BASIS Director Michael Carter and BASIS researcher, Sarah Janzen (Professor, Montana State University), presented in December 2015 on the importance of social protection mechanisms in the face of climate change.
Measuring the Quality of Agricultural Index Insurance: Concepts and Safe Mini...BASIS AMA Innovation Lab
A presentation on Agricultural Index Insurance by Professor Michael Carter of the University of California, Davis, and Director of the Feed the Future BASIS Assets and Market Access Innovation Lab (http://basis.ucdavis.edu). This presentation was given at a World Bank "Brown Bag" seminar on May 21, 2015.
Importance of connected communities to flood resilienceNeil Dufty
Floodplain risk management and emergency management will never protect all Victorian communities in all floods. There will always be some residual risk for communities, meaning that the focus will be on how they look after themselves particularly in large flood events. This self-ability to prepare, respond and recover will largely determine how quickly communities return to normal functioning – a measure of flood resilience.
There is a relatively large body of psychological research that identifies the factors determining people’s flood preparedness, appropriate response and effective recovery. However, according to research into disaster resilient communities, not only is the participation of individuals required, but also collective action. Several researchers have found that community connectedness (especially ‘social capital’) is a critical factor in the ability of a community to recover after a disaster.
Social capital has been defined as the ‘networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit’ (Putnam, 1995). Research into recent disasters around the world, such as the 2004 Indian Ocean tsunami and Hurricane Katrina, has shown the benefits of social capital in providing resources for a faster and more efficient recovery. Some recent post-flood evaluations conducted in Victoria also indicate the importance of social capital in flood response and recovery. Research by the Victorian Department of Planning and Community Development has shown the need for social capital formation in building general community resilience across the state.
There are several implications of these findings for floodplain and emergency agencies including the need to work with community developers in state and local government to assess and strengthen community connections through social capital formation in flood-prone Victorian communities. This should be done as a preparation for flooding to enable the different types of social capital to work in communities during and after a flood.
Another implication is that community flood education and engagement programs such as FloodSafe should include content that helps people and communities learn how to form and use social capital as part of flood preparedness.
Measuring the Quality of Agricultural Index Insurance: Concepts and Safe Mini...BASIS AMA Innovation Lab
A presentation on Agricultural Index Insurance by Professor Michael Carter of the University of California, Davis, and Director of the Feed the Future BASIS Assets and Market Access Innovation Lab (http://basis.ucdavis.edu). This presentation was given at a World Bank "Brown Bag" seminar on May 21, 2015.
Importance of connected communities to flood resilienceNeil Dufty
Floodplain risk management and emergency management will never protect all Victorian communities in all floods. There will always be some residual risk for communities, meaning that the focus will be on how they look after themselves particularly in large flood events. This self-ability to prepare, respond and recover will largely determine how quickly communities return to normal functioning – a measure of flood resilience.
There is a relatively large body of psychological research that identifies the factors determining people’s flood preparedness, appropriate response and effective recovery. However, according to research into disaster resilient communities, not only is the participation of individuals required, but also collective action. Several researchers have found that community connectedness (especially ‘social capital’) is a critical factor in the ability of a community to recover after a disaster.
Social capital has been defined as the ‘networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit’ (Putnam, 1995). Research into recent disasters around the world, such as the 2004 Indian Ocean tsunami and Hurricane Katrina, has shown the benefits of social capital in providing resources for a faster and more efficient recovery. Some recent post-flood evaluations conducted in Victoria also indicate the importance of social capital in flood response and recovery. Research by the Victorian Department of Planning and Community Development has shown the need for social capital formation in building general community resilience across the state.
There are several implications of these findings for floodplain and emergency agencies including the need to work with community developers in state and local government to assess and strengthen community connections through social capital formation in flood-prone Victorian communities. This should be done as a preparation for flooding to enable the different types of social capital to work in communities during and after a flood.
Another implication is that community flood education and engagement programs such as FloodSafe should include content that helps people and communities learn how to form and use social capital as part of flood preparedness.
A presentation I gave as part of a Disaster Leadership course at Tulane University in New Orleans. This presention is about the importance of good information management and how technology, especially social media can play a role.
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Resilience: Managing the Risk of Natural Disaster considers risk management strategies, risk identification methods, and pre- and post- event activities to minimize risk. Post-event recovery is a more widely understood field, as practitioners have a plethora of lessons learned from completed projects. Pre-event planning as a means of minimizing damage and downtime is a lesser developed field, and this book organizes both literature supported data and the authors’ anecdotal experiences into a framework for disaster management, spanning pre- and post- event.
Wildfire Risk Adaptation as Worldmaking: A look at human dimensionsGregory Vigneaux
How can we understand human behavior when their behavior does not make sense? How should we approach the design of interventions when it seems homeowners are living in a different world? Delivered at the 2018 Colorado Wildland Fire Conference, Gregory Vigneaux provides early answers to these questions through a deep exploration of human dimensions following the work of Humberto Maturana, Francisco Varela, and others. Following the establishment of a biological foundation for understanding human perception as "bringing forth a world", he begins sketching an approach to designing interventions targeted at individuals and communities disinterested in risk reduction. Overall, he lays out the beginnings of a framework for operating in the multiverse.
Social Media Vs. Social Marketing For SlideshareMike Newton-Ward
Addresses the confusion between social media, communication and social marketing--especially as it pertains to positive behavior change. Original audience was public health, human service and environmental agency staffs with some exposure to social marketing, but little exposure to social media.
A presentation I gave as part of a Disaster Leadership course at Tulane University in New Orleans. This presention is about the importance of good information management and how technology, especially social media can play a role.
Resilience managing the risk of natural disasterBob Prieto
Resilience: Managing the Risk of Natural Disaster considers risk management strategies, risk identification methods, and pre- and post- event activities to minimize risk. Post-event recovery is a more widely understood field, as practitioners have a plethora of lessons learned from completed projects. Pre-event planning as a means of minimizing damage and downtime is a lesser developed field, and this book organizes both literature supported data and the authors’ anecdotal experiences into a framework for disaster management, spanning pre- and post- event.
Wildfire Risk Adaptation as Worldmaking: A look at human dimensionsGregory Vigneaux
How can we understand human behavior when their behavior does not make sense? How should we approach the design of interventions when it seems homeowners are living in a different world? Delivered at the 2018 Colorado Wildland Fire Conference, Gregory Vigneaux provides early answers to these questions through a deep exploration of human dimensions following the work of Humberto Maturana, Francisco Varela, and others. Following the establishment of a biological foundation for understanding human perception as "bringing forth a world", he begins sketching an approach to designing interventions targeted at individuals and communities disinterested in risk reduction. Overall, he lays out the beginnings of a framework for operating in the multiverse.
Social Media Vs. Social Marketing For SlideshareMike Newton-Ward
Addresses the confusion between social media, communication and social marketing--especially as it pertains to positive behavior change. Original audience was public health, human service and environmental agency staffs with some exposure to social marketing, but little exposure to social media.
Integrated agricultural system, migration, and social protection strategies t...ILRI
Presented by Bradford Mills (Virginia Tech), Genti Kostandini (University of Georgia), Anthony Murray (Economic Research Service, USDA), Jiangfeng Gao (Virginia Tech), Joseph Rusike (AGRA), Steven Omamo, Zhe Guo and Jawoo Koo (IFPRI) at the Livestock Systems and Environment (LSE) Seminar, ILRI, Nairobi, 28 January 2015
EWMD Portugal Leadership Conference Dianova PortugalDianova
Uncertain times require innovate solutions. How are NGO such as Dianova Portugal incorporating Sustainable Development, Social Entrepreneurship, Change Management, Social Media, Communication, Leadership and Innovation issues-methodologies-tools in their strategies? What are the impacts of those in the organisational development and it's impact on society? How to create social value through Leadership and Innovation?! Know how Dianova Portugal is doing it...
Social protection linking policy and strategic trajectories social capital ...Costy Costantinos
Using investigative methods of human feelings of wellness via direct survey of economic, environmental, physical, mental, workplace, social and political wellness metrics, the theme of the research underpins the determination of linkages between policy and strategies and civic en-gagement to spawn social protection mechanisms. The research is predicated on developing tools for stemming the stresses and shocks administered by the degree and speed of impoverishment that has posed enormous challenges for nations and peoples. The influence of global competition, social re-engineering, political and military conflicts and power shifts exert enormous pressure on the psyche of the average individual and family. The results from the survey were computed using the seven satisfaction metrics. While more has changed in the last decade technologically, culturally, politically and economically than the entire past century, responses from key informants by and large show a general level of life satisfaction among the selected population of lowest to highest incomes categories, using the Gross National Happiness approach. Life wellness measurement fares better compared to Gross Domestic Product as it shows satisfaction level and helps self-targeting in public works designed as employment generating safety nets.
Social Protection and Agriculture for Food Security: Breaking the Cycle of Po...Pascal Corbé
Benjamin Davis, Strategic Programme Leader, Rural Poverty Reduction at FAO, presents at GIZ workshop "Agriculture Meets Social Protection: How can food and nutrition security benefit?", Eschborn, 7 July 2016
At the Workshop in Index Insurance to Promote Agriculture and Livestock Development held on December 3rd, 2015 in Addis Ababa, Ethiopia, Professor Michael Carter of UC Davis and Director of the Feed the Future BASIS Assets and Market Access Innovation Lab presented on the importance of creating an integrated social protection scheme, including an insurance component, to help the rural poor climb out of poverty especially as increasing climate shocks are expected
As the recent National Climate Assessment made clear, extreme weather events—including heat waves, drought, tropical storms, high winds, storm surges, and heavy downpours—are becoming more severe. In many places these risks are projected to increase substantially due to rising sea levels and evolving development patterns, affecting the safety, health, and economy of entire communities. Extreme weather events like Hurricane Sandy have made it clear that we remain vulnerable to such events in spite of advances in disaster preparedness. American communities cannot effectively reduce their risks and vulnerabilities without including future extreme events and other impacts of climate change in their planning both before and after a disaster, and in everyday decision-making.
This presentation discusses how practitioner's of mitigation can create and design new programs to make a change in the new normal. This presentation was given at the Natural Hazard Mitigation Association's annual Symposium held every July in Broomfield, Colorado.
Ed Thomas is a President of NHMA, Floodplain Manager, Disaster Response & Recovery Specialist, and a practicing Attorney. His primary concern is the prevention of misery to disaster victims, the public purse, and to the environment. Hazard Mitigation and Climate Adaptation through advocacy and development of locally orientated policies and procedures with a strong economic, moral and legal foundation is his chosen method of accomplishing this goal.
Watch the video presentation here: https://www.youtube.com/watch?v=zy0NI4hN0e8
Johan Swinnen
GLOBAL FOOD POLICY REPORT
IFPRI’s 2023 Global Food Policy Report: Rethinking Food Crisis Responses – Considerations for Africa
IFPRI Africa Regional Office
JUN 22, 2023 - 9:00 TO 10:30AM EDT
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BASIS Director, Michael Carter, Rachid Laajaj of the Universidad de los Andes, and Dean Yang of the University of Michigan presented on the topic of Savings, Subsidies, and Technology Adoption: Field Experimental Evidence from Mozambique.
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(From the AFD-FERDI Workshop, Paris on June 24, 2014)
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(From the AFD-FERDI Workshop, Paris on June 24, 2014)
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ZGB - The Role of Generative AI in Government transformation.pdfSaeed Al Dhaheri
This keynote was presented during the the 7th edition of the UAE Hackathon 2024. It highlights the role of AI and Generative AI in addressing government transformation to achieve zero government bureaucracy
This session provides a comprehensive overview of the latest updates to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly known as the Uniform Guidance) outlined in the 2 CFR 200.
With a focus on the 2024 revisions issued by the Office of Management and Budget (OMB), participants will gain insight into the key changes affecting federal grant recipients. The session will delve into critical regulatory updates, providing attendees with the knowledge and tools necessary to navigate and comply with the evolving landscape of federal grant management.
Learning Objectives:
- Understand the rationale behind the 2024 updates to the Uniform Guidance outlined in 2 CFR 200, and their implications for federal grant recipients.
- Identify the key changes and revisions introduced by the Office of Management and Budget (OMB) in the 2024 edition of 2 CFR 200.
- Gain proficiency in applying the updated regulations to ensure compliance with federal grant requirements and avoid potential audit findings.
- Develop strategies for effectively implementing the new guidelines within the grant management processes of their respective organizations, fostering efficiency and accountability in federal grant administration.
Understanding the Challenges of Street ChildrenSERUDS INDIA
By raising awareness, providing support, advocating for change, and offering assistance to children in need, individuals can play a crucial role in improving the lives of street children and helping them realize their full potential
Donate Us
https://serudsindia.org/how-individuals-can-support-street-children-in-india/
#donatefororphan, #donateforhomelesschildren, #childeducation, #ngochildeducation, #donateforeducation, #donationforchildeducation, #sponsorforpoorchild, #sponsororphanage #sponsororphanchild, #donation, #education, #charity, #educationforchild, #seruds, #kurnool, #joyhome
Jennifer Schaus and Associates hosts a complimentary webinar series on The FAR in 2024. Join the webinars on Wednesdays and Fridays at noon, eastern.
Recordings are on YouTube and the company website.
https://www.youtube.com/@jenniferschaus/videos
What is the point of small housing associations.pptxPaul Smith
Given the small scale of housing associations and their relative high cost per home what is the point of them and how do we justify their continued existance
Social Protection in the Face of Climate Change: Targeting Principles and Financing Mechanisms
1. Social Protection in the Face of Climate Change:
Targeting Principles and Financing Mechanisms
Michael R Carter1 & Sarah Janzen2
1University of California, Davis, I4 Index Insurance Innovation Initiative & NBER
2Montana State University
December 2015
Carter & Janzen Social Protection & Climate Change
2. Summary
Climate shocks are a recognized driver of poverty
Climate change, which increases the frequency & intensity of
climate shocks, threatens to make shocks an ever more
important part of the poverty dynamics
World Bank’s new Shock Waves study estimates that without
policy adaptation, climate change will increase extreme
poverty by 100 million
Against this backdrop, we ask two questions:
1 How should social protection in the face of climate change be
targeted or prioritized between the already destitute and those
who are vulnerable to becoming destitute?
2 Can public budget constraints be relaxed–and impacts on
poverty increased–by having social protection targeted at the
vulnerable financed in part by the private social protection
insurance ’premium’ contributions by its beneficiaries?
Carter & Janzen Social Protection & Climate Change
3. Summary
To gain purchase on these questions, we develop a theoretical
model of risk, accumulation and insurance inspired by pastoral
regions of East Africa where climate shocks drive poverty
Findings from the theoretical analysis are:
Using social protection dollars to issue contingent payments to
the vulnerable reduces the extent and depth of poverty relative
to a conventional cash transfers that targets only the destitute;
But, given a budget constraint, targeting the vulnerable
induces a tradeoff between the short-term and the long-term
well-being of the poor;
Can mitigate this tradeoff if the public budget is stretched by
having the vulnerable fund a portion of the premium load for
an insurance that functions as contingent social protection;
However, the ability of the vulnerable to self-finance their own
social protection is limited and their demand for insurance is
highly price elastic
Climate change-induced increases in risk can be managed–up
to a point–with insurance mechanisms.
Carter & Janzen Social Protection & Climate Change
4. Outline
1 A Dynamic Model of Risk, Vulnerability & Chronic Poverty
Core insights from a model with fixed human
capital/capabilities
Endogenous human capital formation & the inter-generational
transmission of poverty
2 Social Protection Tradeoffs: Targeting the Destitute or the
Vulnerable?
Standard social protection via means-tested in-kind transfers
targeted at the destitute
Inter-temporal poverty tradeoffs if prioritize contingent
transfers to the vulnerable over in-kind transfers
3 Reducing Tradeoffs with Partially Self-financed Insurance
Implementing vulnerability-targeted social protection via index
insurance
Budget-stretching through beneficiary co-finance of VSP
Limitations of co-finance
Carter & Janzen Social Protection & Climate Change
5. Dynamic Model of Consumption & Accumulation in the
Face of Risk
Consider an infinitely lived household dynasty d, which is
comprised of a sequence of generations g = 1,2,... & each
generation lasts for 25 years (t = 1...25).
Enjoys initial endowments of physical assets (Ad0) and human
capital (Hd0)
Assets and human capital combine to produce income using
either a low or high (fixed cost) technology
Assets are subject to random depreciation (mortality) shocks
Consumption cannot be more than cash on hand (value of
income plus assets) as no borrowing is assumed possible
Initially assume human capital fixed across generations at Hdo
Will then allow human capital to be updated for each new
generation, where updating sensitive to ’childhood’ nutrition in
the prior generation
Mathematically write fixed human capital model as:
Carter & Janzen Social Protection & Climate Change
6. Dynamic Model of Consumption & Accumulation in the
Face of Risk
max
c
−→dgt
Eθ
∞
∑
g=1
25
∑
t=1
u(cdgt)
subject to :
cdgt ≤ Adgt +f (Adgt,Hdgt)
f (Adgt,Hdgt) = Hdgt max[A
γh
dgt −F,A
γl
dgt]
Adgt+1 = f (Adgt,Hdgt)+(1−θdgt+1)Adgt −cdgt
Hdgt+1 = Hd0
Adgt ≥ 0
Carter & Janzen Social Protection & Climate Change
7. Dynamic Model (fixed human capital)
Model admits 2 possible long-run equilibria:
For each initial endowment pair (Hd0,Ad0), there is some
probability that the dynasty will end up in ’chronic poverty’ at
the low equilibrium
Fixing Hdo at an intermediate level, ¯Hd0, simulation of the
dynamic model reveals the following:
“Micawber threshold,” AM( ¯Hd0) = 14
Carter & Janzen Social Protection & Climate Change
8. Chronic Poverty Map (fixed human capital)
Across full endowment space see the following:
For fixed human capital, partitions space into: Always poor
(Hd0 < 1.05); Never poor (Hd0 > 1.35); and, Multiple
equilibrium potentially poor in between
At any point in time, define the Vulnerable as those in the
multi-color band & AM(H) as the ’Micawber Frontier’
Carter & Janzen Social Protection & Climate Change
9. Dynamic Model (fixed human capital)
Model has three key implications:
Shocks Can Have Irreversible Consequences for the Vulnerable
A shock that pushes a household below its critical asset level,
AM(Hdgt), has irreversible consequences as the household
becomes mired in chronic poverty.
Shocks Can Induce Asset Smoothing by the Vulnerable
While households near either steady state will smooth
consumption, highly vulnerable households in the
neighborhood of AM(Hdgt) will asset smooth when hit with a
shock (cut consumption to preserve capital and avoid collapse
into chronic poverty).
While asset smoothing is understandable, it potentially has
deleterious long-term consequences as consumption doubles as
investment into future human capital.
Carter & Janzen Social Protection & Climate Change
10. Nutritionally Sensitive Inter-generational Transmission of
Human Capital
Know that the ’First 1000 Days’ matter for human potential
Evidence that the poor households asset smooth by cutting
nutritional and educational investments (e.g., Hoddinott &
Kinsey, 2003, Hoddinott, 2006 & Jacoby et al. 1997)
Assume that household decisionmaker myopically ignore the
long-term consequences on children of these cuts:
discounting
information
middle age bias
present bias
Carter & Janzen Social Protection & Climate Change
11. Nutritionally Sensitive Inter-generational Transmission of
Human Capital
Consider following equation of motion for human capital:
The first term is curly brackets is the next generation’s genetic
potential expressed as a weighted average of the parent
generation’s human capital endowment and a random draw,
˜H, from the overall population capabilities distribution
(E H = 1.35 in simulations)
The second term in curly brackets is a penalty that pushes an
individual below their genetic potential if they suffered
consumption shortfalls (cdgt < z) in the first critical five years
of life.
Carter & Janzen Social Protection & Climate Change
12. Chronic Poverty Map (endogenous human capital)
Again simulate the dynamic model (assuming myopia), but
this time allowing human capital to evolve
Micawber Frontier has moved to the northeast. Initial
endowment positions in the lower right of the diagram, which
used to have some probability of escape from long-term
poverty have seen those prospects drop to zero.
Carter & Janzen Social Protection & Climate Change
13. Chronic Poverty Map (endogenous human capital)
Moreover, vulnerability has increased for a broad range of
dynasties that used to be able to rely on rapid accumulation
and asset smoothing to insure a near certain escape from
poverty.
Get further insight into process by looking how human capital
evolves across 4 generations:
Carter & Janzen Social Protection & Climate Change
14. Poverty Dynamics under a Conventional In-kind Social
Protection Policy
The inability of poor households to sustain investment in the
human capital of their children has motivated the outpouring
of ’save the children’ CCTs we now see across the world
We begin by considering a stylized social protection program
that offers in-kind transfers τdgt that are:
Means Tested: Eligible households are those for whom
cdgt < z, where z is the consumption poverty line.
Contingent Transfers: Subject to budget constraints, each
household receives the transfer needed to completely close the
poverty gap–i.e., τdgt = z −cdgt.
Government Budget Constraint: Government has a fixed social
protection budget, B, that is initially just large enough to close
the poverty gap for all destitute households. If budget becomes
insufficient, then transfers are adjusted so that all destitute
dynasties receive transfers that close an equal fraction of their
poverty gap.
Carter & Janzen Social Protection & Climate Change
15. Poverty Dynamics under a Conventional In-kind Social
Protection Policy
Mathematically, define the total social protection need at each
point in time as:
˜Bgt =
D
∑
d=1
(z −cdgt)1(z > cdgt)
and define the available budget adequacy as:
λgt =
B
˜Bgt
.
Individual transfers are thus given by:
τdgt =
z −cdgt if λgt ≥ 1
λgt(z −cdgt), otherwise
.
Carter & Janzen Social Protection & Climate Change
16. Poverty Dynamics under a Conventional In-kind Social
Protection Policy
To explore the effectiveness of these in-kind transfers, we use
our dynamic model to simulate an economy comprised of D
dynasties that are initially spread uniformly across the
physical/human capital endowment space
Assume transfers are ’unanticipated’ in sense of
Barret-Carter-Ikegami (2013)
We can then see how the transfers influence the chronic
poverty map and also gauge its effectiveness via headcount
and poverty gap measures defined as follows:
Hgt =
D
∑
d=1
1(z > cdgt)
D
Ggt =
1
DHgt
D
∑
d=1
(z −cdgt)1(z > ccgt)
Carter & Janzen Social Protection & Climate Change
17. Chronic Poverty Map under a Conventional In-kind Social
Protection Policy
Cash transfers have some impact on poverty dynamics as the
area of certain chronic poverty in the southeast corner of the
map shrinks modestly.
Vulnerability, however, remains high in certain portions of the
endowment space.
Carter & Janzen Social Protection & Climate Change
18. Poverty Dynamics under Conventional Policy
Measures based on realized post-transfer consumption
As can be seen, cash transfers initially cut into the extent and
depth of poverty.
Over time, the poverty headcount measure drifts upwards as
shocks slowly increase the number of destitute dynasties
Given the fixed budget, this increase in the number of cash
transfer-eligible households in turn pushes up the average
depth of poverty
Carter & Janzen Social Protection & Climate Change
19. Poverty Dynamics under Conventional Policy
Measures based on potential earnings
These measures are based on expected income (based on
assets)
More stable, but draw out that in-kind transfers have limited
impact on potential (except via human capital circuit)
Carter & Janzen Social Protection & Climate Change
20. Vulnerability-targeted Contingent Social Protection (VSP)
The pernicious effects of the underlying system dynamics
raises the question as to whether there can be a more effective
deployment of the given social protection budget
Consider a VSP scheme as one which is:
Vulnerability Targeted
Issues payments to the “moderately vulnerable” (non-poor
20-80% chance of collapse into destitution) when they are hit
by a shock that could push them into chronic poverty (note
that these are contingent payments)
Follows Triage Rule
Social protection resources are triaged by replacing the assets
lost by the vulnerable who have been hit by shocks, and then
transferring the residual social protection budget to the already
destitute. Analogous to restocking programs in pastoral regions
Carter & Janzen Social Protection & Climate Change
21. Vulnerability-targeted Contingent Social Protection
This asset replacement strategy reduces the upward creep
poverty based on earning capacity
But tradeoff in depth of poverty visible in poverty measures
This tradeoff emerges because triage eats up funds for in-kind
transfers
Also note instability in budget for in-kind transfers
Carter & Janzen Social Protection & Climate Change
22. Using Insurance Mechanisms to Reduce Targeting Tradeoff
In principal, contingent social protection is essentially a social
insurance contract that pays off in moments of need
As already seen, contingent social protection can break the
descent into poverty for the vulnerable
Given these large private gains from contingent social
protection, and the tradeoff implied for the poverty gap when
budget is redirected from in-kind transfers to a VSP, might it
be possible for the vulnerable to pay for their own social
protection?
To explore the willingness of the vulnerable to pay for this
protection, we explore the pattern of demand for an index
insurance contract set up to mimic a VSP
In particular, will explore an implementable index insurance
contract that pays off any time a covariant shock occurs
(idiosyncratic shocks do not trigger payments, exposing the
vulnerable to ’basis risk’)
Carter & Janzen Social Protection & Climate Change
23. Vulnerability & the Demand for Insurance
Cash-on-hand spent on insurance directly competes with
consumption and investment
Despite potential gains from insurance payouts, the
vulnerable’s willingness to purchase insurance at market prices
is modest, because their shadow price of liquidity is high
However, price elasticity of demand is high (see Janzen, Carter
and Ikegami, 2015):
Carter & Janzen Social Protection & Climate Change
24. Evaluation of Cash Transfer & Subsidized Insurance Social
Protection Scheme
Taking the same budget constraint, government first spends
money offering a 50% insurance subsidy to anyone with less
than 35 units of assets
Residual budget spent on cash transfers as before
Carter & Janzen Social Protection & Climate Change
25. Further Insights into Efficacy of Alternative Schemes
Insurance subsidy leads to a smaller & more stable on budget
than does the full cost asset replacement program
Cheaper despite ’sloppier’ targeting
Finally, see growth impacts of insurance (note have assumed
that asset transfers are unanticipated & rule out the kind of
moral hazard equilibrium found in Barret-Carter-Ikegami 2013)
Carter & Janzen Social Protection & Climate Change
26. Shocks and Climate Change
Carter & Janzen Social Protection & Climate Change
27. Shocks and Climate Change
Carter & Janzen Social Protection & Climate Change
28. Conclusion
Weather & other shocks may be an important driver of poverty
Coping strategies of the vulnerable are partially effective in the
short-term, but may fail in the longer-term as the
consequences of reduced nutrition are transmitted through to
the next generation
Logic of contingent social protection for the vulnerable is clear:
Prevent the growth of the number of destitute (which crowds
the social protection budget & increases the poverty gap)
Reduce the inter-generational transmission of poverty caused
by asset smoothing
Insurance can in principal serve at least a partially self-financed
form of social protection for the vulnerable
However, if climate change & risk become too severe, then
even vulnerability-targeted program lose their efficacy.
There are also challenges to making insurance work, but that
is a topic that merits its own discussion
Carter & Janzen Social Protection & Climate Change