Rob D. van den Berg: ‘catalytic’ projects and approaches

Development Policy05 Mar 2010Rob van den Berg

Many have already paid compliments to the quality of the analysis in the report – I fully agree and I also feel that it provides a very solid basis for further discussions. However, many have also pointed out that the conclusions and recommendations are weak and not fully supported by the analysis. Notwithstanding the quality of the analysis, I would argue that it is not fully satisfactory on two counts: first it does not properly identify the role of aid and second it does not come to a full understanding of public global goods. These two are interrelated. On the role of aid: the debate in Development and Change in 2001 and 2002, initiated by a challenging article from Jan Pronk, is largely ignored. It led to the publication ‘Catalysing development? A debate on aid’, published by Blackwell in 2004. This debate tackled the disappointing direct results of aid head-on, and many experts argued that aid should in fact have a catalytic role, providing a spark that would initiate home-grown developments, rather than be directly responsible for economic growth and poverty reduction. However, the calls for direct results have not ceased, as seen in moves towards results-based management, managing for results and the evidence movement in evaluation and politics. This was no doubt also due to the fact that measuring the catalytic effect of aid remained a challenge, moreover a challenge that nobody really appeared interested in. Let me first deal with the catalytic role, and then turn to global public goods.

The Global Environment Facility (GEF) is a financial instrument created to deal with global environment problems, following the guidance of the multilateral environmental agreements on climate change, biodiversity, chemicals and desertification. With a funding level between 0.4 and 0.6 percent of annual Official Development Aid, it can only play a marginal role in supporting countries to tackle their environmental problems. This was recognized from the start (in 1991) and thus we see the ‘catalytic role’ of the GEF enshrined in its principles, right from the beginning. Partly this was supposed to happen through co-funding, which has in general been very successful in the GEF, with ratios on average of more than 1 to 4: in other words, every dollar generates four more. In addition, a catalytic approach was adopted by the GEF in which we (the GEF’s independent evaluation office) have been able to measure and evaluate. This catalytic approach draws on three principles:

  1. countries need to adopt policies and regulatory frameworks that provide an enabling environment to tackle environmental problems and issues;
  2. the GEF then supports innovation, technology transfer, the removal of market barriers and changes in natural resources management at local levels;
  3. approaches and innovations that have shown to be successful are then upgraded to national level through larger scale support or investments.

Our evaluations show that this approach is truly catalytic. GEF support in general does not continue beyond four or five years, whereas the changes in society, the economy, and nature take much longer. The real change and impact is happening in the countries themselves after the GEF has left. And this change is beyond the control of the GEF and beyond its influence. The most spectacular example we evaluated concerned a technology transfer project in China, which made more environmentally friendly technologies available to local builders in rural communities. The project itself aimed to demonstrate the new technology and then replicate it to 100 local businesses. We verified that the actual replication rate was 1 to 118. On top of that, we found that the technology was spreading like wildfire and that outside of the reach of the project, an estimated 500 additional businesses took up the technology. However, we could not verify this. There was, after all, no link to the project and the businesses had not received any funding or technological support. They also refused our evaluators access for what they felt was their own independent decision to go for this new technology. This is the kind of change that all of us would like to see, whether in education, in health care, in poverty alleviation or in economic development.

So our aim should be to emulate successful ‘catalytic’ projects and approaches. But then we need to realize that the success will not be ours, but it will be the result of independent decisions by people, communities and businesses in countries that we support. We need to see that our dollar or euro grant disappears, as it did in the example with the replication rate of 1 to 500, rather than that there is a 1 on 1 link between grant and result, which is basically what the results-based management and evidence movement want us to do. It is my feeling that if you asked the taxpayer whether he or she would like to see a 1 on 1 success, or a 1 to 500 replication rate in which the money was only used to ‘set things in motion’ before others take over, the taxpayer would go for the second option.

However, the WRR report seems to opt for 1 on 1 success. And to ensure this, it proposes to defragment aid and concentrate it in a few countries, because then the money will become more influential and success can be guaranteed on a larger scale, and it can be measured and attributed. However, I feel that on this issue the report does not fully see the consequences of the public goods approach that it advocates.

It could be argued that the notion of public goods is foundational to government and public service. After all, if markets and private initiatives take care of an area of concern, the government could, in principle, drop this and focus its efforts on other issues. Much of the ideological debate, on what governments should or could do, focuses on what markets and private initiatives can actually do, and on which issues they fail on. This starts with security, where the nation state usually has the monopoly on violence – any violence not undertaken by the police or the army is usually outlawed. This is not the end of the debate: there is a long history of misuse of this monopoly and it is by no means easy to set up a system in which the monopoly is properly executed and overseen. However, the point is that in principle governments take over where markets and private initiatives fail.

Public expenditure should thus be directed toward local, national and global public goods. Each country can identify its own mechanisms for this and will choose different solutions for how it gathers funds and spends them. On the global level, this is not yet happening, although a beginning system of taxes and resulting funds is emerging. In climate change, for example, Clean Development Projects are taxed and the resulting funds are available for the new Adaptation Fund to support developing countries in tackling the adverse effects of climate change. This is a public good beyond doubt: nowhere in any product on any market internationally are the adverse effects of climate change taken into account in the pricing of the product. This is because the costly adverse effects will occur long after the product has been produced and sold. Furthermore, they will not be related to the specific product, but to the overall impact of a way of producing goods and marketing them.

The WRR sees a role for global public goods as the third principle of aid, after poverty alleviation and economic development. I feel that this misunderstands that public spending on poverty, disease, lack of education, migration, security, and human rights should all focus on the public good side of these issues. And if we do not care about them internationally, why should we care about them nationally? If we are not willing to help and support human beings on the other side of the world, why bother about human beings in our own country? This should, of course, be a universal appeal, not one just made to the population of the Netherlands. It should be a move towards international collaboration rather than towards action on your own. In this light, I disagree with the WRR that the Netherlands should drop the only international norm for how much money each nation should set aside according to its capacity (0.7 percent of its GDP) and I disagree with the recommendation to concentrate aid on a few countries. That is like Zuid-Holland going into Oost-Groningen and only supporting a few villages. We do not want that in the Netherlands and we should not want it in the world.

The second area in which WRR did not sufficiently research the issues is on the costs of global public goods. We (the GEF evaluation office) have gathered reputable calculations for the costs associated with the specific issues which the GEF confronts: climate change, loss of biodiversity, reducing chemicals in our environment and ensuring better ‘services’ from our environment (such as clean water, air to breathe and food produced in a sustainable way). We concluded that what is needed is an order of magnitude higher than what is currently available through international cooperation (including and beyond the GEF). The WRR does not calculate anything, but it states that for public goods, more money is always needed than is available. I consider that a platitude, one which does not allow us to address priorities in the right way. We need to take calculations of the costs seriously and also look for possible solutions. After all, not all of these costs need to be public…if we follow the catalytic model, we can generate sufficient funds to tackle these problems, on a scale that will make a difference.

Unfortunately, this is currently not the situation. This is partly due to underfunding of the problems and partly due to the fact that the catalytic approach is not followed. Let me give another example from the GEF. The Philippines has been supported by the GEF to halt deforestation. The GEF has enabled the Philippines to set up a regulatory framework and it has provided support to the Philippines to reduce deforestation in its protected areas. When we evaluated progress in 2007, we could verify that deforestation had stopped in the protected areas. Unfortunately, we could also see that deforestation outside of the protected areas was continuing. In our evaluation, we noted that the Philippines is facing a problem of compliance with its environmental regulations. We can conclude two things from this: funding support to the Philippines was not sufficient to tackle the non-protected areas, and a catalytic approach to ensure compliance was lacking in the GEF portfolio.

Much has been said and written about the danger of giving too much money, and about aid dependency. This is a serious problem and it needs to be tackled in each and every country where it occurs. Overall, however, major global problems like poverty, security, economic development and environmental services are underfunded, leading to a lack of results. In Dutch, this can be expressed well by saying that much of what we do, is ‘dweilen met de kraan open’ (lapping up the water while the tap is still running). While we are confronted with a major financial and economic crisis, and a looming environmental one, we should not return to old models, reduce our support or concentrate it on a few countries. Furthermore, our focus should not be on increasing Dutch effectiveness through more concentrated and focused aid, nor on how we can increase Dutch professionalism (which we always need to do in any case), but we need to focus on how the Netherlands can more effectively support the effectiveness of others, and increase their professional capacity to deal with the global problems they are facing and need to solve.

This post also appeared on the Dutch version of this blog ‘Minder pretentie, meer ambitie’