Anshuman Saikia: Enhance investments in ecosystems for poverty reduction

Development Policy24 Feb 2010Anshuman Saikia

I consider it a privilege to be part of a debate on the future of the Netherlands government’s aid architecture. It is critical for aid-donor country governments to reflect on their development assistance performance and assess the strengths and weaknesses of their aid programmes over the last few decades, and I applaud the efforts here in this regard.

The Scientific Council for Government Policy (WRR) report recognizes that the development of countries is influenced by complex factors and any efforts at generalization can result in undermining the understanding of such complexities. However, the primary aim of aid often is to immediately improve the lives of the poor instead of creating development. It also notes that foreign investment and migrant remittances in most developing countries account for larger flows of money than aid. In response to these issues, the roadmap highlights the need for channelling aid to add value, develop integrated frameworks and build stakeholder capacity in aid-recipient countries.

However, the WRR report does not give the impression that there has been an effort to understand some of the underlying causes of poverty, such as the links between natural resources and poverty reduction. There is no reference to rights-based approaches, which can be seen to contribute to structural change more effectively than supply-led volume based transfers into the social sectors.

The report does not acknowledge the potential role of natural resources, and the ecosystem services they provide, as part of Dutch development investment strategy. These investments are likely to have far higher rates of return on investment and lead to ecologically sustainable economic growth in the long run. The Economics of Ecosystems and Biodiversity (TEEB) initiative calls upon policy makers to enhance, scale-up and embed investments in the management and restoration of ecosystems for poverty reduction and other forms of human well-being. For example, the report found that in Viet Nam, the planting of 12,000 hectares of mangroves for US$1 million saved dyke repairs to the extent of seven times this value. Similarly, investment in a protected area in Guatemala generated an annual income of US$50 million, created nearly 7000 jobs and increased family incomes manifold.

The WRR report indicates that Dutch development assistance that has been primarily focused on social sectors has not been able to make a significant dent on poverty reduction, due to bypassing investments in productive sectors such as agriculture and infrastructure. I would beg to differ; the right sort of investments in the social sector can also have highly transformative structural effects on poverty reduction and development.

The emphasis on productive sectors seems limited in perspective and does not identify the need for qualitative investments that will effect systemic transformation of these sectors, with particular emphasis on the equitable dimensions of these investments. For example, there is no differentiation on investing in production-oriented agriculture that benefits rich farmers as opposed to systems supporting the empowerment of poor and marginalized farmers. It is critical that development assistance addresses structural deficencies and enables the empowerment of the marginalized and vulnerable sections of society, to transform them into agents of change. In addition, this section does not analyse the sustainability aspects of aid and other factors that might have adverse consequences, such as detrimental effects to the natural resource base or durability of the infrastructure.

The section on the development of a professional organization identifies the need for diagnostic analysis on a country by country basis and cites an example of developing agriculture in Ethiopia by focusing on integrated production oriented approaches. However, the development of agriculture also needs to be viewed through the lens of the socially and environmentally sustainable development of the country, which brings into play issues of equity, ecological sustainability, appropriate technologies and the neutralization of any externalities, etc. This is imperative, as the longer-term development goals should not be undermined by the short-term objective of the expansion of a specific productive sector.

The need for establishing a development agency – NLAid – on similar lines to SIDA and USAID is definitely positive. It might be useful to undertake an assessment and determine the strengths and weaknesses of comparable development agencies to gain an enhanced understanding of what aspects have worked and what might need further focus to improve functioning. The focus on research is important but the purpose seems to serve only the Netherlands’ interests; it might be useful to consider how such research can influence the policies of recipient countries towards achieving sustainable development.

One concern that emerges by focusing on country-based support is whether the Dutch government will continue to address development and environmental issues that have transboundary implications, which the world will continue to grapple with increasingly as climate change impacts exemplify. This can only be addressed if the aid architecture contains aid modalities/instruments for such initiatives, which could lead to significant impacts at both the transboundary and country-specific levels.

I eagerly await the outcome of this important dialogue.