Subnational insolvency : cross-country experiences and lessons

Subnational insolvency is a reoccurring event in development, as demonstrated by historical and modern episodes of subnational defaults in both developed and developing countries. Insolvency procedures become more important as countries decentralize expenditure, taxation, and borrowing, and broaden subnational credit markets. As the first cross-country survey of procedures to resolve subnational financial distress, this paper has particular relevance for decentralizing countries. The authors explain central features and variations of subnational insolvency mechanisms across countries. They identify judicial, administrative, and hybrid procedures, and show how entry point and political factors drive their design. Like private insolvency law, subnational insolvency procedures predictably allocate default risk, while providing breathing space for orderly debt restructuring and fiscal adjustment. Policymakers'desire to mitigate the tension between creditor rights and the need to maintain essential public services, to strengthen ex ante fiscal rules, and to harden subnational budget constraints are motivations specific to the public sector.Bankruptcy and Resolution of Financial Distress,Debt Markets,Banks&Banking Reform,Strategic Debt Management

Seasonal bias in household vulnerability to poverty stimates: insights from a natural experiment

Using data from 260 households from the Hadejia-Nguru wetlands, the paper shows that vulnerability to poverty estimates are biased if the data used is seasonal. The seasonal bias in the consumption expenditure is less pronounced than in its variance. The paper further shows that the relative sizes of the seasonal bias in expected consumption expenditure and its variance determines the final magnitude of the bias. However, the bias in the expected consumption expenditure is sufficiently corrected by including seasonal dummy variables. We therefore encourage researchers to consider seasonality when they are modelling consumption expenditure with the aim of estimating vulnerability.Seasonal bias; vulnerability to poverty; natural experiment; Nigeria

Managing subnational credit and default risks

As a result of worldwide decentralization, subnational debt is rising. Subnational debt crises in major developing countries in the 1990s have led to strengthened regulatory frameworks for subnational borrowing and insolvency. With the fragility of the global recovery and increasing public debt, and the structural trends of decentralization and urbanization, it becomes more important to prudently manage subnational default risks. Although the regulatory frameworks share central features, the historical context and entry points for reform drive variations across countries. Addressing soft budget constraints is integral to the regulatory framework. Ex ante fiscal rules for subnational governments attempt to limit default risks; ex post regulation predictably allocates default risk, while providing breathing space for orderly debt restructuring and fiscal adjustment, as well as the continued delivery of essential public services. The regulatory reforms are inseparable from the reform of broader intergovernmental fiscal systems and financial markets.Bankruptcy and Resolution of Financial Distress,Debt Markets,Access to Finance,Banks&Banking Reform,Subnational Economic Development

The role of shocks and risks for the livelihoods of small scale fishing communities of Hadejia-Nguru Wetlands in Nigeria

This paper assesses the impact of risks and shocks on household welfare in the Hadejia-Nguru Wetlands in Nigeria. We use estimated income loss in consumption equations to assess the impact. Our findings identify death of an adult member, drought, and social conflict as important shocks in the area. These shocks are more significant in reducing household food consumption than non-food consumption. Additionally, we find that farming dependent households suffer more from social conflicts; fishing households suffer more from drought; while the impact of death of an adult member does not depend on household livelihood strategies. Since the shocks that significantly reduce household consumption are not specific to such communities, we conclude that fishing communities do not need special social protection policies but these should not be left out in these programs. Further research should consider understanding the roles of off farm activities as ex-ante risk mitigation strategies or ex-post coping strategies. --

WILLINGNESS TO PAY TO AVOID HEALTH RISKS FROM PESTICIDES, A CASE STUDY FROM NICARAGUA

A contingent valuation approach to assess the health effects of pesticides among Nicaraguan vegetable farmers is presented. Farmers' valuation of health is measured as willingness to pay (WTP) for low toxicity pesticides. Results show, that farmers are willing to spend about 28% of current pesticide expenditure for avoiding health risks. The validity of results is established in scope tests and a two-step regression model. WTP depends on farmers' experience with poisoning, income variables and pesticide exposure. The results can help in targeting of rural health policies and the design of programmes aiming to reduce negative effects of pesticides.health risks of pesticides, contingent valuation, Nicaragua, Health Economics and Policy,

THE IMPACT OF FARMER FIELD SCHOOLS ON PESTICIDE USE AND ENVIRONMENT IN THAILAND

This paper presents an application of a difference in differences model to measure environmental and economic impacts of Farmer Field School on crop and pest management practices of rice in Thailand. Panel data from 241 farm households were collected three times over a period of four years in five rice-producing provinces of Thailand. Data included socio-economic data describing household and farm characteristics, rice input and output data including detailed accounts of pesticide use and other pest management practices and farmers' knowledge of crop management and agro ecosystem factors. Using the concept of environmental impact quotient parameters on the health and environmental consequences of a change in pesticide use was computed. Data analysis was conducted by measuring changes in farm performance, using a two and a three periods growth model. Results showed that trained farmers significantly reduced pesticide use on the short term. It was also found that they retain their reduced pesticide use practices several years after the training. However no significant change in rice gross margin could be detected.Farmer Field School, Impact Assessment, Multi-Periods Panel Data Model, Pesticide Use, Environment, Teaching/Communication/Extension/Profession,