Adaptation finance: Why not just give it to the poor?

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14 October 2010

A new book argues that the best approach to reducing poverty is the simplest: giving money to the poor. In Just Give Money to the Poor, Hanlon, Barrientos and Hulme argue that cash transfers put money directly in the hands of those that need it, and that the poor are both willing and capable of using the money to benefit themselves and their families. Given the uncertainties and pitfalls of spending money on climate change adaptation, could we do worse than simply giving money to the poor themselves?

The regular transfer of small but significant amounts of money directly into the hands of the poor (cash transfers) has become a popular tool in the global fight against poverty. And according to Hanlon, Barrientos and Hulme, it has been remarkably successful. Their arguments are not mere speculation, nor idle populism — they are based on a massive amount of research on the increasing number of cash transfer programmes that have been implemented in developing countries, currently benefiting an estimated 110 million families. Celebrated examples include Bolsa Familia in Brazil, which has been credited with contributing significantly to an unprecedented fall in income inequality in the last decade.

These programmes are by no means identical: some are aimed at specific groups within the poor, such as women or the elderly, and some require recipients to fulfil certain conditions, such as sending children to school and attending regular health checks. Although choices about how to use the money vary depending on local contexts, the crucial issue is that the poor people themselves are making these decisions, rather than economists, governments or NGOs. Not only that, cash transfers can stimulate local economies because the poor tend to buy a large amount of their products locally.

So how is this relevant to climate change?

The link between cash transfers and adaptation may not be immediately obvious, and debates about social policy are too often divorced from those about floods, droughts and temperature rises. But there is an emerging consensus that the impacts of climate change will fall disproportionately on the world´s poor, whose lack of resources makes them particularly vulnerable. Recognition of this reality is becoming increasingly mainstream, with $100 billion a year being promised to vulnerable countries by 2020 in the Copenhagen Accord.

But adaptation won´t be easy. Human societies have long adapted to changes in their environments, but the challenge posed by anthropogenic climate change is likely to be unprecedented. And for that reason, no one is quite sure how to do it. One issue is uncertainty: although general tendencies of climate change can be predicted, modelling does not allow for simple decisions to be made at a local or even national level.

Beyond that are the issues of power relations and ownership: who should decide how adaptation money should be spent? Currently, many less developed countries are up in arms over efforts by the World Bank to control much of the funding. The history of aid and development projects tells us that finance can easily get whittled away to pay consultants and an aid industry that Hanlon et al. accuse of “thriving on complexity and mysticism”. But even if governments have full ownership of adaptation funds, this can also be problematic — after all, national and local governments often fail to act in the interests of those most vulnerable to climate change.

Step in cash transfers

Cash transfers cannot reduce vulnerability to climate change directly, and it is unlikely that the poor will use them specifically to prepare for climate related events. Given this, there cannot be a 100 per cent guarantee that cash transfers will always reduce vulnerability to climate change. In some cases, it might even be the case that the poor make decisions that increase their long-term vulnerability. But by putting more assets and resources in the hands of the poor, and by contributing to higher levels of nutrition, education, health and investment, cash transfers will increase the capacity of the poor to adapt to climate change. This form of ‘adaptation’ will not be perfect but it may well be preferable to those that aim to predict climate related phenomena.

This is not to say that all adaptation finance should be directed towards cash transfers. Hanlon, Barrientos and Hulme agree that they need to be accompanied by parallel improvements in services (health, education etc.), which should be the responsibility of governments. In the long run, the poor will also need to become better informed about the threats posed by climate change. Moreover, cash transfers do not address broader adaptation issues such as the need for better water management or urban planning — these are clearly the responsibility of governments, working in tandem with civil society organisations representing the poor. But given the problems of conventional notions of adaptation, perhaps one of the best ways of reducing the drivers of vulnerability is the simplest of all: just giving money to the poor.

(An alternative version of this article has been posted on The Guardian's blog, Poverty Matters.

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