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Nov 23, 2015

Cash Transfers: Helping Households Adapt to a Changing Climate

With 17 new Sustainable Development Goals (SDGs) recently announced, the United Nations member states will again put eradicating poverty, in all it’s dimensions, at the heart of the global agenda.This time the focus is on sustainability, with environmental degradation and a changing climate being recognised as two of the greatest threats to meeting UN aspirations.

This year, it is estimated that global temperatures are set to rise one degrees centigrade above pre-industrial averages for the first time, halfway towards the two degree boundary that was agreed by parties at the 2010 United Nations Framework Convention on Climate Change (UNFCCC). The next UNFCCC will occur in Paris in December this year and securing a high-ambition climate agreement will be key to achieving the SDGs and vice versa. Even with affirmative action the effect of a global climate deal won’t be truly felt until after 2030.[1]

Those whose livelihoods depend on the areas most vulnerable to climate change and with fewest resources will be disproportionately affected and less able to adapt to the effects. It is vital that governments put in place the social policies required in order to protect those most at risk. [1,2] The key to this is to connect the economic, social and environmental aspects of development absent in the Millennium Development Goals. The 2013 UN Report on the post-2015 development agenda states that ‘environment and development were never properly brought together. People were working hard – but often separately – on interlinked problems’.[1] Cash transfers are an effective, well-evidenced, scalable, cost-effective method to combine the above and help the most vulnerable households adapt to the effects of a changing climate before 2030.

This photograph was taken in 2012, when 13.3 million people in Kenya, Ethiopia, Djibouti and Somalia, once again faced loss and suffering due to a drought, the worst in 60 years, in the region.

Cash transfers are direct, regular and predictable non-contributory payments that raise and smooth incomes. The goal is to reduce income poverty and vulnerability.[3] They can either be unconditional, in that they do not require recipients to engage in any specific activity (for example, to visit primary health care facilities) or conditional. These programmes have already provided well-evidenced interventions in a number of middle income and some low-income countries for general indicators in health, education and poverty reduction.[4]

Many of these indicators help to meet the existing needs of the poor and therefore assist households to adapt to climate change as they help families to survive in times of crisis. This includes many responses to stress that weaken the long term ability of families to deal with future challenges and improve their livelihoods long-term, especially for those living in rural areas. This might include selling productive assets like farm equipment and fertilisers or taking on high interest debt.[4,5]

For example, Ethiopia’s Productive Safety Net System (PSNP) protects assets, such as food and livestock, from being sold to provide for immediate needs, and from the early harvesting of crops.[6] In many cases, families have even been able to invest in their long-term livelihoods further increasing their stability and adaptive capacity: after a cash transfer program in Zambia, Goat ownership by families in Zambia’s Komolo district went from 8.5% to 41.7%, the number of households investing in enterprise quadrupled and the average investment doubled after a cash transfer programme aimed at increasing entrepreneurship was introduced.[7]

Climate change interventions rely on complex models that are location specific and have high rates of uncertainty which makes them difficult to plan and scale.[4,11] Cash transfers do not require an understanding of these complexities, either by recipients or coordinating agencies, as the decision on spending lies at the household level.

The level of control given to households regarding their spending, sometimes with no conditions, raises concerns around an increase in the consumption of temptation good such as alcohol and cigarettes, however most evaluations have reported no significant increase in spending in these areas.[12] Social protection programmes are also often criticized for dissuading wage earning by working adults, however cash transfers are evidenced to lead to reduced child labor and at most modest disincentives to work in some cases.[12]

Some of the best examples of cash transfer programmes originate in Latin America and were designed with strong monitoring and evaluation structures in place, which has lead to robust learning and expansion4. For example, Mexico’s Oportunidades Conditional Cash Transfer Programme reduced the poverty of beneficiaries by 30% and that of the poorest of the poor by 45% (by some measures). This suggests that the most important reductions in poverty are taking place among the poorest households[8,9], which makes cash transfer an excellent candidate for targeting the poorest of the poor.

Cash transfer programmes can be easily adapted to meet local needs and capacities, or target specific indicators important to organizations and governments. [4] In addition, well-documented monitoring and evaluation data have lead to the building of excellent frameworks for implementation. Cash transfer has been shown to be no more expensive than other interventions with similar outcomes, though like-to-like comparison of cost-efficiency is exceptionally difficult to measure; however, generally cash transfers have lower administrative and overhead fees.[10]

The success of the SDGs is intertwined with the progression of climate change. We must think about the effect that climate change will have on the poorest and most vulnerable within society who are least able to adapt and help households adapt by 2030.Cash transfers are a no-regret social policy with a range of indirect outcomes, and few, if any negative consequences, that can be used to achieve this. As some of the most well evidenced, easy to adopt and scalable interventions cash transfer programmes have great potential. However they are no panacea, and require multi-level sustainable development of the economy, society and environment to be ultimately effective.

References

  1. DAVIES, M., A. Barrientos, S. Devereux, S. Hickey, R. Sabates-Wheeler, B. Guenther, and I. Macauslan. UN, 2013:A New Global Partnership: Eradicate Poverty and Transform Economies Through Sustainable Development. The Report of the High-Level Panel of Eminent Persons on the Post-2015 Development Agenda. 2013
  2. FIELD C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L. White (eds.). IPCC 2010:Climate Change: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA, 2010.
  3. DAVIES.M. DFID Social Transfers Evaluation Summary Report. IDS Research Reports, 2009: 1–36. doi: 10.1111/j.2040-0217.2009.00060_2.x
  4. WOOD. R. G. Is there a role for cash transfers in climate change adaptation? International Conference: “Social Protection for Social Justice”. Institute of Development studies, UK, 13-15 April 2011.
  5. PARRY. M.L, O.F.Canziani, J.P. van der Linden and C.E. Hanson (eds). Contribution of Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on climate Change, Cambridge University Press, Cambridge, UK and NYC, USA, 2007.
  6. SLATER, R. S. Ashley, M. Tefera, M. Buta and D. Esubalew. Ethiopia Productive Safety Net Programme (PSNP): PSNP Policy, Programme and Institutional Linkages. London: Overseas Development Institute, 2006.
  7. SCHURING. E.Social cash transfers in Zambia; A work in progress. [online] [Accessed 30/08/2015]Available from: http://www.academia.edu/3103799/Cashing_in_-_How_cash_transfers_shore_up_Zambian_households_affected_by_HIV
  8. NIGENA. G and L.M. González-Robledo. Lessons Offered by Latin American Cash Transfer Programmes: Mexico’s Oportunidades and Nicaragua’s SPN. Implications for African countries. Centre for Social and Economic Analysis. Mexican Health Foundation. June 2005 (paper) DiFID Health Systems Resource Centre
  9. SKOUFIAS E. and B. McClafferty. Is Progresa working? Summary of the Results of an evaluation by IFPRI. Food Consumption and Nutrition Division International Food Policy Research Institute No. 118 Washington, DC 2000.
  10. GOVERNMENT AND SOCIAL DEVELOP MENT RESOURCE CENTRE Helpdesk Research Report; Financing and Cost-effectiveness of Cash Transfer Schemes. August 2010.
  11. MORTON, J.F. The impact of climate change on smallholder and subsistence agriculture. Proceedings of the National Academy of Sciences in the United States of America, Vol. 104, No.50 (Dec.11, 2007) pp.19680-19685
  12. GIVEWELL. Givedirectly Report. [online]. [Accessed 29/08/2015] Available from: http://www.givewell.org/international/top-charities/give-directly