Revisiting the Global Food Architecture: Lessons from the 2008 Food Crisis

The 2008 episode of food price explosion, political turmoil, and human suffering revealed important flaws in the current global food architecture. This paper argues that to safeguard the strengths of the current system, four failures in market functioning and policymaking must be addressed. First, governments must reinvest in agriculture with a focus on public goods and subject to increased public accountability to re-ensure the global food supply. Second, the policy-induced link between food and fuel prices must be broken through a revision of EU and US agro-fuel policies. Third, better sharing of information on food stocks, stricter WTO regulation of export restrictions, and some form of globally managed buffer stock will be minimum requirements to prevent the resurgence of inefficient national food self-sufficiency policies. Fourth, a market-based food security system is only sustainable given well functioning national social safety nets.agriculture, agro-fuels, food crisis, food security

Transfers and Development: Easy Come, Easy Go?

Contrary to the popular notion that money that is easily earned, is also easily spent, economic theory holds that income is fungible. Drawing on the concept of mental accounting, this study theoretically explores when such a link between spending behaviour and the effort dispensed in obtaining income is plausible. Empirically, it is found that the marginal propensity to consume from unearned income is about three times larger than that from earned income, based on household panel data from rural China, with the difference more pronounced when unearned income is transitory and smaller than earned income. The policy implications are real.transfers, saving, mental accounting, permanent income hypothesis, China

Consumption risk, technology adoption and poverty traps: evidence from Ethiopia

Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receiving much attention. This paper focuses on a factor that has been less well documented: the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just exante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertiliser. The lack of insurance causes inefficiency in production choices.Technology adoption, Fertiliser, Risk, Poverty trap, Ethiopia

Consumption risk, technology adoption, and poverty traps : evidence from Ethiopia

Much has been written on the determinants of input and technology adoption in agriculture, with issues such as input availability, knowledge and education, risk preferences, profitability, and credit constraints receivingmuch attention. This paper focuses on a factor that has been less well documented-the differential ability of households to take on risky production technologies for fear of the welfare consequences if shocks result in poor harvests. Building on an explicit model, this is explored in panel data for Ethiopia. Historical rainfall distributions are used to identify the counterfactual consumption risk. Controlling for unobserved household and time-varying village characteristics, it emerges that not just ex-ante credit constraints, but also the possibly low consumption outcomes when harvests fail, discourage the application of fertilizer. The lack of insurance causes inefficiency in production choices.Economic Theory&Research,Financial Intermediation,Consumption,Insurance&Risk Mitigation,Inequality

Who is vouching for the input voucher ? decentralized targeting and elite capture in Tanzania

Input subsidy programs carry support as instruments to increase agricultural productivity, provided they are market-smart. This requires especially proper targeting to contain the fiscal pressure, with decentralized targeting of input vouchers currently the instrument of choice. Nonetheless, despite clear advantages in administrative costs, the fear of elite capture persists. These fears are borne out in the experience from the 2008 input voucher pilot program in Kilimanjaro, Tanzania, examined here. Elected village officials received about 60 percent of the distributed vouchers, a factor that significantly reduced the targeting performance of the program, especially in more unequal and remote communities. When targeting the poor, greater coverage and a focus on high trust settings helped mitigate these concerns. The findings highlight the continuing need for scrutiny when relying on decentralized targeting. A clearer sense of purpose (increasing productivity among poorer farmers versus increasing aggregate output) could also enhance the targeting performance.Rural Poverty Reduction,Economic Theory&Research,Housing&Human Habitats,Services&Transfers to Poor,Regional Economic Development

Toward an understanding of household vulnerability in rural Kenya

Considerations of risk and vulnerability are key to understanding the dynamics of poverty. This study conceives vulnerability as expected poverty and illustrates a methodology to empirically assess household vulnerability using pseudo panel data derived from repeated cross sections augmented with historical information on shocks. Application of the methodology to data from rural Kenya shows that in 1994 rural households faced on average a 40 percent chance of becoming poor in the future. Households in arid areas that experience large rainfall volatility appear more vulnerable than those in non-arid areas, where malaria emerges as a key risk factor. Idiosyncratic shocks also cause non-negligible consumption volatility. Possession of cattle and sheep/goats appears ineffective in protecting consumption against covariant shocks, though sheep/goat help reduce the effect of idiosyncratic shocks, especially in arid zones. Of the policy instruments simulated, interventions directed at reducing the incidence of malaria, promoting adult literacy, and improving market accessibility hold most promise to reduce vulnerability.Financial Intermediation,Environmental Economics&Policies,Economic Theory&Research,Health Economics&Finance,Housing&Human Habitats,Environmental Economics&Policies,Health Economics&Finance,Inequality,Financial Intermediation,Economic Theory&Research

Are African Countries Paying Too Much Attention To Agriculture?

Africa, Agriculture, Poverty

Transfers and Development: Easy Come, Easy Go?

Contrary to the popular notion that money that is easily earned, is also easily spent, economic theory holds that income is fungible. Drawing on the concept of mental accounting, this study theoretically explores when such a link between spending behaviour and the effort dispensed in obtaining income is plausible. Empirically, it is found that the marginal propensity to consume from unearned income is about three times larger than that from earned income, based on household panel data from rural China, with the difference more pronounced when unearned income is transitory and smaller than earned income. The policy implications are real

Growth, distribution, and poverty in Africa : messages from the 1990s

review recent evidence on the trends in household well-being in Africa during the 1990s. They draw on the findings of a series of studies on poverty dynamics that use the better data sets now available. The authors begin by taking a broad view of poverty, tracing changes in both income poverty and in other more direct measures of individual welfare. Experiences have been varied: several countries have seen a sharp decline in poverty, while some have witnessed a marked increase. Yet, in the aggregate, economic growth has been pro-poor. Nonetheless, the aggregate numbers also hide significant and systematic distributional effects which have caused some groups to be left behind. The authors draw four key conclusions: Economic policy reforms (improving macroeconomic balances and liberalizing markets) have been conducive to reducing poverty. Market connectedness is key for the poor to benefit from new opportunities generated by economic growth. Some population groups and regions, by virtue of their sheer remoteness, have been left behind when growth picks up. Education and access to land further condition the extent to which households can benefit from economic opportunities and escape poverty. Finally, rainfall variations and ill health are found to have profound effects on poverty outcomes in Africa underscoring the significance of social protection in a poverty reduction strategy.Health Economics&Finance,Health Monitoring&Evaluation,Environmental Economics&Policies,Public Health Promotion,Services&Transfers to Poor,Governance Indicators,Achieving Shared Growth,Poverty Assessment,Environmental Economics&Policies,Health Economics&Finance

Family planning and fertility : estimating program effects using cross-sectional data

Although reproductive health advocates consider family planning programs the intervention of choice to reduce fertility, there remains a great deal of skepticism among economists as to their effectiveness, despite little rigorous evidence to support either position. This study explores the effects of family planning in Ethiopia using a novel set of instruments to control for potential non-random program placement. The instruments are based on ordinal rankings of area characteristics, motivated by competition between areas for resources. Access to family planning is found to reduce completed fertility by more than one child among women without education. No effect is found among women with some formal schooling, suggesting that family planning and formal education act as substitutes, at least in this low-income, low-growth setting. This provides support to the notion that increasing access to family planning can provide an important, complementary entry point to kick-start the process of fertility reduction.Population Policies,Health Monitoring&Evaluation,Adolescent Health,Reproductive Health,Rural Development Knowledge&Information Systems