Giving cash for Xmas (and as a form of Aid)

The economics of gift giving by Marginal Revolution.

There are two problems with giving presents. The first one is the knowledge problem – “how do I really know what the person wants”. The second one is the incentive problem – “how do I make a good decision about the choice I make”. You can create value by giving presents for example buying warm gloves for my child, signaling that they should keep warm, or buying a diamond for a girlfriend to signal you are committed to her. However, in most cases, according to research, people value a gift less than what it cost the person who bought it. giving cash gets round these problems as the recipient knows exactly what he or she wants and has a strong incentive to choose well.

This example of Christmas giving is used to explain why aid is badly spent. Aid agencies have the same two problems e.g. how do they really know what problems are facing a rural community. Is buying a cow for the community the best option? Or a mobile phone? As with Xmas present giving, giving cash is an efficient solution. One NGO called was set up by economists to enable people to give poor communities cash.

Which is probably what my children would prefer to have for Xmas too.


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Food for thought

10 best bet innovations to help agriculture adapt to climate change – innovations in rice, water, digital, finance, livestock and more

Social and environment impact entrepreneurs showcased by UNCTAD including using bees to generate big data for environmental protection and an app to encourage safer taxi drivers in Rwanda

How international organizations stay ahead of the game on social media

Blogging to save the planet – There is a lack on consensus on cause of climate change due to climate deniers having so much space and influence in the media. This is despite overwelming evidence showing human activity causes climate change. Scientists and people who love science must therefore blog more and engage more with the public in the media




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Incentives to kill off Lionfish

This month I took part in a joint mission with UNDP to prepare a project on climate resilient agriculture and biodiversity in Grenada. There are many threats facing the country’s biodiversity including climate change, land degradation, tourism development, urbanization and hurricanes. Invasive species are a particular concern as they decimate local, native flora and fauna. For a small island they are numerous, including Lion fish, African Mona monkey, rats, feral cats and mongoose.

The case of the lionfish is well known across the Caribbean wrecking havoc on local fish populations. Are there innovative ways to deal with the issue for example incentivizing fisherman to catch them and keep their numbers down?

Innovations to combat invasive species across the world include dropping poisoned mice from helicopter to kill off the brown tree snake in Guam, and marketing handbags made from canetoad leather. Here in Geneva, the local authorities encourage local fishermen to kill invasive catfish in the lake but do not go so far as offering catch payments.

Can the Caribbean states enact innovative ways to reward communities and local industry to catch lionfish. The Invasive Species Advisory Council (ISAC) has outlined different forms of incentives for invasive species capture including bounty payments to individuals, contractor payments to companies, community harvest by concerned groups, recreational harvests (e.g. to divers and fishermen) and subsidies. In Louisiana for example, the authorities pay fishermen US$5 per nutria (rodent native to South America) tail delivered to collection centres.

According to the Lionfish Guide (a Bible on killing off the species) produced by the Gulf and Caribbean Fisheries Institute, governments need to ensure as a first step they have a coordinating strategy in place for lionfish eradication.

However, “the physical human removal of lionfish can buy time and protect key resources while new technologies are developed and natural controlling mechanisms emerge”.  According to the handbook, one of the most effective methods for engaging the  public in lionfish removals includes organized events and removal programs. These include “derbies”, monthly contests, adopt a reef program and diver organized events.

Visiting the tiny port of Sauteurs on the north coast of Grenada, I saw one fisherman on the beach dressed in a wetsuit cleaning his catch of 10 fish – half were lionfish. This was alarming as an indication of the numbers of lionfish on the reef. Apparently they are tasty to eat, although with their venomous spins are tricky to catch. Can Grenada find a way to incentivize its fishermen and diving companies to increase their removal of lionfish and so help conserve the local ecosystem?



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How does trade policy support food security?

I attended a meeting at FAO last week. The Committee on Commodity Problems held an event in which experts from WTO and other trade related organizations discussed the linkages between trade and agricultural policy. The impact of climate change on agriculture and our response to it loamed large over the meeting. The main ideas and issues discussed are set out below.


FAO DG da Silva presenting to delegates in The Green Room at FAO in Rome

FAO Director General José Graziano da Silva highlighted three areas where trade and food security concerns are linked.

  1. Prioritizing global agreements over bilateral and regional agreements which should complement not substitute agreement.
  2. Most of the 850 million people in the world who are hungry are smallholders and family farmers in developing countries. Family farms produce 80% of world food production. Export subsidies are particularly harmful to them as they face difficult conditions to compete with producers from developed countries.
  3. Standards and food safety rules based on science based evidence are required in trade rules. If every govt applies different standards, trade would be more costly. Food safety is fundamental to food security.

Roberto Azevedo, the DG of the WTO followed with an opening speech via videolink. He highlighted the elimination of export subsidies achieved in Nairobi at the 10th Ministerial as the most significant recent achievement in trade reform. He said it will help level the playing field and deliver SDG 2. Together with the Trade facilitation agreement this is a big achievement.

The DDG of WTO and its Director of Agriculture went into more detail on the upcoming Ministerial meeting in Buenos Aires where agriculture will be an important topic in negotiations. The three main issues for negotiation include domestic support, public stock holding (PSH) and export restrictions. A big related issue for negotiation is fishery subsidies. It appeared from discussions at the meeting that success most likely in the PSH negotiations.

In a panel session that included representatives from ICTSD, OECD and FAO, the linkages between trade, climate change and food security were further explored. Several themes emerged.

Climate change is having strong negative impact on productivity. This will alter the patterns of trade.

Trade can be a tool to address climate change.

  1. we can expect an increase in extreme weather events which will have an impact on global markets (shortages ). This will lead to govt responses for example export bans. This may have positive short term effects in price increases but longer term creates reduction in private sector incentives to invest in infrastructure so reduce future resilience to shocks.
  2. CC likely to give rise to food-borne diseases. We need to ensure trade not overly restrictive in response and that we strengthen food safety control systems to counter this
  3. CC itself can be directly affected by trade by increases in transportation of food and indirectly by incentivize production thru unsustainable practices

There is a need to reconcile domestic support (to boost productivity) and respecting trade policy objectives to keep trade open. Does trade policy have the framework to meet the challenges of climate change in view of this?

Trade is an enabler but not sufficient alone to achieve public policy goals. It is a blunt instrument to change public policy outcomes like non-communicable diseases and biodiversity. The focus must be on getting domestic policies right.

In view of the challenges to sustainability, agricultural policy should be structured around three pillars of support for:

  1. a bundle of environmental goods and services
  2. innovation
  3. risk management

Broadly, policies must ensure input and output markets function efficiently and we must resolve land issues.

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Kosher pizza and antisemitism in Rome

Rome has a tiny old Jewish quarter. I stumbled across it looking for somewhere to eat after arriving late Monday night for work meetings Tuesday in FAO.  I picked a restaurant with most people in it as an indicator of good food. I was ushered to a table and ordered a “4 brothers” pizza. I was sitting next to an older Israeli-Italian couple and they told me about the repression of Jews in Roman history.


The couple’s description of historical antisemitism seemed remote but I was wrong. It is very much a live issue in Italy as it is in neighbouring France. The next day the local newspaper and international media described how on Sunday night Lazio fans had photoshopped the football shirt of their rivals Roma onto a picture of Anne Frank who anniversary it was. They left the photos in the stadium as an antisemitic insult to Roma fans.

The response of the Lazio President was admirable and necessary. He is flying 200 young Lazio fans to Auschwitz for an education visit.

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