Archive | February 2012

On the Edge of Mainstreaming Sustainability

My close friend and I were arguing yesterday over what work environments and organizations I should strive to work for if I want to stay in the sustainable development field and make a significant difference. My friend A argued that the obvious choices–the World Banks, Oxfams, WWFs, World Resources Institutes, and DfIDs of the world–are not influential enough. They’re too bureaucratic (read: risk-averse and increasingly unused) or too reliant on outside funding (read: risk-averse and unsustainable). Instead, he argued, I should look toward smaller, more nimble organizations that are financially self-sustainable, do more interesting work, and create their own value.

I found one such place today: the Sustainable Food Lab. Its mission is to “clean up” agricultural supply chains; it partners with big businesses like Costco, funders like DfID, and NGOs like Oxfam to come up with sustainable solutions, though many of these currently appear to be on a small scale relative to the size of the market and even the corporations themselves.

I also came across a letter by its director, Hal Hamilton, about how sustainably-minded change by big businesses is not enough: he argues that collaboration between businesses (the private sector), government (the public sector) and NGOs (and it must be all three) is essential for getting past the many perverse incentives to sustainability (like needing to keep a company’s market share by sourcing with the cheapest, most harmful methods possible). In particular, Hamilton seems to imply that government action is especially lacking (such as in the case of Indonesia and palm oil expansion leading to expansive deforestation, despite companies that buy palm oil trying to be more sustainable).

He also included a great quote by his colleague, Adam Kahane:

Change from the top down doesn’t work, and change from the bottom up doesn’t add up.

It was refreshing to hear a realistic perspective on the approaches commonly taken by NGOs to mainstream sustainability and social change, though I’m slightly skeptical of how financially sustainable and transparent their own organization (the Lab) is, based on the lack of annual reports and other systematic reporting. I was also glad to see that the directors acknowledged that partnerships between NGOs and corporations can only go so far, and I’m eager to see what next steps the Lab will propose to push the frontier of what’s feasible, both for the agribusiness industry and business in general.

Companies only make changes that are cost neutral or that gain consumer support. They cannot add costs, in isolation, that make them less competitive… Some of the costs of sustainability require co-investment by other sectors.

Reinterpreting Somalia

Alex de Waal, a British journalist and Darfur expert, published an editorial in the NYT today on the upcoming meeting in British meant to “solve” Somalia, and what ought to be done differently. He makes some interesting points, including:

Fundamentalists were struggling to gain a foothold in Somalia until foreign military interventions handed them the banner of nationalist resistance.

Somali elders and businessmen have created a functioning democratic state (the Republic of Somaliland) and, next door to it, an effective self-governing region (Puntland). They did this by turning their communities’ dynamic business sectors and traditional values — the clan system and Islam — into forces for stability.

However, I was surprised/dissappointed by some of his other arguments:

  • de Waal claims that simply publishing the names of suspected Somali backers of terrorism will stop these individuals and networks from receiving money and support. This has obviously backfired in the past, for multiple reasons. Even during the McCarthy era of suspected Communist blacklists in the US, plenty of people were a) falsely accused, b) put on the list for political or competition reasons, and c) were able to survive, receive outside support, and escape to other countries to operate. As long as these individuals have loyal networks (which is likely in a tribal society), I doubt that publishing their names will be easy or effective. If these people operate in rural regions with high levels of illiteracy, this is even less likely to be successful.
  • de Waal repeatedly points to Somaliland as a model for success, almost to the point that I question if he was asked by Somaliland’s leaders to speak on their behalf. Somaliland is much better off than many other parts of Somalia, but one must not ignore the geopolitical circumstances: most parts of Somaliland are very close to the coast of the Gulf of Aden (and thereby also the Red Sea and the Indian Ocean), facilitating transport and trade with the Middle East, South Asia, and East Africa (for example, Ethiopia uses Somaliland’s Berbera port for imports & exports). Furthermore, this proximity to the booming economies of the Gulf States means that Somaliland receives a high proportion of all remittances coming into Somalia–no small matter for a state that gets little development aid and needs to finance infrastructure for development. Finally, the smaller, more manageable size of Somaliland is much more in line with cultural and clan boundaries, and ultimately makes the state more governable by democratic means. And while it is a democratic system, Somaliland still operates under Sharia law–meaning that, among many other implications, no other religion but Islam is recognized or practiced, and gays and women do not have equal rights or opportunities (for example, women even need their husbands’ consent for a Cesarean section).

Map of Somaliland

  • The editorial’s title (“Getting Somalia Right This Time”) reeks of white man’s burden. At the same time that de Waal warns against using Western tactics to “fix” Somalia, the mere notion of “fixing” Somalia with extensive outside intervention is flawed. Yes, they can benefit from assistance, but what country–developing or otherwise–would ever turn down money? Just like in Afghanistan, tribal societies, and societies not based in Christian laws, require a different mode of thinking. The USSR realized this after its failed Afghan invasion, so why did the US think it would be any more successful? This gets to the root of the problem: a “state” solution is simply ignorant if the central government cannot be trusted, is put in place by Westerners, and does not represent the diversity of the country’s population. Why not let a nation work out its own issues for once?
  • de Waal points to a “thriving middle class” and home-grown entrepreneurship (such as Somalia’s cellphone network). While this is useful for those wishing to invest in Somalia, it fails to recognize that most people still live in poverty. So… yes, there is potential for growth, but the issues of unequal growth & increasing class disparities are worth mentioning too.

Forgotten corners of a not-forgettable city

An urban greenhouse for cacti, SoHo (Prince & MacDougal St)

Close-up of the dense almost-jungle

Croatian Catholic Church in Hell's Kitchen (502 West 41st Street)

Croatian Church close-up

Strange finger-like chimneys in old brick houses on the Upper East Side (~E 79th and Park Ave)

Apologies for taking pictures from a bus window. Next time I’m in NYC, I’m definitely visiting the church on foot. Unfortunately, the jungle doesn’t seem penetrable (there was no public entrance…)

Development’s a Circus

Imagine hordes of 35+ year olds wearing obscene paper hats they’d just stapled and colored with sharpies, wearing party hats with feathers, or wearing Halloween-esque hats ranging from rubber masks to cone-shaped witch hats. This was yesterday afternoon… and it was the town hall for our division at the World Bank.

Why did the vice president make us all do this? To laugh at us? (Probably.) Supposedly, it was also because we had cause for celebration: for the first time in a long, long time, we as a division no longer needed to defend our existence and were finally contributing something useful to the Bank. Sure, that’s definitely cause for celebration–but to think that it took this long? That’s a bit scary.

I wonder how many organizations have these identity crises. How much more efficient would they be if they were to coordinate, collaborate, merge, share resources–without trying to assert their individuality? This issue is coming up now in the form of whether to have a [new, better] version of the UNEP or [an improved, better-funded] UNEP or [the same, underfunded, under-respected] UNEP we currently have, because many countries want to see more action taken to protect and enhance the state of the global environment, and whatever we’re currently doing (hundreds, if not thousands, of organizations all trying to work on the same issues separately) isn’t working.

The bigger question I keep asking myself is in regards to development agencies in particular. Fifty years ago, they were mostly run by former colonial powers who felt morally bound to help the countries they often indirectly destroyed (i.e. the DRC). Ten years ago, they were still mostly run by the same developed countries, now with different organizational names, but still pursuing the global version of Congress: giving money in exchange for enforcing whatever they think is best. Today, the World Bank and other huge development/ lending agencies finally have competition (like the African Development Bank, among many others), driving them to become more efficient, effective, and innovative. The question is: are they too late in reforming themselves, and if not, what role can they play in the future global arena to stay useful and add value?

———–

On a side note, I had lunch today with an alum who worked on a study, publicized in the Economist this week, about cash transfers to girls and young women in Malawi. The researchers randomly gave money to some of the young girls and their families and saw significant decreases in the rate of HIV/AIDS and herpes infections. While I’d need to read the study more carefully (and it doesn’t seem to be double-blind), the concept sounds like a promising conclusion! (And supports the fact that HIV infection is preventable given behavioral shifts.)

Putting Global Investment into Perspective

It’s all about your outlook.

There are two main views on the amount of investment needed to adequately mitigate climate change: either it’s a reasonable [small] amount… or it isn’t.

McKinsey’s 2012 report on resource requirements claims that about $2 trillion is needed to adequately improve energy efficiency, resource use, and climate change impacts.

They also wisely point out:

“Today, governments are subsidizing the consumption of resources by up to $1.1 trillion. Many countries commit 5% or more of their GDP to energy subsidies.”

They acknowledge that changing our behaviors to account for climate change is expensive but very realistic, given that we would have to spend most of this amount anyway for harder-to-extract oil, more expensive land, scarcer water, etc.

The International Finance Corporation (IFC, part of the World Bank Group), in contrast, says:

“Mitigating climate change by reducing greenhouse gas emissions in developing countries will require considerable investments—estimated by the World Bank’s 2010 World Development Report to be as much as $4.6 trillion to keep global average temperature rise within 2 degrees Celsius by the end of the century.”

A friend working at WRI (the World Resources Institute) told me yesterday that solar power is already financially sustainable (read: pays for itself) in Hawaii, and will likely get there soon in California and Texas. But this is never publicized; instead, there are tons of debates about how these “green energy” investments are not feasible and too expensive in a time of deficit. It’s a shame that much of Washington still doesn’t realize that their arguments of needing national energy sovereignty are completely aligned with smarter energy sources.

Insights from Micro-credit Disasters

Last night’s class involved our professor of sorts, M, giving his perplexing insights into his experience with microfinance projects at the World Bank. I say perplexing because none of us students could really come away with a successful example, despite its worthy founding principle. M showed evidence, including DfID’s 2011 report, suggesting that micro-credit has no clear net-positive benefits [read: able to lift people above the poverty line, permanently]:

Despite the apparent success and popularity of microfinance, no clear evidence yet exists that microfinance programmes have positive impacts.

There have been four major reviews examining impacts of microfinance (Sebstad and Chen, 1996; Gaile and Foster 1996, Goldberg 2005, Odell 2010, see also Orso 2011). These reviews concluded that, while anecdotes and other inspiring stories purported to show that microfinance can make a real difference in the lives of those served, rigorous quantitative evidence on the nature, magnitude and balance of microfinance impact is still scarce and inconclusive.

His main advice for microfinance institutions was:

  1. Growly slowly. Very slowly. –> Do not take on extra clients if they are not financially disciplined (able to save and able to make returns.)
  2. Do not accept charity.  –> Do not accept more donor money than you are capable of lending to disciplined clients.
  3. Do not act like a charity. –> Do not give out grants, which discourage people from repaying. Do not lower interest rates to the point that you are not sustainable as an institution. (Because then nobody benefits.) (This also means that you should not let the government run the microfinance institutions, because they are often tempted to forgive loans before elections and thus wreck havoc to the system, as happened in India and elsewhere.)

While it was surprising for someone who cares deeply about the poor to say that microfinance institutions should not operate as charities, it was also very telling, coming from someone who has seen the industry both during its inspiring heyday in the early 1990s and its disastrous plunge shortly after. He shared with us a great quote by a microfinance CEO from Sri Lanka:

“We would like the World Bank’s support. But not their money.”

He also stressed a very important, and over-looked point: micro-credit was meant to be used as investment capital–and not for consumption smoothing. In other words, the money is only given to you because you need extra money to start or expand your small business (and therefore, you can make a return from your work, which you can then use to pay for the interest); the money is not meant for you to use if you need food and run out of savings with which to buy it. This is an important, if somewhat obvious, distinction that I, and many others, tend to overlook.