Thirty Million Dollars, a Little Bit of Carbon, and a Lot of Hot Air

Thirty Million Dollars, a Little Bit of Carbon, and a Lot of Hot Air

SSIR Opinion & Analysis

"Vestergaard Frandsen makes an ingenious water filter that's too expensive for the people who need it." Fast Company, April 2011

Verstergaard Frandsen, maker of fine mosquito nets and the mostly useless LifeStraw Personal, has announced plans to give away a million of their LifeStraw Family water filters to households in western Kenya. CEO Mikkel Vestergaard Frandsen will invest $30 million of his own money in the project—known as Carbon for Water—but according to Fast Company, "he's not worried about losing out—because for each LifeStraw he donates, he's going to be making money."

How's that work? Though the magic of carbon credits, of course! Back to Fast Company: "Kenyans boil their water to eliminate waterborne diseases, using wood fires. Those fires generate a large amount of carbon, and eliminating the need to boil water means fewer emissions from Kenya. Because they're providing the means to reduce emissions, Vestergaard Frandsen earns carbon credits for each LifeStraw donated. He will then turn around and sell those credits to companies in countries that have carbon caps and exchanges." And these ain't plain ol' vanilla carbon credits, either: "Because the project is based in Kenya and has significant humanitarian and health co-benefits, these credits can be sold for a premium."

This scheme is so wrong on so many levels that I don't know whether to laugh or cry.

First, this is a bogus application of carbon credits: People in western Kenya, by and large, don't boil their water. I've made numerous trips there and have talked to any number of far more qualified people working in the region. One of those is Jeff Albert at Aquaya, who says, "Boiling prevalence is likely very low throughout Africa, but we have some actual data from western Kenya in particular. What we found was that out of 400 randomly selected households in the study, only about a quarter of the respondents reported boiling their drinking water with any frequency, and I suspect that even that number was inflated by courtesy bias (the natural tendency to tell the visitor what you think would make them happy)." The notion that you're going to prevent lots of carbon going into the atmosphere by distributing water filters is ridiculous, and anyone involved in this charade should be ashamed of themselves—especially the Gold Standard Foundation, which certified it.

Second, there is little evidence that LifeStraw Family water filters reduce diarrheal disease under real-world community conditions. There is exactly one rigorous study looking at health impacts. Tom Clasen, an excellent researcher, and his team, did a 12-month randomized trial in the Congo where they gave filters to 240 households: They did not find a statistically significant reduction in diarrheal illness. Moreover, at 12 months, 24 percent of households didn't use them at all, and only 56 percent understood how to use them properly (it's not that simple). That's just one study, of course, and perhaps subsequent trials will paint a rosier picture, but it certainly doesn't justify the distribution of a million of these things.

Third, the LifeStraw Family water filter is just too damn expensive, and it has to be replaced every three years. There are only two ways that a product like this can get to real scale: the market or free government distribution. The wholesale cost of the device from VF is about $25; the real cost to a customer, if you include distribution and marketing, would be more like $50 to $70. Put another way, you'd be asking a smallholder farmer to spend a quarter of her annual income on a water filter. That's not going to happen, nor will governments pass out a device this expensive. Even if the LifeStraw Family did achieve the claimed carbon and health impacts, you'd have to repeat a $30 million give-way every three years.

Projects like Carbon for Water make a mockery of the effort to prevent carbon emissions, and as a physician, it's especially depressing to see a loopy funding scheme paired with a lousy public health solution. The social sector has got to escape this pattern of bogus idea, hyperventilating media, and eventual, invisible failure. This idea should have been dead on arrival, and I hope that Mr. Vestergaard Frandsen gets to experience the joy of a $30 million donation rather than a profit on his investment. I wish that his company would stick to the manufacture and distribution of their excellent and affordable mosquito nets.

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Kevin Starr directs The Mulago Foundation and the Rainer Arnhold Fellows Program. He also practices rural emergency medicine part time.

 

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Memoirs about Africa

Memoirs about Africa

AFRICA IS A COUNTRY

Timothy Burke, Swarthmore history professor–he's written a book on commodity culture in Zimbabwe–and blogger, has a great post about 'memoirs from Africa.' Basically he was asked to prepare a year-long reading of books about Africa for school alumni. Burke decided to only include memoirs or first-person perspective accounts from the last 30 years or so. He acknowledges that he's end up with "… a surplus of certain kinds of books that I find tedious because they follow such a strong template and are so driven by market fads: memoirs of white women who grew up on African farms that followed on Alexandra Fuller's great memoir of life in Rhodesia and now memoirs of child soldiers and survivors of Darfur." Anyway, his list is interesting for what it says about who publishes memoirs in Africa and what's available outside the continent. Some of the titles that made it onto his initial list are familiar, but there are also some surprises. Here are samples with Burke's mostly spot-on comments:

Alexandra Fuller's Don't Let's Go to the Dogs Tonight: "It's so distinctive in stylistic terms, and so unsentimental and unapologetic, that it still unsettles a kind of complacently do-gooder liberal expectation about what reading about Africa or white settlers ought to be like."

Samson Kambalu's The Jive Talker: An Artist's Genesis: "Great fun, fascinating, and a real cure-all for the endless parade of memoirs by Africans about their experiences of war, genocide and violence."

Saidiya Hartman, Lose Your Mother: "There are other travel accounts by African-Americans that I like, but some are out of print (Eddy Harris' Native Stranger) and some I don't like (like Keith Richburg's Out of America) but Hartman's is really distinctive and fiercely resists compression or reductionism."

Aidan Hartley's The Zanzibar Chest:  "I actually like this less for the early more standard colonial-nostalgia stuff on white settlers and more for Hartley's honest accounts of his work as a journalist and rootless traveller and the kind of scruffy hedonism that he got caught up in in between covering war and genocide."

William Kamkwamba's The Boy Who Harnessed the Wind: " God, this is so well-meaning and sincere that I feel a bit like I've just watched a marathon of The Waltons when I read it. But again, the last thing I want is a year full of genocide and war."

Anyway, you can read the rest of the list and the back and forth between Burke and his blog readers here.

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SINGER: When Prevention is Better than Relief

SINGER: When Prevention is Better than Relief

Project Syndicate - A World of Ideas - the highest quality opinion ...

SINGER: When Prevention is Better than Relief People donate hundreds of millions of dollars to help people after a disaster – even after a disaster in a wealthy country like Japan – but are unwilling to invest the same amount to save lives before a predictable disaster strikes. But we should be guided by the best estimates of the chance that prevention will save lives, and by the cost of saving those lives.

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Who is making you uncomfortable?

Who is making you uncomfortable?

Seth's Blog

Who looks you in the eye and says, "given your skills, you could do better..."

"You have enough leverage to really make a difference."

"What would happen if you doubled the amount you donated?"

"Could you set aside the fear and go faster?"

"I know you're holding back..."

It takes love and kindness and confidence to bring the truth to a friend you care about. If you're insulating yourself from these conversations, who benefits?

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What’s a Big Government?

What's a Big Government?

The Baseline Scenario

By James Kwak

One thing that all parties seem to be able to agree on is that big government is bad. It was President Clinton, after all, who said, "The era of big government is over." And the current Republican budget-slashing wave seems motivated by the idea that our government is too big.

But what is the size of government, anyway?* When a typical anti-government person thinks of government, she probably has in mind the EPA, the Consumer Financial Protection Bureau, the "jack-booted government thugs" at the the Bureau of Alcohol, Tobacco, and Firearms, OSHA, and all those government agencies that prevent businesses and individuals from getting on with their lives. The idea here is that government intervention in the free market makes the economy less efficient and therefore reduces aggregate societal welfare.

Another big part of the government is defense spending. President Reagan, the patron saint of "small government," wanted to roll back the regulatory state, but he very emphatically wanted more defense spending in order to "fight" the Cold War. Traditionally, conservatives have exempted defense spending from their budget-cutting axes, although to their credit some (though not Paul Ryan) have recently come around to the view that reducing the deficit will require cuts in defense as well.

Then there are entitlement programs, which are mainly composed of Social Security and health care (primarily Medicare and Medicaid). Social Security is unequivocally a government program (so is Medicare, "keep your government hands off my Medicare" notwithstanding), but it isn't government in the same sense as the EPA. Social Security is a mandatory retirement insurance program with a modest redistribution component, so it affects when people have cash and who has that cash, but it doesn't otherwise change economic behavior.

So where am I going with this? First of all, when you look at the data, it's not even clear that government has been getting bigger at all. This chart shows total government receipts and outlays for the past forty years and the next ten years. (All data are from the CBO's most recent Budget and Economic Outlook.)

If you look at the red line, what you see is that "government" appears to be getting smaller in the 1980s and 1990s, then starts growing again in the first decade of the 2000s (by FY 2007 it's already as large as it has been since FY 1994), spikes upward in FY 2009-2010 because of automatic stabilizers and (secondarily) the fiscal stimulus, and is projected to grow modestly after the stimulus subsides. So the "big government" story only makes sense, if at all, from FY 2002.

What's happened since then? This chart shows discretionary spending divided into non-defense and defense spending.

On the defense side, what you see is the buildup of the Reagan years, the peace dividend of the 1990s, and, starting in FY 2002, the increase in spending for Afghanistan and Iraq. On the non-defense side, you see Reagan's successful efforts to make government smaller, but since then non-defense discretionary spending has basically been constant, with bumps every time there is a recession.

For the period from 2001 to 2008, government in the EPA/ATF/OSHA sense barely budged. The vast majority of the total growth in outlays was due to increased defense spending (about 50 percent) and to Medicare (about 35 percent). The 2009-2010 spike in outlays was due partly to the stimulus, which erodes over time, partly to a big increase in defense spending, and mainly to increases in automatic stabilizers and Social Security (perhaps because of people exiting the workforce due to the recession).

When you look forward, the future growth of government outlays is entirely due to entitlements (and interest on the debt). Everything else that government does is getting smaller: in 2021, the CBO projects that defense spending will be at its lowest level since 2002 and non-defense discretionary spending will be at its lowest level in more than fifty years.**

So what can we conclude from this?

First, if you think of government as regulation of people's ordinary lives, that government has been getting smaller since the 1980s and continues to get smaller. In that sense, Reagan won, and conservatives who continue to complain about big government don't realize that they won already.

Second, if your conception of government includes national security, then you probably don't have too much to complain about. We spent a lot in the 1980s; spent a lot less in the 1990s after winning the Cold War; and spent more in the past decade for the wars in Afghanistan and Iraq. I personally don't think that we should have invaded Iraq, but if you take that as given (and that was very much the doing of Bush II and Cheney), then the increased spending has been justified.

So the only sense in which we have "big government" that has been getting bigger is entitlements. And the key question here is: should increased entitlement spending count as bigger government? Here I say: not really. Obviously entitlements like Social Security are government programs, and Medicare is more intrusive into the private sector than Social Security. But if we accept Social Security and Medicare at some size, is the fact that their outlays are growing evidence that the government is getting bigger in any meaningful sense?

For Social Security, the answer is clearly no. Social Security's outlays to the individual beneficiary have remained constant, and so the amount by which those outlays or the promise of those outlays changes peoples' and firms' behavior is constant. The implications of a potential payroll tax increase are more complicated, but since those taxes haven't increased in decades, it's hard to say that government has been getting bigger because of payroll tax increases.

Medicare is also more complicated, but the basic principle is simple. Say in year 0 health care costs $100. In year 1 health care costs $110 (assume zero inflation). If Medicare outlays are 10 percent higher in year 1, is that bigger government? The first-order answer is no, because Medicare is buying the same amount of health care it was in year 0; so if we as a nation decided that Medicare was buying the appropriate amount of health care, then it is still buying the appropriate amount of health care. When you dig a little deeper things get more complicated because there should be some price elasticity of demand for health care, so if prices go up by 10 percent we as a society probably want to buy a little less than 10 percent more health care — maybe 8 percent more, since health care is pretty inelastic. So the point there is that Medicare should evolve toward better cost containment, which is basically the philosophy behind part of the Affordable Care Act.

Now, none of this is to deny that there is a problem out there somewhere in the future, since entitlement spending is currently projected to grow faster than revenues . . . forever. But the reason for that has nothing to do with "big government" in the classical right-wing sense of government bureaucrats telling freedom-loving Americans what to do. There are two basic reasons. First, our population is getting older, and we decided decades ago to create certain programs to help old people. Second, health care costs are going up rapidly. (And five minutes of comparative research will tell you that the best way to control health care costs is more government, in the form of a national health insurance program. The problem we have here is that the private sector determines the cost of health care but the national government is committed to buy a certain amount of it).

Of course, conservatives are jumping on the projected entitlement deficits to demand further cuts in the part of government they hate, mainly discretionary non-defense spending. But that "solution" has nothing to do with the problem we face.

* This post is vaguely motivated by the book I'm currently reading: The Age of Deficits: Presidents and Unbalanced Budgets from Jimmy Carter to George W. Bush, by Iwan Morgan. It goes into detail on all of the major budget negotiations of the past thirty-five years. (One reason I've been blogging less is that I'm trying to read more and write less.)

** I know there are problems with the CBO's baseline projection (the CBO knows it, too), but those problems are much bigger in areas other than discretionary spending. The big whoppers in the baseline are things like letting tax cuts expire, not patching the AMT, and not passing an annual fix to Medicare payment schedules.

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China puts its mark on Malawi

China puts its mark on Malawi

Global development news, comment and analysis | guardian.co.uk

China's presence in Malawi has been growing steadily since the two countries established diplomatic ties in 2007 and signed a trade agreement

Driving through Malawi's capital, Lilongwe, it is difficult to miss the imposing building under construction in the city centre. It's the country's first five-star hotel, $90m worth of well-appointed rooms, a state-of-the-art conference centre and 14 opulent presidential suites.

The hotel is being built by the Shanghai Construction Company, a Chinese firm, and is one of numerous projects funded in line with a pledge of $260m of concessionary loans, grants and aid from China to Malawi to support development, including infrastructure.

At a ceremony marking the completion of the main building and conference centre, China's ambassador to Malawi, Pan Hejun, said he expects that the project will be completed by the end of the year.

"This will attract more and more foreign tourists to Malawi and enable Malawi to host international conferences such as the AU [African Union] summit," said Pan.

Chinese construction companies have been busy in Malawi. The parliament now operates from a grand new building that was opened in June 2010. That project cost around $41m.

And this month Pan announced China will assist the Malawi government to build a university of science and technology in the southern district of Thyolo, which, he said, will be ready in just under two years.

"The university, which will accommodate more than 3,000 students with advanced facilities, will be one of the best universities in south-eastern Africa, and will make great contributions to the national development of Malawi," said Pan.

Relations growing steadily

Chinese construction companies are also building a secondary school in Thyolo, and a 100km road between the northern districts of Karonga and Chitipa. Beijing has also promised to build a China-Africa Friendship school in Lilongwe, establish solar and biogas pilot projects, and set up an agricultural technology demonstration centre.

China's presence in Malawi has been growing steadily since the two countries established diplomatic ties in December 2007, and Malawi abandoned its links to Taiwan after 41 years. A memorandum of understanding covering industry, trade and investment was signed between the two countries in May 2008, committing China to help in increasing the productive capacity of Malawi in tobacco, cotton, mining, forestry, fertiliser production and in processing hides and skins.

A 2010 report from Malawi's ministry of trade indicates that the value of trade between the two countries has doubled since 2007, reaching $100m in 2010. It is rapid growth, though still dwarfed by trade with South Africa, which accounts for just over 40% of Malawi's total trade of $3.2bn.

Malawi's president, Bingu wa Mutharika, has declared himself satisfied with his government's relations with China. In a speech this month at the laying of foundations for the planned university of science and technology, Mutharika said the Chinese projects come with "no strings attached". "The People's Republic of China has demonstrated that they are good friends of Malawi," he said.

Some problems

This year, Chinese nationals working in Malawi in construction or as traders have featured in a number of unwelcome headlines. In January, police at the international airport caught Zhang Xiang-quian trying to smuggle 3.5kg of ivory bangles, curios and necklaces out of the country. The same day, Jennifer Li was arrested when she tried to bribe police to release Zhang. The two – who both held senior positions with the Shanghai Construction Company – were fined and deported.

In February, the owner of the China Superscope Media Company, Ning Naixing, was apprehended at the airport with 1.5kg of ivory. Police assert the ivory in both cases originates from elephants poached in Malawi. The ministry of tourism issued a statement on 11 February warning against trafficking of ivory.

Chinese traders – who have established a firm foothold in the wholesale and retail sectors in Malawi – have also run foul of the law. Yani Huang, a businesswoman, was arrested and fined for violating foreign exchange controls in November 2010, when she tried to leave the country with an undeclared $18,350. A few months earlier, another Chinese national was arrested trying to take $144,000 out of the country.

Malawi is experiencing acute shortages of foreign exchange, leading to strict controls on the export of hard currency. This complicates life for Chinese traders who want to repatriate profits.

Local traders are also anxious about competition from the new arrivals. "Some are setting up small-scale businesses and competing with indigenous traders. They are making life difficult for us," Maddy Gawani, a trader who runs a clothes shop in Lilongwe, told IPS. She said there are big Chinese-owned wholesale shops in Lilongwe's Old Town, a less affluent area of the capital.

"Many items in the Chinese shops are cheap but not very durable. A lot of people now shop from the Chinese, who bring in many things in bulk. We are not happy as local traders," said Gawani.

Relations between the Chinese traders and their clients are sometimes tense as well. Last year, Chen Bo-wet was arrested in the lake district of Mangochi after he allegedly forced a woman he suspected of stealing from his shop to undress in the presence of other customers. Nothing was found on the woman, and he was arrested after complaints.

Worst fears unrealised

When the memorandum of understanding on trade and investment was signed, local groups feared it would have a negative impact on the country.

At the time, Mavuto Bamusi, the network co-ordinator of the Human Rights Consultative Committee, which promotes human rights, including economic rights, in Malawi, said the evidence was that Chinese investment had harmed the interest of poor people in some countries.

"We know that the Chinese usually bring in their own workers when they invest in poor countries and that they have been accused of dumping cheap goods on such countries' markets. Civil society will be quick to raise an alarm if such malpractices happen here," Bamusi told IPS.

But the Malawi Congress of Trade Unions has been keeping a close eye on the situation. The MCTU secretary general, Robert Mkwezalamba, told IPS that when they first arrived in the country, Chinese construction companies either paid their Malawian workers below the minimum wage or paid them in kind – in the form of clothing, bicycles, maize flour and sugar. In some cases, workers were not provided with protective gear.

"They were paying the Malawi workers just about $13 per month when the country's acceptable minimum wage is $20. Some Chinese factories were locking up the workers [in their workplace] overnight," said Mkwezalamba.

But, he said, companies have responded to the MCTU's objections. "We have been asking them to change and they are accepting our demands," he told IPS. "We are also happy that the construction companies are transferring advanced skills to local staff."

• China
• Malawi

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