Friday, February 29, 2008

Green Economics in Africa

UNEP, celebrates the rise of a global green economy and called for an end to remaining barriers and fossil fuel subsidies (see article in WBCSD). What does green economics mean and which are the main green economic organisations in Africa?

Green economics, also refered to as ecological economics is a transdisciplinary field of academic research that addresses the dynamic and spatial interdependence between human economies and natural ecosystems. Its main focus is the "scale" conundrum: how to operate an economy within the ecological constraints of the biosphere. Ecological economics brings together and connects different disciplines, within the natural and social sciences but especially between these broad areas.

Some ecological economics organisations in Africa:
African Society of Ecological Economists
Forum for Economics and the Environment
Africa's Search for Sustainable Economic Trajectories (ASSET)
Centre for Environmental Economics and Policy in Africa
(Let me know if I have missed important ones)

How ecological economics contribute or should contribute to the development of Africa is a post for another day.

Thursday, February 28, 2008

A declining demand for equality?

Can we just assume that people desire a more equal world? Contrary to expectations former socialist countries do not express a great desire towards equality. A recently released working paper by the World Bank entitled Attitudes to Equality. The Social Legacy Revisited concluded that in countries of the former Soviet Union there may be little political or social consensus for moving towards greater income equality.   Thus, the unequal outcomes observed may not be 

the consequence of limited administrative capacity of the state to redistribute incomes, or different levels of confidence in ability of the state, but the lack of a political consensus that it should do so.  

Do we see signs of a trend? Not only in capitalist countries such as the UK (see earlier post Does rising inequality lead to a higher demand for redistribution.), but now also in former socialist countries equality does not seem to be that much on peoples' minds.  

Any studies on the attitudes of Africans to equality?

Wednesday, February 27, 2008

What can South Africa learn from Kenya?

A hotbed of high expectations for change fuelled by poverty, inequality, elitism and tribalism made Kenya explode (see earlier posts on this blog).

Fast forward. A hotbed of high expectations for change fuelled by persistent poverty, rising inequality, elitism and racism made South Africa.... 

There are certainly risks.  Whether the anger will spill into the streets of South Africa will need some careful analysis.

It is a plausible scenario that the changes started in Polokwane will continue with the election of a more leftish leaning president (whether this is Mr Jacob Zuma or not). In such a scenario, this is where the comparisons with Kenya's misfortune will most likely stop (and South Africa be faced with other kinds of questions). 

If for some reason, the expectations of the poor masses are not met by these changes there are a few very important differences with Kenya.  South Africa has invested in a massive insurance policy in the form of basic needs provision and social grants. Despite the fact that unemployment remains very high, and inequality is increasing, up to 12 million people (mostly children though) receive grants from the state. Angry, unemployed drop outs from school, usually in their late teens and twenties, are not covered.  This remains a big risk. The persistent challenge remains for the economy to absorb them.

However, with most basic needs covered, the question remains whether relative deprivation will make the crowds angry enough to turn into violent mobs.

Monday, February 25, 2008

The Sustainability of Nations

A new working paper by Pilarizetti & van den Bergh published by the Tinbergen Institute in the Netherlands revealed surprisingly high variability in aggregate sustainability rankings when different measurements are used. The paper quantitatively compares three aggregate indicators of sustainability: the World Bank’s ‘Genuine Savings’ (GS) measure, the ‘Ecological Footprint’ (EF) and the ‘Environmental Sustainability Index’ (ESI).

Top African countries:
All: Namibia, Central African Republique
GS: Morocco, Lesotho
EF: Gabon, Mauritania, Namibia, Botswana, Zambia
ESI: Gabon.

Bottom African countries:
All: Algeria, Egypt, Burundi, Zimbabwe, Nigeria
GS: Zimbabwe, Sudan, Malawi, Nigeria, Angola, Mauritania, Congo Rep
EF: Libya
ESI: Zimbabwe, Burundi, Ethiopia, Sudan

More interesting are those countries that score well on economic growth as well as sustainability indicators. Gabon and Botswana must be doing something right (see also earlier post Go Gabon).

Unmasking Africa's seven success stories

A report from the Belfer Centre for Science and International Affairs at Harvard University (Robert I. Rotberg, Africa’s Successes: Evaluating Accomplishment, Belfer-WPF Report 43, Program on Intrastate Conflict (Cambridge, MA, 2007) evaluated the achievements of seven of mainland Africa's success stories: Botswana, South Africa, Zambia, Ghana, Tanzania, Mozambique, and Uganda (in order of 2006 annual GDP per capita).

Success it turns out is relative:
Although all of the seven countries are growing, they are each dependent on primary commodity exports, not on invisible earnings or manufactured products. Unlike the Asian tigers, and arguably Botswana, none has entered a steady state of sustainability, not even South Africa (where population growth continues to outstrip net job creation). The Asian tigers perform well for their peoples—they provide quantities and qualities of the seven essential political goods. In the seven African cases, only Botswana and South Africa begin
to match such levels of performance, and South Africa’s high crime rate makes it the most insecure country among the seven.

From the executive summary:
Africa’s seven successful countries are all growing reasonably rapidly. Yet, job creation still lags behind promises and expectations, underlining the persistence of poverty. Moreover, where there is growing indigenous wealth, there are also severe income inequalities. Several countries will be benefiting from new resource finds, and broad improvements in GDP could eventually flow into the seven countries from such discoveries. But the exploitation of these
finds, and other commercial advances, is being deterred in every case by serious shortages of electric energy. Every country has outrun its available power supplies; several years will pass in each case before these shortages can be met. Moreover, nearly all, except Botswana and South Africa, have road and rail networks that are inadequate for the industrial and agricultural growth on which their economic advances depend. Likewise, each country in our sample is being dragged down economically by the scourges of tuberculosis, malaria, and

I do not like what I read. Maybe I must not write about this. Maybe I must ask for self-censorship and only focus on good news stories in future. Maybe I must be more afraid to face reality. Or, better, develop models that just ignore it.

Friday, February 22, 2008

Reporting on randomised trials

From The Lancet a suggestion how to report on randomised trials:

For clinical trials, clear, transparent, and sufficiently detailed abstracts of journal articles and conference abstracts are important because readers often base their assessment of a trial on such information. Some use an abstract to decide whether to seek more information about a trial. However, in some parts of the world, health professionals often have access to the abstracts only, so health-care decisions are made on the basis of abstracts of randomised trials

It can be a life and death issue:

In 2006, Arthur Amman, President of Global Strategies for HIV Prevention, made a disquieting remark: “I recently met a physician from southern Africa, engaged in perinatal HIV prevention, whose primary access to information was abstracts posted on the internet. Based on a single abstract, they had altered their perinatal HIV prevention program from an effective therapy to one with lesser efficacy. Had they read the full text article they would have undoubtedly realized that the study results were based on short-term follow-up, a small pivotal group, incomplete data, and unlikely to be applicable to their country situation. Their decision to alter treatment based solely on the abstract's conclusions may have resulted in increased perinatal HIV transmission.”

What about a similar protocol for randomised trial studies in development economics?

Economics for a better world

After that damning post yesterday on the plunge of economics into insignificance, I need to post something to make it up. I started searching for evidence that economics postively impacts on the worst problems we face. One of them is poverty.

Interestingly enough it seems as if many economists agree which economists were managing to do influential work on the crucial questions facing modern society. In a survey of economists, conducted by David Leonhardt and reported on in the NY Times... the small group of economists who work at the Jameel Poverty Action Lab at M.I.T., led by Esther Duflo and Abhijit Banerjee, were mentioned far more often than anyone else.

According to their website ...the Abdul Latif Jameel Poverty Action Lab (J-PAL) serves as a focal point for development and poverty research based on randomized trials (and here).

As pointed out by Urbanomics, randomized trials can be very useful in shaping policy, but they have to deal with a mind-numbing diversity between and within developing societies, and their possible responses to the specific strategy or approach could (and will) itself exhibit similar diversity. Dani Rodrick argues that this way of thinking about development policy is radically different from more traditional approaches as it admits much greater diversity and heterodoxy. In his words: It is humble about the extent of our knowledge but optimistic about our ability to learn.

Randomised trials have been applied in many fields, most notably in healthcare. Although there are many pitfalls in applying randomised trials, most notably its potential ethical impacts, it can provide insights on how the (developmental) system behaves. Given the lessons from clinical trials in healthcare (such as mentioned here), one needs to be cautious in only relying on such results without a contextual bigger picture understanding on how development paths look or ought to look like.

Go economists! The real world is waiting.

Thursday, February 21, 2008

Saving economics from a rapid plunge to insignificance...

Economists working on environmental issues have a lot of work to do, and that is not only because natural resources and environmental good and services are becoming scarcer.

According to an article in Environment and Development Economics by Paul Ehrlich ecological economists are well-placed to save the economics profession from, in his words, a rapid plunge to insignificance.

Wow! Just when I thought that life-work balance is slowly becoming a reality...

Biofuels: from science to politics

From African Agriculture:

Scientists and NGOs across Africa are calling for a moratorium on new biofuels projects as millions of acres of prime agricultural land in sub-Saharan Africa are switched from food to fuel...

Just as the bonanza is getting into full swing, the scientific argument that biofuels mitigate climate change is collapsing. Last week, the journal Science published a major study concluding that biofuels contributed to climate change as the environmental cost of land conversions generated more carbon emissions than it saved

Not everyone agrees. The Wall Street Journal reports:

In a letter to Sciencexpress, which published the original article, Dr. Wang, of the Argonne National Laboratory, and Dept. of Energy colleague Zia Haq take issue with the Science study, which sought to explore how using more land for growing biofuels could end up spewing more carbon dioxide into the atmosphere.

With the rising costs of energy as well as food, regulatory environments already developed or in process of developing in support of biofuels, and large vested interest groups in the production of biofuels this debate has all the elements to propel to the top of many political agendas.

The art of constructing an official poverty line

In his budget speech Mr Trevor Manual referred to South Africa's new official poverty line, expected witin a few weeks from Statistics South Africa. A bit of deja vu - in last year's budget speech it was noted that an official poverty line was expected in the second half of 2007 (M&G).

While we wait, a few snippets on poverty and poverty lines:
  • The poverty threshold, or poverty line, is the minimum level of income deemed necessary to achieve an adequate standard of living. (Wikipedia)
  • Zimbabwe's poverty line is a staggering Z$100 million per month!! (Fin24)
  • China's official poverty line is reported to be Yuan 640 ($85) per capita per year, a figure far too low for subsistence and much lower then the international bencmark of $1 per capita per day (Share The World's Resources)
  • There is very little consensus on how to define poverty let alone measure it (eldis)
  • The following map from UNDP (Data source: United Nations Human Development Report 2007-2008. Available at indicates percentage of people living on less then $1 per day:

Poverty is a politically sensitive. Measurement is an open game. As in the case of China all the incentives are there to manipulate the outcome. One can only hope that the much anticipated South African official poverty line does not not fall prey to such shortsightedness.

Paying for environmental services: one step closer to mainstream?

Payments for ecosystem services is slowly gaining ground as evident by carbon sequestration, national forest conservation and watershed level initiatives. Formidable obstacles remain, not least the measurement of ecosystem goods and services and the actual changing of behaviour.

An article in Resources, as referred to on the Environment for Development website explains:

A promising concept that has received considerable attention, Payment-for-ecosystems- services has the potential to become a conventional environmental management tool.

Forests and farms supply a wide array of valuable ecosystem services including sequestering carbon, harboring biodiversity, and preventing soil erosion. Yet forest and farm managers rarely, if ever, receive a financial reward for these services. As a result, from society’s perspective, they may be too quick to clear trees and engage other activities that disrupt ecosystem benefits. An increasingly popular approach to this problem is to pay land managers for the ecosystem services their parcels provide. Payment-for-ecosystem-services (PES) programs have been established in a number of places around the globe, and they function at a variety of geographic scales. Emerging markets for carbon sequestration credits constitute an international program; national forest conservation programs are operating in Australia, Costa Rica, and Mexico; and the World Bank, among others, has piloted watershed-level initiatives in a several countries.

Challenges remain:
A promising concept that has received considerable attention, PES has the potential to become a conventional environmental management tool. Its ability to live up to its early
billing, however, will depend on the ability of its proponents to develop strategies and methods for targeting payments to ensure they actually change behavior, and for more precisely
measuring ecosystem services to ensure that payments are as cost-effective as possible.

Wednesday, February 20, 2008

Environmental fiscal reform: 2 cents per KwH

In the Budget speech 2008 presented today, Min. Trevor Manual announced a new environmental tax on electricity use. A full extract of the speech:

Supporting sustainable development
...I have indicated that we also have to focus more clearly on our longer term responsibilities.
The Treasury circulated a draft policy paper on environmental fiscal reform to key
stakeholders in 2004, and then published it as a revised discussion paper in April 2006.
Since then, the United Nations International Panel on Climate Change, in which a South
African team led by the Department of Environmental Affairs and Tourism played an
active role, has added impetus to the need for policy change.

Options that will now come under scrutiny for implementation include the use of
emission charges and tradable permits, tax incentives for cleaner production
technologies and reform of the existing vehicle taxes to encourage fuel efficiency. A
proposal to encourage biodiversity conservation by private landowners through an
income tax deduction is under consideration.

There is much to be done to develop specific and practical measures to support
sustainable development, both on the tax and the spending side of the budget. I hope
that this House will encourage an energetic debate – if that is the right word – and we
have to work hard at developing an understanding between very diverse groups of
people: scientists, environmental activists, engineers, businessmen, workers, policy
advisors, regulators, and every one of us who enjoy the ordinary privilege of having
access to light, heat, cooling, television, transport, communications and so much else,
at the flick of a switch or the press of a button.

As a first step towards appropriately targeted fiscal environmental measures, and in
support of the required demand-side response to power supply shortages, a new levy
will be introduced this year on the sale of electricity generated from non-renewable
sources, at a rate of 2 cents per kWh. It will be collected at source from the electricity
generator, and is expected to raise about R2 billion in 2008/09 and R4 billion a year

Madam Speaker, we know that the introduction of a new tax is never a popular move.
However, this is an instance where we hope that people will succeed in avoiding the
tax. Households and businesses who reduce their consumption by 10 per cent or more
will find that this levy does not affect their monthly costs.

Carbon dioxide vs radioactive waste?

What is worse: coal fired or nuclear power stations? Is this a false choice? While these questions are heavily debated some have already made the decision. According to an article in The News&Observer:

As Progress Energy looks for new power sources amid shifting environmental rules, the Raleigh utility has decided that coal is out and nuclear is in...Its decision favoring nuclear energy is driven largely by uncertainties in public policy. Legislators and regulators increasingly are focusing on the environmental threat posed by global warming. Penalties on carbon-dioxide emissions are widely expected from Congress, a policy that could significantly increase the operating costs of coal plants by taxing coal's byproduct: the greenhouse gas that is blamed for overheating the planet.

South Africa plans to add around 28500MW of coal fired power stations to the national grid by 2025. Nuclear power generation is also expected to grow strongly. Whether the environmental threat posed by global warming will have an impact on these plans remains to be seen.

Given international climate agreements and trade rules, what are the risks that South Africa will not be able to follow a carbon-intensive development path?

Tuesday, February 19, 2008

Farmers - time to adapt

A new study by Prof Blignaut from the University of Pretoria, as reported on in Farmer's Weekly, indicated that farmers in South Africa are receiving less rain and have to cope with higher average temperatures.

This has important implications on how farms and water resources are managed in future.

Monday, February 18, 2008

Poverty impacts on neural development of children

According to an article 'Poverty is Poison' in today's New York Times:

neuroscientists have found that “many children growing up in very poor families with low social status experience unhealthy levels of stress hormones, which impair their neural development.” The effect is to impair language development and memory — and hence the ability to escape poverty — for the rest of the child’s life.

Poverty News Blog reports on the same study:
Studies by several US universities have revealed the pervasive harm done to the brain, particularly between the ages of six months and three years, from low socio-economic status.

Martha Farah, director of the University of Pennsylvania’s centre for cognitive neuroscience, said: “The biggest effects are on language and memory. The finding about memory impairment – the ability to encounter a pattern and remember it – really surprised us.”

Interventions in the first few years of a child's life is vital:

Jack Shonkoff, director of Harvard University’s centre on the developing child, said policymakers had to take note of the research because “the foundation of all social problems later in life takes place in the early years”.“The earlier you intervene [to counteract the impact of poverty], the better the outcome in the end, because the brain loses its plasticity [adaptability] as the child becomes older,” he said.

What happens if this small window of neurological adaptability is lost?
Once poor, always poor?

Saturday, February 16, 2008

When willingness to pay for conservation falls short

Cameroon wants to lease pristine tropical forest to conservationists. Conservationists are not willing/able to pay (see contingent valuation) the desired amount.

How serious are we really about conservation? Read the full story in The Economist.

Friday, February 15, 2008

Economic policy for South Africa in the balance?

Since Jacob Zuma became president of the ANC the question whether South Africa will change its economic policy direction became more pertinent. What do you think? Vote on this blog.
Here are a few snippets from the last few days:

In today's Mail & Guardian Online 'Mbeki on tightrope as left influence rises':
South Africa's left is riding high as the government prepares to unveil a budget that is expected to raise spending on social programmes and shift policy more towards fighting unemployment and poverty.Powerful trade unions and the South African Communist Party (SACP) have seen their influence within the ruling African National Congress (ANC) rise since the election of the populist Jacob Zuma as party president.

President Mbeki in the 2008 State of the Nation address:
At the macro-economic level, we will continue to maintain a fiscal posture that supports continued economic growth and development and reducing our external vulnerability.

Further to accelerate our economic growth and development we will implement the Industrial Policy Action Plan. Government will continue our industrialisation programme and continue to create opportunities for growth and employment-creation. In this regard, R2,3 billion has been budgeted for industrial policy initiatives and a further R5 billion in tax incentives over three years will support industrial policy.

In 'Political risk rising in SA - Fitch':
Zuma won the race to lead the ruling African National Party in December, making him frontrunner to succeed Thabo Mbeki as the president of Africa's biggest economy.
However the left-leaning Zuma's trade union links are causing unease among investors and businesses who fear a Zuma-led government could reverse the liberal reforms of the past decade.

Thursday, February 14, 2008

Climate risks start to bite Eskom's planned coal fired power stations

Pricing carbon is not a new idea. Emissions Trading Schemes and carbon taxes have been discussed and implemented throughout the world.

This time there is something new. The Bank of America has decided to start factoring a cost of carbon-dioxide emissions into decisions whether to underwrite debt for new coal-fired plants, according to an article on WSJ Environmental Capital. The shadow price is set at between $20 - $40 per ton of CO2.

Eskom currently emits around 210Mt of CO2 per annum at a rate of around 0.9 kg of CO2/Kwh sent out.

It is not a distant American or European challenge only. Financing Eskom's planned expansion is already under pressure, and one of the reasons is the climate risk (see Business Report):

Steve Lennon, Eskom's resources and strategy managing director, says both the Medupi and Bravo stations will use state-of-the-art climate change technology for higher efficiencies. Both plants will be built to ensure they are ready for carbon capture and storage technologies that may be established in time, he says.

However, South Africa may not have the appropriate geological formations for carbon storage. It is this kind of uncertainty that may influence the rate at which Eskom can borrow.

The utility is already feeling the pinch of funding constraints.

Its credit quality is being questioned. Standard & Poor's says the utility's credit rating may be downgraded in the next three months because of the absence of a funding plan for the R300 billion Eskom plans to spend building generating capacity over the next five years. In addition, global markets are increasingly averse to risky economies, as liquidity is being distributed far more circumspectly.

Coal fired power stations are planned to contribute around 28500 MW of capacity by 2025 (75% of the planned expansion to 80000MW from the current 42000 Mw).

Clean coal technology research suffered a major blow when the US Dept of Energy pulled the plug on FutureGen (see articles in Reuters and here).

At an average emission rate of close to 0.9kg CO2/Kwh and a price for carbon between $20 and $40 per tCO2 start penciling in an additional cost of between 14-28 cents per Kwh ($1 = R7.5). To place this in perspective Business Day reports: Eskom is understood to have guaranteed the Coega project electricity at 14c/kWh.

Who pays the rest?

It may not happen tomorrow, but it seems as if the accumulation of these potential liabilities is a bit too much for some to stomach.

Wednesday, February 13, 2008

Mobile teledensity

This blog has reported a few times on the cellphone revolution sweeping across Africa. (See for example the bright future of mobile, Mobiles and the digital economic boom)

Here is a neat graph to illustrate this. South Africa is rapidly nearing the number of one mobile phone per person. The rest of Africa is also growing rapidly but there is still a lot of potential.

Six photos on Antarctica in a warming world

The Guardian presents six pictures on how ice shelfs in Antarctica are impacted by a changing climate.

Hot Stress?

From a contribution on the William Briggs blog:

A belief that mankind causes every bad event, excessive hand-wringing, frequent bowel movements, a tendency to lurk on internet message boards and post things such as, ‘There is a consensus! There is a consensus!’, an irrational desire to measure one’s personal ‘carbon footprint.’” But the most worrying of all is the, “Urge to make idiotic comments in public tying global warming to any event.”
Recognise any of this? You may well be suffering from GWSS (global warming stress syndrome).
Might have seemed plausible apart from the fact that the term does not yield any real tangible results on Google, nor the psychologists who said this. The only link is to the same post on Free Republic and this is what they are all about:
Free Republic is the premier online gathering place for independent, grass-roots conservatism on the web. We're working to roll back decades of governmental largesse, to root out political fraud and corruption, and to champion causes which further conservatism in America. And we always have fun doing it. Hoo-yah!
So, we will treat this a (funny) rubbish until proven otherwise.

Black gold

Coal prices are expected to double this year (see article in Forbes)

Expect much more new coal mine development applications.

Does poverty kill?

People die earlier the poorer they are (at least in part). This is the finding from a new NBER paper Aging and Death under a Dollar a Day, as reported on by VoxEUon panel data from Vietnam and Indonesia.

From VoxEU:

...the largest difference in mortality rates across incomes is consistently found in cohorts of old people. For example, in 1992-93, an Indonesian or Vietnamese aged 50 year-old or more faced a 15% probability of dying within 5 years if he lived in an extremely poor rural household compared to just a 3% to 5% chance if he lived in a rural household with a daily per capita expenditure of $6 to $10.

The causal relationships are more complex to understand: Does ill health reduce people’s ability to work and thus lower incomes, or is it low incomes that lead to ill health and early death?

The NBER paper further concludes:
The direction of causality is unclear: the poor may be poor because they are sick (and thus more likely to die), or they could die because they are poor.

Whatever the case, there is no joy in being stuck in the bottom billion.

In Africa alone that means 41% of the population living on less then $1 per day.

Tuesday, February 12, 2008

Rigidity and flexibility in times of crises

What are the best preconditions for a development trajectory that lasts? Most of us would agree that it should at least be a stable system, without inherent risks of breaking down in the face of internal and external shocks. The trick is to convey this into a workable policy. Should the system be more rigid or more flexible? Where is the balance?

Development is a complex and dynamic process. Complex in the sense that there are many interrelationships between different actors operating at different levels. Complexity must never be interpreted as a licence for indecision and lack of leadership. Often our first reaction to unintended consequences, a lack of understanding complex systems, or in times of crises is to regulate with a heavy hand relying on a linear interpretation of the policy making process (and here). Centralise decisions (see earlier post), design new and more rules on the tax system, on how and when to invest, on how to avoid future financial meltdown, on constraining development, and to increase exploitation of ecosystems to name a few. Coupled with a strong belief that policy actions will turn the system towards equilibrium this is more then often confused with strong action and leadership.

The fact is that this approach may worsen the situation, and provide a whole set of new complexities that in turn may trigger a collapse. Increased rigidity may breed instability, the very opposite of what was intended. (For a discussion on the dangers of instability from rigidity in international financial markets see this piece 'Instability from Rigidity' in Project Syndicate).

In a complex and dynamic systems (not all systems are complex and dynamic!) sustainable development trajectories need to be supported by flexible policies, strategies and operational procedures. In such an approach novelty, surprise and crises can be easily adapted to without too much disruptions and with an eye on possible emerging new opportunities.

(All of this will not hold if the world is becoming more certain and simple to understand, less connected, more computable and predictable, less globalised and with only isolated social and natural systems feedbacks...)

In a complex world, stable systems are far closer to resilient then to rigid systems. This means a lot for development policy; at least to provide the means for people to adapt to an ever changing world, and better even, to instill possibilities of learning in times of adjustment.

In a nutshell? Embrace change. Learn to adapt to it. Grow smarter and smarter while doing it.

Development is a hard slog

The Economist reports on the relationship between technological leapfrogging in developing countries and sustained development. The case is argued that basic infrastructure and the development of human capital cannot be ignored,and in fact, is a prerequisite for a larger scale
diffusion of technology in these societies. Mobile phones are the exception.

A few quotes from these articles:

Building a fibre-optic backbone or putting plasma screens into schools may be much more glamorous than building electrical grids, sewerage systems, water pipelines, roads, railways and schools. It would be great if you could always jump straight to the high-tech solution, as you can with mobile phones. But with technology, as with education, health care and economic development, such short-cuts are rare. Most of the time, to go high-tech, you need to have gone medium-tech first.

Broadly, two sets of obstacles stand in the way of technological progress in emerging economies. The first is their technological inheritance. Most advances are based on the labours of previous generations: you need electricity to run computers and reliable communications for modern health care, for instance. So countries that failed to adopt old technologies are at a disadvantage when it comes to new ones. Mobile phones, which require no wires, are a prominent exception... The other set of problems has to do with the intangible things that affect a country's capacity to absorb technology: education; R&D; financial systems; the quality of government. In general, developing countries' educational levels have soared in the past decade or so. Middle-income countries have achieved universal primary-school enrolment and poor countries have increased the number of children completing primary school dramatically. Even so, illiteracy still bedevils some middle-income countries and many poor ones.

Development is a hard slog.

Nine climate change tipping points

Most cats have nine lives so the saying goes. It is somewat ironic that sientists have come up with no less then nine serious tipping points, each one of them serious events that may trigger larger scale collapse.

Here are the earth's 'nine deaths' according to an article on climate change tipping points in The Independent:

* Arctic sea ice: some scientists believe that the tipping point for the total loss of summer sea ice is imminent.
* Greenland ice sheet: total melting could take 300 years or more but the tipping point that could see irreversible change might occur within 50 years.
* West Antarctic ice sheet: scientists believe it could unexpectedly collapse if it slips into the sea at its warming edges.
* Gulf Stream: few scientists believe it could be switched off completely this century but its collapse is a possibility.
* El NiƱo: the southern Pacific current may be affected by warmer seas, resulting in far-reaching climate change.
* Indian monsoon: relies on temperature difference between land and sea, which could be tipped off-balance by pollutants that cause localised cooling.
* West African monsoon: in the past it has changed, causing the greening of the Sahara, but in the future it could cause droughts.
* Amazon rainforest: a warmer world and further deforestation may cause a collapse of the rain supporting this ecosystem.
* Boreal forests: cold-adapted trees of Siberia and Canada are dying as temperatures rise.

Knee-jerk reactions to such natural shocks will only aggrevate the situation. How to make decisions under such complex uncertainties is an area that warrants far more attention.

Friday, February 8, 2008

Kenya: The real causes are poverty and inequality

Most coverage on Kenya blames tribalism for the recent violence, but there is something far more fundamental that explains why anger is spilling into the streets: pervasive poverty and extreme high inequality. IrinNews reports.

Appreciate what you have

A friend send me this (from YouTube)

Wednesday, February 6, 2008

Is South Africa running out of resources?

Today the WWF warned of resource shortages in South Africa. See article in Mail & Guardian Online.

South African natural resources (e.g. water, energy, ecosystems, fisheries) are indeed under a lot of pressure. The reasons are legio: ineffective institutions, incorrect price signals leading to misallocation and waste of resources, lack of data and information to inform planning, lack of environmental eduction etc. etc.

Here is a 4 point suggestion what to do to to circumvent resource shortages:
1. Value the contribution of natural resources and the environment to the economy and society. Natural resources are not for free and should not only be charged at a level that recovers capital, operational and maintenance costs. Statistics SA started compiling natural resource accounts, this excercise need to be broadened to all of our important natural resources and repeated at least on a biannual basis.
2. Institution building - creation of markets that provide correct price signals on scarce natural resources. Prices on water, energy and ecosystems should start reflecting its scarcity value. This creates the means for a gradual transition to a less resource intensive society.
3. Structural reform - moving beyond "getting the prices right". Behavioural changes are needed especially in the face of looming resource limits. One example is the growing risks of a very energy and carbon-intensive economy.
4. Monitor and evaluate (M&E) impact of policy instruments. The world is complex, and interventions may create all sorts of unintended consequences. Adaptive management, or being on your toes, requires well constructed M&E feedback.

(Source: Sustainable Options)

An African love affair

Africans love soccer.
Africans love cell phones.
These two love's have found each other. Bizcommunity reports

It is February after all.

Pre-school nutrition and adult wellbeing

From SciDev:

"Many developing country and middle-income country governments face significant trade-offs in how they allocate their budget to various types of investments. Governments which have a strong interest in improving welfare, reducing poverty and increasing economic growth, should increase the investments they make in pre-school nutrition"

See full article in The Lancet.

Nature: the youngsters will blow it! Really?

From EcoEgg and The Guardian:

Video games compete with outdoor activity. This is expected to lead to less interest in nature and more difficulty in raising public awareness for conservation.

I have a few questions. Yes we hike less, camp less and fish less. Maybe, we spend less time in the outdoors (will have to verify this for Africa though). That this will translate into apathy is a bit too much:

  • Will people only value things that they can physically experience? What about the idea of existence value?

  • What about the trend towards higher environmental awareness?

  • What about the power of connectivity? Social networking? The contagious effect of a message such as 'cool to be green'?

Non consumptive values such as recreation does not tell the whole picture. We experience negative ecological feedback with larger consequences and on increasing scales then a few decades ago. It is likely that the incentive to conserve will not come from our physical interaction with nature only (sure it helps, and it does help for a lot of other things as well, and I will bring my kids to such places), but from a far more pressing necessity.

Tuesday, February 5, 2008

Facts on R&D

Africa spends $5 billion (expressed in PPP$) on R&D, but that is only 0.6% of the $814 billion R&D expenditures worldwide, according to a new study on R&D indicators released by the US National Science Foundation.

R&D share of GDP for South Africa is 0.87% or gross expenditure on R&D (GERD) of R12 billion (2004 data). According to the HSRC the share has risen to 0.92% or a GERD of R14.1 billion in 2005/6. For full results of 2005/6 survey click here.

This compares to 4.71% for Israel (excl. defense R&D), 2.25% for all OECD countries, 1.78% for The Netherlands, 1.34% for China and 0.39% for Romania.

According to the Department of Science and Technology (DST):

  • South Africa has set a goal of achieving R&D expenditure equivalent to 1% of GDP by the year 2008.
  • Most South African R&D is performed in the major research field of engineering sciences (comprising 23.9% of total R&D), followed by the natural sciences (20.8%) and the medical and health sciences (14.8%).
  • The business sector is the major performer and financier of R&D in the country and performs 58% of all R&D undertaken, while financing 45% of total R&D. The higher education sector undertakes 21.1% of national R&D while government (including the science councils) performs 20.9% of the total but finances 32.1% of R&D. About 15% of South Africa’s R&D is financed from abroad.
R&D matters. Empirical literature suggests that social rates of return to R&D are far above private returns. That means that spill-overs are present and can be quite large. According to the UK based IFS, returns on R&D in the UK manufacturing sector vary between 17-34%, while the returns to society are close to 100%.

To be truly innovative and be able to compete in the knowledge economy, Africa needs accelerating investment in intangibles such as R&D. It will help to translate existing surveys on R&D into a measurement tool, such as R&D satellite accounts, to support the management of this process.

Monday, February 4, 2008

Prices up, use of plastic bags down?

In Ireland - the use of plastic bags decrease a whopping 94% for a plastic bag tax of 33c. New York Times,2 Feb 2008
In Ireland - the use of plastic bags decrease a whopping 95% for a plastic bag tax of 15c. BBC News, 20 August 2002.

How are we doing in South Africa? It seems that we are not that lucky.

A 2007 paper "The Economics of Plastic Bag legislation in South Africa" by Reviva Hasson, Anthony Leiman and Martine Visser argues the folowing:

The results suggest that plastic bag demand is relatively price inelastic and imply that instruments utilising price alone, would have limited efficacy. However, the combination of standards and pricing successfully curbed plastic bag use in the short run. Further analysis suggests that the effectiveness of the legislation may be declining over time.

In plain language: when prices increased, first we did not want them, then we started to get used to it and just paid for them, now we cannot be without them again. The net effect is that state receives a steady flow of income.

Wat happened in Ireland that did not happen here? Social pressure. You do not dare be seen with one of those filthy plastic bags.

I guess South Africans just do not care. The more bags, the more succesfull the shopping.

GDP growth makes Africa look green

No this is not a post on the virtues of a steady state economy. It is also not a post on the green quality of Africa's growth path (will save that for another day).

This is a map on average GDP growth from 1990-2003. The mapmakers ironically chose greener colours for higher growth (couldn't figure out whether South East Asia was dark green or black). Africa has quite a lot of it.

This not the full story. Per capita income looks a lot more colourful, meaning, in this context, a lot worse. This means that most of the economic growth up to 2003 in Africa (with some very notable exceptions) was largely absorbed by a growing population.

Figures are up to 2003 so the recent commodity-based growth surge is not fully included yet.


Average annual percentage growth rate of GDP at market prices based on constant local currency. Dollar figures for GDP are converted from domestic currencies using 1995 official exchange rates. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products.

Per capita gross domestic product (GDP) average annual growth, 1990–2003. Average annual percentage growth rate of GDP per capita at market prices based on constant local currency. Dollar figures for GDP are converted from domestic currencies using 1995 official exchange rates. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products.

Source: World Bank
Cartographer/designer/author (Philippe Rekacewicz, Emmanuelle Bournay, UNEP/GRID-Arendal)

Biogas well underway

South Africa's national biogas programme is well underway.

Biogas is a product of the anaerobic digestion or fermentation of biodegradable materials such as manure or sewage, municipal waste, and energy crops. (from Wikipedia)

Engineering News reports that in the first phase of the programme 20 000 households will benefit from the scheme. According to the article a potential of 310 000 households have the technical ability to participate in a rural biogas programme.

Biogas is used worldwide as a solution to biodegradable waste and the provision of sustainable energy. For example, the Biogas Support Program in Nepal has installed over 100,000 biogas plants in rural areas. Vietnam’s Biogas Programme for Animal Husbandry Sector has led to the installation of over 20,000 plants throughout that country. According to the Institute of Science in Society, up to the end of 2005, China had 17 million digesters with annual production of 6.5 billion m3 biogas, mostly in rural areas, with 50 million people enjoying the benefits of biogas technology.

Click here for more information on Integrated Biogas Solutions.

Saturday, February 2, 2008

Who reads this blog?

Saturday afternoon, siesta time in Cape Town.
It is 32 degrees C outside.

Fiddling a bit with the world behind the blogosphere.

This is the result.

From some great statistics on who reads this blog.

594 page loads, 346 unique visitors.

38% are South Africans (long last! almost thought Eskom and Telkom succeeded killing all energy in this country)
15% come from the US (must be a plus that I do not have a poll on Obama and Clinton on the blog)
8% from The Netherlands (university and social networks that last?)
8% from the UK (did not know my brother was that keen on my work)
7% from France (must have been that trip to Paris last week)
3% from Mauritius (thanks guys, I have not even posted one word about Mauritius yet)

Kenya and Uganda? 0.5% after all that stuff on food miles and Kenyan strawberries and the whole Ushahidi campaign..
Rest of Africa? zero.

Remember,this is a blog on Africa's development challenge...

Cold beer sound good, thanks. Have a great weekend.

Thumbs up for land reform, but not the Zimbabwean way

A very recent paper published in the Journal of African Economies from Margaret Chitiga and Ramos Mabuga argues that well-planned land reform can play an important role in the reduction of poverty and inequality.

World Wetlands Day 2 Feb

Posted on Western Cape Wetlands Forum blog

Friday, February 1, 2008

The uneven distribution of ecological damages

Science News Online reported on a study that measures the distribution of ecological damage around the world. The main outcomes are contained in this figure:

GIANT STEPS. Color-coded footprints indicate the dollar cost, in trillions, of environmental damage inflicted by high-, middle-, and low-income groups of nations on each of the other two groups. E. Roell, from Srinivasan graphic

The study uses the results from UN environmental economic valuation studies and express these in net present values. A discount rate of 2% was used implying a larger preference for future ecological goods and services as are expressed in markets currently. Sensitivity analysis is done on a range of 1-3%. The depicted figure is therefore only one interpretation and may look very different with different values for ecological impact and different discount rates.

The study does set the stage though and a surprising result is the high amount of impact by low income countries on middle-income countries.

See Proceedings of National Academy of Sciences of the USA (PNAS) for the full study

The electricity crises and short-circuiting city power reticulation

In times of crises the urge to centralise power and to be opportunistic in settling old scores is always present. South Africa's electricity crises is no exceptance. The CEO's of the National Energy Regulator of SA (Nersa), Smunda Mokoena and the CEO of the Electricity Distribution Industry Holdings, Phindile Nzimande, are calling for municipalities to be stripped of their (constitutional) powers to reticulate electricity to their customers.

According to Business Day, both argue that infrastructure at local level is in a state of collapse and that municipalities were such inefficient distributors of electricity that they were harmful to the economy. For full article see Business Day.

Such a move, apart from being unconstitutional and somewhat utopian, will have severe impacts on South African cities coping with years of backlog of local infrastructure. According to a draft (as yet unreleased) paper by the Sustainability Institute on natural resource-based services in the City of Cape Town (see earlier blogpost for background), the reason for this infrastructure backlog stems from the challenge to expand services into poorer areas, while maintaining standards throughout the City. Electricity and water services traditionally cross-subsidised this roll-out, at expense of infrastructure maintenance. Thisis unsustainable and it is realised that alternative ways of financing such expansion should be sought.

Here a few extracts from the paper:
Despite the many political changeovers in Cape Town’s municipal government since 1994, a constant theme of successive administrations has been the need to address the service backlogs in the poorer areas of the city. This has had major implications for capital and operating expenditures in the energy, waste, water and sanitation (EWWS) sectors which together account for the bulk of expenditure by the CCT.

The core challenge that has faced officials since 1994 has been to find fiscally viable ways to expand the EWWS services into poorer areas while maintaining and operating the EWWS services for the city as a whole.

To complement the progressive aims of rates and tariff policies, the general approach to services from the mid-1990s onwards was that the levels and standards applied in the former white areas must be applied to all areas. This had major implications for capital budgets, reinforced by increasingly large inter-governmental transfers. However, it is one thing to extend infrastructure using capital budgets and transfers, it is a completely different matter to make sure that operating budgets are expanded accordingly in order to maintain and repair these infrastructures into the future, and provision is made in capital budgets for refurbishment and upgrade.

From 2005 onwards, municipal engineers and the consulting industry were issuing strong warnings that cross-subsidisation coupled to funding of service expansion to achieve uniform levels and standards of service were undermining the operating budgets. By 2006, major infrastructure projects had to be postponed and serious disruptions due to under-maintained infrastructures began to emerge. In 2007 the municipality declared restrictions on new developments in numerous suburbs due to overloading of existing bulk infrastructure, in particular sanitation. These, coupled to rising levels of bad debt, reinforced calls to move towards a sectoral cost recovery model. By the start of 2007, there was a general consensus that the rollout of basic services to meet the needs of the poor could no longer be at the expense of essential maintenance and refurbishment of existing city-wide infrastructures.