Health, government, and the poor : the case for the private sector

The authors present a case for user charges and some privatization of health care in developing countries. They demonstrate that - consistent with public choice theory - government actions in the health sector are neither equitable nor efficient in developing countries. In general, they increase the real income of influential middle and upper income groups - despite the fact that the greatest mortality gains would come from directing health spending to the poor. They discuss why government health interventions will become less effective than they have been. They point out that high mortality in developing countries is related more to poverty than it used to be, while pressure on governments to finance health care for the middle class and the rich is increasing because the population is aging and the costs of handling adult chronic diseases are rising. The inequity and inefficiency of government health programs reflect the current political equilibrium which, unfortunately, cannot be easily changed. Opportunities for change, including marginal changes in the distribution of political power, must be recognized and exploited whenever they arise. Information that increases public awareness of current inequities, fiscal stress, and tactical use of newly available resources may also create opportunities to alter the equilibrium.Health Systems Development&Reform,Environmental Economics&Policies,Agricultural Knowledge&Information Systems,Health Monitoring&Evaluation,Health Economics&Finance

The private and public insurance value of conservative biodiversity management

The ecological literature suggests that biodiversity reduces the variance of ecosystem services. Thus, conservative biodiversity management has an insurance value to risk-averse users of ecosystem services. We analyze a conceptual ecological-economic model in which such management measures generate a private benefit and, via ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem users. We find that ecosystem management and environmental policy depend on the extent of uncertainty and risk-aversion as follows: (i) Individual effort to improve ecosystem quality unambiguously increases. The free-rider problem may decrease or increase, depending on the characteristics of the ecosystem and its management; in particular, (ii) the extent of optimal regulation may decrease or increase, depending on the relative size of private and external effects of management effort on biodiversity; and (iii) the welfare loss due to free-riding may decrease or increase, depending on how biodiversity influences ecosystem service provision; it increases, unless higher biodiversity greatly decreases the variance of ecosystem services. --biodiversity,ecosystem services,ecosystem management,free-riding,insurance,public good,risk-aversion,uncertainty

The Private and Public Insurance Value of Conservative Biodiversity Management

The ecological literature suggests that biodiversity reduces the variance of ecosystem services. Thus, conservative biodiversity management has an insurance value to risk-averse users of ecosystem services. We analyze a conceptual ecological-economic model in which such management measures generate a private benefit and, via ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem processes at higher hierarchical levels, a positive externality on other ecosystem users. We find that ecosystem management and environmental policy depend on the extent of uncertainty and risk-aversion as follows: (i) Individual effort to improve ecosystem quality unambiguously increases. The free-rider problem may decrease or increase, depending on the characteristics of the ecosytsem and its management; in particular, (ii) the size of the externality may decrease or increase, depending on how individual and aggregate management effort influence biodiversity; and (iii) the welfare loss due to free-riding may decrease or increase, depending on how biodiversity influences ecosystem service provision.biodiversity, ecosystem services, ecosystem management, free-riding, insurance, public good, risk-aversion, uncertainty

Universal service obligations in utility concession contracts and the needs of the poor in Argentina's privatization

The authors summarize the main lessons emerging from Argentina's experience, including universal service obligations in concession contracts. They discuss free-riding risks, moral hazard problems, and other issues that arise when social concerns are delegated to private operators. After reporting on Argentina's experience, the authors suggest some guidelines: 1) Anticipate interjurisdictional externalities. Users'mobility makes targeting service obligations difficult. 2) Minimize the risks imposed by elusive demand. In providing new services, a gradual policy may work better than a"shock". 3) Realize that unemployment leads to delinquency and lower expected tariffs. Elasticity of fixed and usage charges is important. 4) Deal with the fact that the poor have limited access to credit. Ultimately, plans that included credit for the payment of infrastructure charges were not that successful. 5) Coordinate regulatory, employment, and social policy. One successful plan to provide universal service involved employing workers from poor families in infrastructure extension works. 6) Beware of the latent opportunism of users who benefit from special programs. Special treatment of a sector may encourage free-riding (for example, pensioners overused the telephone until a limit was placed on the number of subsidized phone calls they could make). 7) Fixed allocations for payment of services do not ensure that universal service obligations will be met. How do you deal with the problem that many pensioners do not pay their bills? 8) anticipate that operators will have more information than regulators do. If companies exaggerate supply costs in remote areas, direct interaction with poor users there may lead to the selection of more cost-effective technologies. 9)"Tailored"programs are often much more effective than standardized programs. They are clearly more expensive but, when demand-driven, are also more effective.Payment Systems&Infrastructure,Economic Theory&Research,Enterprise Development&Reform,Decentralization,Environmental Economics&Policies,Governance Indicators,Health Economics&Finance,Consumption,Environmental Economics&Policies,Economic Theory&Research

Is cost recovery a feasible objective for water and electricity ? The Latin American experience

Given the relatively small segment of the population that faces genuine affordability problems in Latin America, there appears to be a promising case for using targeted subsidies to reconcile the cost recovery objective with social protection concerns. Social tariff schemes of various kinds are already widespread in Latin America, but they suffer from a number of design flaws. Increasing block tariff (IBT) structures are the most prevalent form of social tariffs in the region. These are likely to be more successful in the electricity sector than in the water sector because the correlation between consumption and income is much stronger in the case of electricity than water. Moreover, IBT structures in electricity tend to be much better designed than in the case of water, with lower fixed charges, lower subsistence blocks, and steeper gradients. A number of more sophisticated social tariff schemes are also being applied that combine consumption criteria with some form of socioeconomic screening. These are generally found to perform better than IBTs, although they also present significant room for improvement.Infrastructure Economics,Town Water Supply and Sanitation,Public Sector Management and Reform,Regional Governance,Urban Governance and Management