Sustainable development was once thought of as primarily a concern for the poorer, so-called “developing” countries. Today, with industrial civilization spreading across the entire world, devouring ever more resources and emitting more greenhouse gases into the atmosphere, economists believe wealthy countries too are in a sense still “developing” ones. Life on Earth will not survive in its current form if lifestyle of the northern countries remains as it is and extends across the planet.
Crises in access to water are making headlines around the world. Among difficult policy pathways to respond, convincing people to change their behavior and reduce their consumption can be one of the hardest.
This post gives us a promising picture from Belén, a small town in Costa Rica. Of Belén’s 21,633 inhabitants, 99.3% have access to water service, but shortages are anticipated by 2030. Our recent study demonstrated that the government could cheaply encourage citizens to save water by enabling them to compare their consumption with that of their peers.
This is a timely lesson, as the United Nations estimates that more than two-thirds of the world’s population will live in water-stressed regions by 2025. Demographic and economic pressures make water management an increasingly urgent policy priority even in water rich areas like Latin America, home to nearly 31% of the world's freshwater resources.
While Costa Rica is relatively well-endowed with water resources, current demand virtually matches production capacity Risks of water deficits and existing shortages are heightened by overdevelopment of areas with limited water supply. To help address these challenges, we partnered with local authorities in the small municipality of Belén to conduct a randomized control trial, capturing an innovative approach that can help conserve water across the country, and in similar contexts around the world.
The project built on insights from the growing field of behavioral economics, which challenges the underlying, intentionally simplified assumption of standard models: that people make rational decisions based on a self-interested cost-benefit analysis. Behavioral economics borrows from other sciences to consider the full scope of social and psychological influences on human decision-making.
The open government agenda is most closely linked to the ambitious Goal 16 on Peace, Justice and Strong Institutions, which among other targets includes the objective of ensuring “responsive, inclusive, participatory and representative decision-making at all levels.” Though progress in this area is maddeningly difficult to quantify, evidence increasingly shows that participation, the next transparency frontier, matters to development outcomes. Making the target explicit, it is hoped, will galvanize efforts in the right direction.
This week, officials from finance ministries and leaders of the accounting profession from across Francophone Africa will gather in Dakar, Senegal from Oct 28 to 30 to chart a path forward in their countries’ development. They will focus on an area that is often ignored, but is vital to national success and prosperity: public financial management. They will focus on financial reporting, which is also known as “the way governments keep track of your money.”
This topic is important to you, citizens of the world, of the African continent. How governments manage their taxes, their borrowing, their spending, and the ways they account for these forms of transactions – income, borrowing and expenditure – are essential to economic growth, to poverty-reduction, and to ensuring that the region’s poorest can improve their lives.
In many parts of Francophone Africa, accounting practices have a lot of room to improve. In particular, financial reporting and auditing need reforms, according to ongoing research by the World Bank and others. Policy-makers do not always have accurate information about the money available to provide vital and quality public services, such as school-teachers or the construction of health clinics or roads.
Planning for the development of an unfamiliar and complex sector can be daunting. How should sector policy objectives be determined?
Which economic, accounting and taxation principles should be considered? What kinds of laws and regulations would a government need to adopt? What roles do various ministries and government agencies play in administering these laws? How do technical, environmental and social considerations fit into the scheme of things? What about the investment of resource revenues, or the potential for new industry linkages?
Yes. Intuitively to many development practitioners, the link between governance and growth is established in the literature. But, what about hard-nosed financial investors? Is there a link between governance and financial returns? Initial cutting-edge research suggests that there is a link. And investors are increasingly paying attention to governance.
According to a study conducted by Global Evolution, an asset manager that specializes in emerging and frontier market sovereign investments, shows that governance may be a significant driver of sovereign bond returns. According to Ole Hagen Jørgensen, Research Director of Global Evolution, “improvements in a country’s Environmental, Social, and Governance (ESG) scores – and particularly the “G” of governance – significantly correlate to pricing of risk, credit ratings and return generation of sovereign bond funds in emerging and frontier markets.”
On Monday, the final round of discussions will get underway in Bangkok on the indicators to measure the Sustainable Development Goals that were agreed by all UN Member states in New York last month. The agreement from New York calls for the underlying indicators to “preserve the political balance, integration and ambition” of the agenda.
Target 16.3, as agreed in New York, is to “Promote the rule of law at the national and international levels and ensure equal access to justice for all.” The proposed indicators for 16.3, to be discussed in Bangkok, do not respect the ambition of the target as they both focus on the criminal justice system. Whilst criminal justice is important to many people’s lives – in truth, only a small percentage of the population comes into direct contact with the criminal justice system. Sustainable development is about much more.
The adoption of governance focused SDG #16 and its targets is being claimed a great victory for proponents of good governance.
All UN member states approved the goal to “build effective, accountable and inclusive institutions at all levels” and committed to develop action plans to achieve targets that “substantially reduce corruption”, practice “responsive, inclusive and participatory decision making”, and “ensure public access to information.”
On the surface this appears to be a major paradigm shift from the MDGs.
A closer examination suggests that these intentions have a caveat that may weaken the supposed shift in the political economy of governance for development. All of these commitments are subject to national legislations that vary broadly in scope in terms of access to information, public participation and strength of anti-corruption policies and institutions. Moreover, governments involved have different opinions on what key concepts such as rule of law, fundamental freedoms, and accountable institutions mean.