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Financial Sector

The Case for an Extraordinary Windfall Tax on the Financial Sector

Jamus Lim's picture

Fixing bankers' compensation is all the rage these days. The latest salvo in the ongoing tussle is the December joint proposal by France and Britain to impose a windfall tax on the bonuses of bankers, along with the crisis "responsibility fee" suggested by the United States.

'I Explained It to My Daughter, and She Understood'

Tom Grubisich's picture

If Sergio Margulis didn't grow up to be an environmental economist, he could have, no doubt, become an equally successful stand-up comic.  Who else could get some laughs when trying to explain the econometrics of climate-change adaptation?

The occasion was the recent World Bank-sponsored panel discussion on the draft report "The Costs to Developing Countries of Adapting to Climate Change," of which Margulis was co-author.  Of course, Margulis' primary intention wasn't to get his audience to laugh, but to understand a complex but increasingly important issue that's going to occupy global attention for perhaps the rest of the century as developing and developed countries try to put a ceiling on more global warming.

Margulis, Lead Environmental Economist with the World Bank's Environment Department, was joined at the panel by report co-author Urvashi Narain, Senior Environmental Economist at the World Bank; Otaviano Canuto, Vice President and Head of the Poverty Reduction and Economic Management (PREM) Network at the World Bank, and Warren Evans, Director of the World Bank's Environment Department, who moderated the standing-room-only event.

Here's the video of the discussion.  (Sorry we couldn't embed it.)

Climate Threats Hit Low-Income Countries Hardest

Tom Grubisich's picture

As the table shows, many low-income countries face the most climate threats, as identified by the World Bank.  A number of the most-threatened countries are also in the Least Developed Countries category, and six of them are in "fragile situations," also as identified by the World Bank.

Among the hundred finalists in the recent DM2009 competition, 26 of them came from most-threatened countries.  Bangladesh, which ranked first among most threatened, had five entries, but no competition winners.

Pledges of Adaptation Collaboration Need a Close Watch

Tom Grubisich's picture

Many developing countries are busy planning to adapt to climate change that is already heavily impacting their people, natural resources, and economies, especially agriculture.   But what actually works in particular countries, and at what cost, are often questions that National Adaptation Plans of Action (NAPAs) and other strategies don't adequately answer.
 
To find answers that can be tailored to the conditions of individual developing countries -- there are 130 -- the World Bank is leading a pilot study of climate adaptation in Bangladesh, Bolivia, Ethiopia, Ghana, Mozambique, Samoa, and Vietnam.

The concept note says "overall oversight of study progress" will include, besides the six national governments, "civil society representation."  But some DM2009 finalists say they see little evidence, based on their own experiences, that governments in their countries are serious about collaboration with the private sector.

Successful climate adaptation depends on public-private collaboration, especially on the community level, where so much adaptation integrated with economic development has to take place.  NGOs with strong community roots -- like many of the DM finalists -- can also help close the capacity gap that hampers public programming in developing countries.

DM2009 Finalists and Other NGOs Must Tell Their Story

Tom Grubisich's picture

With global warming heating up, will non-governmental organizations be major players in forging and implementing climate adaptation as developing countries struggle to cope with the adverse effects of climate change on their people, resources, and economies?

The answer should be a no-brainer yes.  Many NGOs -- pre-eminently those that populate the DM2009 finalist roster -- have strong local roots.  Community connections are an essential ingredient of effective climate adaptation action.  But many DM2009 finalists express frustrations in their attempts to collaborate with governments in their countries.  Those frustrations have been detailed in this blog -- here, here, here, and here, among other places.

Will There Be a Battle Over Climate Change Funds in Developing World?

Tom Grubisich's picture

We now know the price of climate adaptation in developing countries –- US$75-100 billion per year between 2010 and 2050.  The recently published costs were explained by their World Bank estimators in a panel discussion at the Bank on Tuesday.  But who, exactly, will do the adapting?

Most of the developing countries that will be hardest hit by climate change are poor (20) and some of them are classified as fragile (six).  Poor –- and especially fragile – countries are already hard pressed to effectively implement current economic growth strategies because their governments don’t have adequate capacity in launching projects (e.g., local ownership, rigorous monitoring and evaluation, focus on results, feedback mechanism).   Multilateral development banks, like the World Bank, are increasingly turning to non-governmental organizations to close the capacity gap.

Climate-adaptation spending – if it’s fully funded – would equal what’s now spent on “official development assistance” (ODA).  Besides, climate adaptation, because it's unexplored terrain in many respects, will require a lot of learning, knowledge, and innovation.  So how would the doubling of development funding be matched by capacity?  The new cost-of-adaptation study says, very confidently: “For all sectors, adaptation costs include the costs of planned, public policy adaptation measures and exclude the costs of private adaptation.” 

Does that mean that NGOs wouldn’t get a share of the billions of dollars in annual climate-adaptation funds that are expected to flow from developed to developing countries in coming years as part of the recent Copenhagen “accord”?  Not necessarily.  After Tuesday’s panel, I asked the chief author of the World Bank cost study, Sergio Margulis, if his numbers covered only climate adaptation carried out by national and regional governments, or might they be a “hybrid” that included NGOs. “A hybrid,” he said.

For Social Entrepreneurs, All Expenses Paid

Tom Grubisich's picture

If you're a social entrepreneur, the Global Social Benefit Incubator (GSBI) program wants to consider you for its 2010 all-expenses-paid course on how to create a business plan for a sustainable, scalable project that will connect with donors and other investors.  The deadline for applying for the mostly distance-learning program is Friday, Jan. 15.

Development Marketplace finalists especially will want to consider applying to GSBI.  Leonardo Rosario of the Philippines, a DM2009 finalist winner, received this invitation from GSBI:

“Dear Leonardo,  Because of your recognition by World Bank’s Development Marketplace, it is my pleasure to invite your application for the 2010 Global Social Benefit Incubator (GSBI™).

Nnaemeka Ikegwuonu of Nigeria, who was also a winner at DM2009, says: "As an alumni of this program I highly recommend it for social entrepreneurs and other interested development professionals."

 

The first step in the application is a "value proposition" exercise where potential participants describe their organization and "articulate why the target customer/beneficiary will 'choose to buy' or 'consume' your product or service offering(s) over other alternatives.  (Note: the alternative may be 'non-consumption')."

 

Don’t Blame Mother Nature

Otaviano Canuto's picture

by Otaviano Canuto

As my World Bank colleague Milan Brahmbhatt and I observed in a recent note, primary commodity exports remain crucial for most developing countries. When one takes a simple average across developing countries (i.e. attributing each country an equal weight) for 2003-07, commodities still show up as accounting for over 60 percent of merchandise exports, with half of the group featuring a commodity export dependence of over 70 percent. Chart 1 shows different degrees of primary commodity dependence across regions.


Source: Brahmbhatt & Canuto (2010)

World Bank Showcases DM2009

Tom Grubisich's picture

Development Marketplace got marquee treatment from the World Bank website this week.  It was featured in the top spot on the Bank's homepage, with a photo of Alejandro Agumedo, director of the Association ANDES project, and researcher Katrina Quisumbing King of the winning Peru finalist project Adapting Native Andean Crops for Food Security to Indigenous Peoples.  The World Bank package included, besides the main story, profiles of three past finalist winners and their subsequent successes.

 

What's Next for Non-Winning DM Finalists? An Answer From One

Mohammad Abu Musa's picture

Climate change has uprooted 2 million people in the coastal belt of Bangladesh.  They can't afford to be a direct buyer of the refugee resettlement service and economic recovery project that brought me to DM2009 as a finalist (but wasn't a winning entry).  Some third-party economic buyer is required on humanitarian grounds. In the absence of such a buyer, my project got bogged down in frustration, but, gradually, we're trying to recover.

Some other of the 72 non-winning DM finalists where the target beneficiaries cannot afford to be the direct economic buyer may have similar stories.

DM2009 finalists have detailed in this DM blog -- here and here -- the problems of NGOs trying to form climate-adaptation partnerships with national governments.  Too often, collaboration doesn't happen.
 
The World Bank can help make collaboration happen by exercising its convening leadership -- with international donors and national governments as they prepare their climate- adaptation programs.  “Just because they don’t get a prize from us doesn't necessarily mean they wither away,” said Aleem Walji, the World Bank Institute's Innovation Practice Manager.  “Indeed, we know that many finalists are able to leverage the Development Marketplace experience to get other support. I think we have a responsibility to try and support this entire community of finalists.”

Let there be a “Finalists72 Campaign” to turn all ideas into action to save the planet.

(Photo credit of Bangladeshi woman in search of drinking water after cyclone Aila on May 26, 2009: Abir Abdullah/Oxfam/Flickr.)


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