Monday, April 28, 2008

African country domains and internet usage

From Boing-boing a map of the world's top level domain names. Unsurprisingly, China (.cn) and India (.in) leads the pack.

Top African ones according to this map:
Nigeria (.ng)
Democratic Republic of Congo (.cd)
Egypt (.eg)
Ethiopia (.et)
South Africa (.za)

Both DRC and Etiophia looks suspicious. According to Internet World Stats, DRC has only 180 000 Internet users, Ethiopia 164 000 compared to 6 million in Egypt, 8 million in Nigeria and 5.1 million in South Africa. 

Friday, April 25, 2008

Food prices and payment for ecosystem services (PES)

Payments for ecosystems services (PES) and farmers are closely linked (see here). It is common knowledge that food prices are rising (see here). Rising food prices increases incentives for farmers to produce (see here).
What is not mentioned often is this situation increases the opportunity cost for farmers to provide ecosystems services. In other words, the private gains from farming may continue to exceed that of PES flows. 

The above would hold if input costs to farming activities do not rise in the same or higher proportions then income, and if demand for ecosystem services do not raise as well.  Farm input prices certainly rises with rising prices of oil and fertilizers, and demand for ecosystems services are also expected to rise (see report from IIED).  

Another delicate trade-off in the making. Any case studies to support or refute this?A 2007 FAO report on PES and farming does in passing mention the possible impact of PES on rising food prices, but did not present an analysis on the impacts of rising food prices on the market for ecosystem services.

Chinese rural to urban migration and commodity prices

An interesting observation from the Marginal Revolution blog What will happen with commodity prices?:

I would say that China has been massively productive but not so much in producing commodities.  That means the demand for commodities has gone up much more rapidly than the supply.  You could imagine an alternative universe in which China grew by figuring out ways to produce oil, copper, and rice much more cheaply.  Of course that's not what happened and it is relatively easy to see why not.  Following some good policy changes, Chinese growth has been driven by a massive rural to urban migration and yes we are talking about hundreds of millions of people.  It's plastic basketballs that have become cheaper, not the products of farms.

The mere addition of labor inputs to urban areas doesn't, in the short run, help you produce commodities more cheaply.  Think of the Solow model where K and L have gone up lots but the rate of generating new ideas is only slightly higher.

When all those new Chinese engineers and scientists are at the peak of their creative powers, this relationship will reverse itself and commodities prices will plunge.  But it's quicker to produce another toy than to bring about a new Green Revolution, so in the meantime commodity prices are very high.  I give the current price trend another ten or fifteen years or so to run.  Eventually high commodity prices will seem permanent and then the bottom will drop out.

We've never had a rapid and successful migration of hundreds of millions before, ever.

African prospects dependent on reinvestment of resource rents

Why do we have these polar opposites in opinion on African prospects? This is much more then a simple case of Afro-pessimism or Afro-optimism.  What we have is a different focus by economists, development experts and policy makers on different and often partial aspects of African reality. 

One example of this is the narrow focus on short-term wealth creation through consumption driven by a sole focus on GDP as a measure of wellbeing. Africa, in general, is rich in natural resources, but lacking in productive and intangible resources. This leads to a situation where a relative small and connected part of the population reaps the benefits from rapid natural resource extraction.  With weak institutions, and no or little private incentive to reinvest, not enough resource rents are captured for reinvestment in productive and intangible assets, stalling a much needed diversification of the economy.   

It is common knowledge in resource economics that to sustain constant consumption one has to reinvest all resource rents in reproductive capital (see Hartwick rule).  The temptation is huge however, to rather consume these rents as illustrated in this graph based on an analysis by the World bank.  

Countries with a high percentage of minerals and natural resources rents (expressed as percentage of gross national income) tend to save less (as measured by genuine savings).  A country with no savings has much less room for investment.

This is a wake-up call to reinvest, to diversify natural resource based economies and to safeguard future prospects of wealth. A focus on increased consumption of natural resource wealth in the short term is not a sustainable strategy.  A simple start is changing how we measure wellbeing. This is a topic on its own.

Thursday, April 24, 2008

Ecological footprints, human development and measures of wellbeing

What is wellbeing? Depends on how one defines and measures it. With the inadequacy of GDP as a measure on well-being, alternative measures are developed.  These measures, however, are at risk of not bridging the debate between economic, ecological and social aspects of well-being, but of reinforcing the differences in worldviews between respective disciplines.

For example, Africa's ecological footprint are the lowest in the world (with the notable exceptions of Libya and South Africa), but they continue to have low quality of life (as measured through the HDI). This is neatly illustrated by the following figures from a publication on Africa's ecological footprint by the Global Footprint Network.

Measuring well-being first needs an alternative to the simple aggregations  of individual economic utility.  Kahneman's proposal to distinguish among different conceptions of utility rather than presume to measure a single, unifying concept that motivates all human choices and registers all relevant feelings and experiences, looks promising.

Secondly, given that socio-ecological systems do operate under thresholds, and given that the risks of breaching these thresholds does not filter into measures of subjective well being, it will make sense to develop indicators that indicate larger-scale thresholds and limits.  

For an interesting set of presentations on the measurement of sustainability see this symposium held at the Sydney University. 

In summary, we need a dual strategy of digging deeper in the human psyche and broader into the Earth's thresholds to improve understanding and measurements of wellbeing.

Tuesday, April 22, 2008

Sub Saharan Africa growth through asset stripping?

According to some more inclusive measures of economic progress Sub Saharan Africa is becoming poorer. Isn't that an odd thing to say? The IMF reports that Africa achieved high growth rates over the last few years and stock markets continue to shine (see article on JSE).
The point is that all growth efforts (as narrowly measured by GDP) needs to be supported by a productive base, have to be shared with a growing population and comes at a cost to the natural environment.  According to a contribution from Partha Dasgupta to the Encyclopedia of the Earth a society's productive base can be described as follows:

A society’s productive base is the source of its well-being. We should note that the productive base is a diverse collection of durable objects, some tangible and alienable (buildings and machinery, land and animals, trees and shrubs), some tangible but non-alienable (human beings, the oceans), some intangible but alienable (codified pieces of knowledge, such as patentable ideas), some intangible and non-alienable (air, skills, the legal framework, and cultural coordinates), and some that involve both human capital and mutual expectations (institutions, social capital).

But how is a generation to judge whether it is leaving behind an adequate productive base for its successor?

This is the really important question. A change in a society's productive base is measured by a change in its capital stocks and institutions.  It is the simple sum of investment in an economy adjusted for disinvestment. 

Although this sum is conceptually easy to understand, actual measurement is harder as not all values of capital assets are reflected in market prices.  It is controversial to attach values to the loss of natural capital. It is also hard to measure intangible values of well-functioning institutions.  Environmental economists argue that the best way forward is not to ignore these values, but to proceed with cautious and transparent best estimates.  

The results of some large scale studies doing just that - measuring the real progress of nations - are now starting to come to the fore.  Again, according to Dasgupta:
The message is sobering: over the past three decades, sub-Saharan Africa (home to 750 million people today) has become poorer if judged in terms of its productive base per capita; and economic development in the Indian sub-continent (home to over 1.4 billion people today) and in the UK and the US was either unsustainable or just barely sustainable. 
In short, there are a growing body of evidence concluding that Sub Saharan economic growth is largely achieved by a depletion of capital (asset stripping). Higher levels of investment in different forms of capital as well as institutional strengthening is urgently needed. Sub Saharan countries are not homogeneous and different investment strategies and institutional focus would be required for different countries.

Monday, April 21, 2008

The world's largest solar energy projects

From Foreign Policy - a list of the world's biggest solar energy projects.  The biggest solar energy project is 500MW, possibly expanding to 850MW.  

This is small when compared to South Africa's current power demand and supply schemes.  According to a government statement, expected peak demand capacity in South Africa for 2008 (with a 8-10% reserve margin) is around 38 000MW.  

The following list (from reuters) illustrates the amount of MW generated per power scheme:
Coal-fired    Total net maximum capacity * Kendal      3,840 MW * Majuba      3,843 MW * Matimba     3,690 MW * Lethabo     3,558 MW * Tutuka      3,510 MW * Matla       3,450 MW * Duvha       3,450 MW * Kriel       2,850 MW * Arnot       2,020 MW * Hendrina    1,895 MW * Camden        930    (Mothballed, being recommissioned) * Grootvlei     --     (Mothballed, being recommissioned) * Komati        --     (Mothballed, being recommissioned)
  Nuclear * Koeberg     1,800 MW
  Gas/liqued fuel turbine    925 MW  Hydroelectric   600 MW
  Pumped storage schemes        1,400 MW

Social networking for the greater good?

To tap the power of emerging social networks for a greater cause looks promising. This article on the use of Facebook to address malaria in Africa is one example.  Conferences are organised with aim to bring new Internet applications closer to sustainable development actors.  

From an economic development perspective, a few loose observations on this emerging phenomena.  Increased networking may decrease the costs of doing transactions (farmer with a cellphone), it is important to understand whether collaboration and 'social huddling' increases the amount of social capital (do we create or destroy trust), whether this increases the resilience of communities (are networks strong enough to help cope in bad times as well or is it only fun when we all ride the wave), and how emerging social networks are complemented with other conditions for the creation of added value (over and above social capital we need financial capital, human resources, natural resources, rule of law etc. etc. for development).  

Other ideas? Development 2.0 anyone?

Friday, April 18, 2008

Denialism and crises

At least we have certainty about one thing. The next time there will be critique on a politically sensitive issue in South Africa, chances are good that it will be denied. It becomes a trend:

HIV does not cause AIDS (see here and here). There is no electricity crises (see here, that was 2006!). Poverty in South Africa is not increasing (see earlier blogpost). There is no crises in Zimbabwe (see here). There is no looming water crises (see here), and the latest:

Health Minister Manto Tshabalala-Msimang has rejected the findings of a report showing SA is not on track to meet its millennium development goals for reducing child and maternal mortality. (see article and earlier blogpost)

When the crises hits, just blame something entirely different (for instance 'a very significant rise in demand for electricity', see here).

Denialism is dangerous. Acknowledging problems is the first step in addressing them. Yes, the world is complex, yes, cause-effect relationships are often not that obvious, yes data may tell lies and data can be manipulated, but it becomes very hard to believe that all critique is wrong all the time. 

It reflects a crises in leadership and, if one is not careful, rapidly deteriorates into a crises in morality.

Wednesday, April 16, 2008

Video and images on collapse of Antarctic ice shelf

The Wilkins Ice shelf is collapsing, 15 years earlier then scientists expected. See video footage.
See here for high resolution satellite image and press release from National Snow and Ice Data Centre.

According to Professor Vaughan of the British Antarctic Survey in an article on Environmental News Survey:
"Climate warming in the Antarctic Peninsula has pushed the limit of viability for ice shelves further south, setting some of them that used to be stable on a course of retreat and eventual loss. The Wilkins breakout won't have any effect on sea-level because it is floating already, but it is another indication of the impact that climate change is having on the region."

Tuesday, April 15, 2008

Pain in the carbon market

Several countries have accepted targets for greenhouse gas emission reductions. Reducing all these gases at home is expensive. It therefore makes a lot of financial sense to reduce greenhouse gas emissions somewhere else.  This explains the growing market in certified emission reductions (CERs) through the use of the Clean Development Mechanism under the Kyoto Protocol. After a reckless start, the market is starting to come to grips with the rules that will govern its future. The problem is an interpretation on the rules how much additional carbon is reduced (beyond what would have happened anyway) that can be sold as credits through certain interventions.  According to the United Nations, carbon credit brokers and independent auditors have interpreted the rules for additionality far too broad. A UN crackdown is starting to bite prominent carbon middlemen like EcoSecurities who will not deliver one-quarter of its credits.  

For more, read the full story Two Carbon-Market Millionaires Take a Hit as U.N. Clamps Down in the Wall Street Journal.

As Africans try to tap into the CDM market, it will be wise to check the credentials of middlemen and auditors operating in this field and to make an effort to understand emerging UN rules on the carbon credit markets.

For related blogpost see Electricity crises and the CDM.

Friday, April 11, 2008

Shocking statistics on maternal, newborn and child mortality in sub-Saharan Africa

If one has a choice, sub-Saharan Africa would not be a place to be born. The Lancet published a report card on maternal, newborn and child mortality just before a conference to present and discuss the implications of the findings in Cape Town, South Africa, on April 17–19, 2008.  It is certainly time for action. What kind of society have we become if we cannot even take care of the weakest among us?

Some quotations from the report:

At least half of maternal and child deaths take place in sub-Saharan Africa. There are critical gaps in contraceptive services, skilled birth attendance, and clinical management of newborn and child illnesses.

In sub-Saharan Africa, 12 countries are experiencing worse rather than improved under-5 mortality rates. Listed according to the magnitude of these reversals, they include: Botswana, Swaziland, Zimbabwe, Lesotho, Kenya, Congo, Equatorial Guinea, South Africa, Cameroon, Chad, Central African Republic, and Zambia.

The major limitation to expansion of essential services—such as coverage for oral rehydration therapy, treatment of childhood pneumonia, and provision of skilled and emergency obstetric care—is the capacity of the health system.

Maternal and child undernutrition account for 20% of maternal deaths and 35% of under-5 deaths, respectively. Yet nutrition accounts for only 8–13% of total aid flows. 

Taken together, these analyses indicate that, despite isolated examples of welcome progress, national and global attention to maternal, newborn, and child health is still strikingly inadequate. Children and mothers are dying because those who have the power to prevent their deaths choose not to act. This indifference—by politicians, policy makers, donors, research funders, and civil society—is a betrayal of our collective hope for a stronger and more just society, one that values every life no matter how young or hidden from public view that life might be. It signifies an unbalanced world in which only those with money, military strength, and political leverage determine what counts and who counts. As health professionals, we should not accept this pervasive disrespect for human life. We have a voice, a platform, and a constituency that should be an instrument for radical change. Let that voice be heard in Cape Town.

Not all economic growth is good

What was argued for Africa in an earlier blogpost is also the case in South Africa. Not all economic growth is good, in fact, it can be harmful. 

South Africa’s economic growth over the last decade can be characterised as growth driven by the affluent. This period of relatively good economic growth can also be said to have increased inequality and not to have been environment friendly.
Click here for the full article.

Thursday, April 10, 2008

Latest on World Bank investments for coal fired power stations

...the IFC, the bank's private investment affiliate, 
approved a $450 million investment in the Tata Ultra Mega power project, which would produce nearly 25 million tons of CO2 per year for at least 25 years, making it one of the top 50 sources of CO2 in the world. 

Being anxious about funding in coal-fired power stations is one thing, changing the rules for investment appears to be quite another.

African economic growth, but no social development

Higher economic growth is often perceived as the one key indicator every nation (with the possible exception of happiness-driven Bhutan) aspires to.  However, if economic growth does not lead to better living standards or come at an unaccounted expense to the natural environment, the desirability of such low-quality growth (see report from World Bank on Quality of Growth for example) needs to be questioned. 

It seems as if Africa has a lot of low-quality growth.  The latest Economic Report on Africa 2008 report by the Economic Commission for Africa, comes to the following conclusion:

The first main conclusion of this Report is that African countries have recorded strong economic performance for the third consecutive year, with an average growth rate of 5.8 per cent. This strong performance is due to a range of factors, including high commodity demand and prices and increased output in key sectors such as agriculture and services. 

The second is that despite high growth rates in recent years, this strong performance has not translated into meaningful gains in terms of social development. African governments need to increase investments in social sectors, and also improve the efficiency of social sector expenditures. At the same time, gains from growth need to increase, by better targeting of employment creation through broader and more 

flexible macroeconomic frameworks and sectoral policies. 

Increasing wealth and increasing poverty at the same time creates a negative spiral of ever-increasing relative deprivation and social division.  In some systems this increases the risks of violent outbursts by those who are left behind, in other systems this raises the risks of repression.  It seems to me that no system can sustain a spiral of rising inequality in the long run without imploding or resorting to some form of repression.

Friday, April 4, 2008

Zoellick's 1% deal: $30 billion to sub-Saharan Africa

According to a World Bank press release, Rob Zoellick, the World Bank chief, pledges to work with sovereign wealth funds to invest 1% of their assets in sub Saharan Africa.  

“Today, sovereign wealth funds hold an estimated $3 trillion in assets. If the World Bank Group can help create the platforms and benchmarks, the investment of even one percent of their assets would draw $30 billion to African growth, development, and opportunity,” he said.

Poverty and Inequality after Apartheid

A new study from Prof Jeremy Seekings at Centre for Social Science Research, University of Cape Town argues that income poverty is persistent (although slightly decreasing) and inequality worsening. The prospects for pro-poor policy reform does not look that rosy either. 

This is the full abstract:

Democratic South Africa was born amidst high hopes for the reduction of income 

poverty and inequality from their high levels under apartheid.  The reality has been 

disappointing: despite steady economic growth, income poverty probably rose in 

the late 1990s before a muted decline in the early 2000s, income inequality has 

probably grown, and life expectancy has declined. The proximate causes are clear: 

persistent unemployment and low demand for unskilled labour, strong demand for 

skilled labour, an unequal education system, and a social safety net that is 

unusually widespread but nonetheless has large holes. It is also clear that 

economic growth alone will not reduce poverty or inequality. Pro-poor social 

policies are important, but not as important as a pro-poor economic growth path.  

Unfortunately, there is little sign of the political conditions changing to push the 

state towards the promotion of a more pro-poor pattern of economic growth.  

There is some chance of parametric reforms of the welfare state. Overall, however, 

it is likely that, after another ten years of democracy, unemployment and poverty 

rates will remain high, despite significant redistribution through cash transfers, 

and incomes will continue to be distributed extremely unequally. 


See also earlier post Poverty Data continues to make headlines in South Africa

No blogging in Beijing

Access to Blogger in China is somewhat of a see-saw ride. In 2005, it was announced that the Blogger ban in China was lifted (see article).  This article in the Shanghaiist dated Feb 29, 2008 states that Blogger is accessible again.  Not all agree though, as can be seen in the comments.

On my recent trip to Beijing (end of March, early April), I was not able to access Blogger. So blame Tibet, the Olympics and sensitive Chinese authorities for not being able to read your favourite posts on Africa's development challenge last week.