, risk taking, and funding for new partners and approaches to development
• The Obsessive Measurement Disorder for judging programs that limits funding for the most transformational development sectors
• The focus on the short term over the long term
• The subtle but insidious redefinition of development to de-emphasize good development practice, policy reform, institution building, and sustainability.

Natsios ends, “Let me conclude with one simple question asked in a different form by the Duke of Wellington. Do Washington policy makers wish USAID, PEPFAR, and the MCC to implement serious development programs or comply with the demands of the Regulatory Lords of Washington? They cannot do both.”

Driving a Hummer in Geneva

Today I saw a Hummer with CD plates - should I be pissed off on environmental grounds?

A Hummer uses goes 9 miles per gallon. My Nissan Almeira 42 miles per gallon. All of this rendered meaningless depending on how many flights a year I take.

A Hummer uses up loads of space on the road, pollutes way more than my Nissan and is a nightmare for cyclists and pedestrians. But then I guess the intern who I passed on the bus is probably saying the same about me.

OK, so I can't win the environmental arguments, but it does send out an uncomfortable ethical message if UN employees are buying these monster cars...

Evaluating trade assistance programmes

What Aid for Trade said about evaluation

On Monday I attended the final session of the WTO's Aid for Trade meeting focused on monitoring and evaluation.

Why do we need M & E?

An obvious question but worth asking: electorates are skeptical of development aid’s impact and so want to see independent, scientific studies that demonstrate its impact

· A recent poll in the Financial Times shows that respondents in most OECD countries considered defence and development aid as priority areas for spending cuts

· From the ESCAP delegate, Out of 1 Australian dollar, 67cents ends up in expat salaries

A4T evaluation particularly challenging

The moderator Michael Roberts (WTO) pointed to the success of evaluation in the health sector (i.e. does a dollar spent on health result in lives’ saved) but how can we apply it to A4T? This type of “gold standard” of evaluation seen in health is more difficult in trade due to difficulty in assigning casuality.

Given these challenges evaluation should at least be a learning process, where feedback loops are in place. Fear of making mistakes should be replaced by analysis and learning from them as seen in the private sector (see the new book “Adapt” by Tim Harford on the value of making mistakes).

The wonders of evaluation

Aaditya Mattoo, World Bank expert on evaluation illustrated how powerful evaluation in aid programmes with an example of randomized trials by the Poverty Action Lab and work of Estor Duflo.

Problem: Kids in rural Kenya were not getting sufficient education. How does the government get its biggest bang for its buck investment.

The study show that de-worming kids (In much of the developing world, most kids have intestinal worms, leaving them sick, anemic and more likely to miss school), resulted in 25 percent less absenteeism. The cost of this (35c) compared highly favourably to other policy options like paying for school uniforms or an additional teacher (around US100).

However, such trials are difficult to implement in the A4T context. How can you get robust data sets? How can you assign causality when many other factors are affecting outcomes (e.g. other economic and social policies).

For this reason, he said that A4T was at a primitive stage compared to health in evaluation, but we need to be pragmatic.

The three tyrannies of evaluation

Despite the need for figures showing value for money, Mattoo warned the meeting against what he called the tyrannies of evaluation. These are:

Methodology – i.e. avoiding evaluation as we have not perfected the methodology

Causality – i.e. this programme was wholly responsible for a 10% rise in incomes.

In A4T we can not easily assign casuality but we can draw more qualitative conclusions. For example, an IADB study on a trade capacity building programme could not assign casuality on volume of trade increased but made a useful finding that it increased their diversity of exports. A lesson from another study was that A4T aid should not be directed to the large companies but to the marginal companies.

Measurement – i.e. avoiding evaluating what can not be measured, so we end up focusing on only what we can measure.

At a side event later in the evening the Bank launched a new study Where to Spend the Next Million? Applying Impact Evaluation to Trade Assistance. It looks at how M and E is being applied in A4T.

Why blog?

It has been a year since I blogged....it is time I started blogging again...this is why from Seth Godin