Friday, November 26, 2010

Issues for UNFCC Climate Negotiations in Cancun

Achala Chandani and Linda Siegele have published a briefing paper identifying six key issues on climate change that UNFCCC negotiations in Cancun should sort out: shared vision; adaptation; climate finance; technology transfer; reducing emissions from deforestation and degradation; and post-2012 emissions reduction targets.


We must mitigate and adapt to climate change. On this, the international community is agreed. But exactly how to do that is still up for debate. There were high hopes that last year’s UN climate talks in Copenhagen would deliver a legally binding agreement for action on climate change. But the outcome — the Copenhagen Accord — was instead a political ‘statement of intent’ that fell significantly short of expectations. Now, after a year of interim meetings and several negotiating texts, parties to the UN Framework Convention on Climate Change (UNFCCC) are gathering in Cancun, Mexico, to try again. Their success will largely depend on settling disputes — particularly between the developed and developing world — about six key issues: shared vision; adaptation; climate finance; technology transfer; reducing emissions from deforestation and degradation; and post-2012 emissions reduction targets.


There are major disagreements between developed and developing counties on many of the six issues. The authors argue that one of the major challenges will be to strike a balance between funding from developed countries and accountability from developing countries. The trust on multilateral process in reaching climate change goals will hinge on if a balanced deal is reached in Cancun. If so, then a legally binding agreement could be reached in South Africa in 2011, the authors opine.

Six Issues for UNFCCC Cancun Negotiations
Issue Developing countries want... Developed countries want...
Shared vision ...all ‘building blocks’ in the Bali Action Plan included ...a focus on the long-term global goal for emissions reductions
Adaptation ...financial compensation for the unavoidable loss and damage caused by climate change ...further study
Climate finance ...new and additional money through public funding sources ...more binding action from developing countries
Technology transfer ...easy and affordable access to patented technologies ...strong patent laws to protect intellectual property rights
Emissions reduction  targets ...to set a global target and then define individual countries’ contributions ...to set national targets that are then aggregated into a global goal

A draft negotiating text on ‘shared vision’ is ready for discussion in Cancun. It takes into account a long-term global goal for emission reductions and five building blocks identified in the Bali Action Plan. A long-term emissions reduction plan is hinged on the principle of ‘common but differentiated responsibilities’—whereby there is agreement on the common goal of effectively dealing with climate change, but with differing degrees of responsibilities for causing it.  The five building blocks in the Bali Action Plan are mitigation, adaptation, finance, technology transfer and capacity building. There already is disagreement on some issues of the shared vision between developed and developing countries. Some of the developed countries think that the shared vision should focus mainly on the long-term emission reductions goal, i.e. the numbers.

Regarding adaptation, there are four contentious issues that needs to be resolved in Cancun: defining vulnerability, adaptation finance, emissions mitigation, and compensation.

The Copenhagen Accord includes a ‘collective’ promise of US$10 billion each year until 2012, rising to US$100 billion by 2020. But, there is a large gap between the available funding and estimates of what is needed. Environmentally sound technology transfer is also a key issues and developing countries need it to not only mitigate emissions, but to better adapt to climate change.


Another potential stumbling block is the issue of intellectual property rights. Many developed countries call for strong patent laws in developing nations to ease technology transfer, but some developing countries say that strictly enforced patent rights can lead to high licence costs and obstruct the use and adaptation of technologies for local conditions.


Reducing emissions from deforestation and forest degradation (REDD) is also contentions because of unresolved issues such as rights of indigenous people and forest-dependent communities, market mechanisms to regulate emissions, and allocation of funding to forest-related activities.

The most contentious issue is about emissions reduction targets post-2012.


Developed countries, hard hit by the economic crisis, want a bottom-up approach where they can set targets that suit their national situation and aggregate them into a global goal. But many developing countries are concerned that this approach is not stringent enough — when individual targets are aggregated, they fall far short of what science says is required to avoid increasing global temperatures above the ‘tipping point’ of 2°C. So the developing world is pushing for a top-down approach that sets a global target, rooted in science, and then distributes contributions to that target based on an agreed methodology.


Thursday, November 25, 2010

G20 Seoul summit and trade financing

Marc Aubion outlines how the recent G20 meeting in Seoul has provided a mandate to multilateral institutions to address a lack of affordable trade financing being suffered by low income countries. He argues that “over the coming weeks we will see institutions such as the WTO, the World Bank, as well as others work together in order to address such obstacles, along the lines of the G20 mandate.”


  • "addressing regulatory reform pertaining specifically to emerging market and developing economies: we agreed to work on financial stability issues that of particular interest to emerging market and developing economies, and called on the FSB, IMF and World Bank to develop and report fore the next Summit. These issues could include: (....); trade finance."
  • "To support LIC capacity to trade (...), we note our commitment to (..) support measure to increase the availability of trade finance in developing countries, particularly LICs. In this respect, we also agree to monitor and to assess trade finance programs in support of developing countries, in particular their coverage and impact on LICs, and to evaluate the impact of regulatory regimes on trade finance."


Gender preference for children in Nepal


Gender discrimination and son preference are key demographic features of South Asia and are well documented for India. However, gender bias and sex preference in Nepal have received little attention.

1996 Nepal Demographic and Health Survey data on ever-married women aged 15–49 who did not desire any more children were used to investigate levels of gender bias and sex preference. The level of contraceptive use and the total fertility rate in the absence of sex preference were estimated, and logistic regression was performed to analyze the association between socioeconomic and demographic variables and stopping childbearing after the birth of a son.

Commonly used indicators of gender bias, such as sex ratio at birth and sex-specific immunization rates, do not suggest a high level of gender discrimination in Nepal. However, sex preference decreases contraceptive use by 24% and increases the total fertility rate by more than 6%. Women’s contraceptive use, exposure to the media, parity, last birth interval, educational level and religion are linked to stopping childbearing after the birth of a boy, as is the ethnic makeup of the local area.

The level of sex preference in Nepal is substantial. Sex preference is an important barrier to the increase of contraceptive use and decline of fertility in the country; its impact will be greater as desired family size declines


Here is the full paper published in 2003. I think the author should have done disaggregated analysis of rural and urban areas. The results are quite reflective of urban areas. There still is a strong son bias in the rural areas. Also, isn’t this “Commonly used indicators of gender bias, such as sex ratio at birth and sex-specific immunization rates, do not suggest a high level of gender discrimination in Nepal.” and “The level of sex preference in Nepal is substantial.”—i.e. result and conclusion—contradictory?

Wednesday, November 24, 2010

Political Economy of Nepal (1971-2009)

How did the economy perform during different political eras in Nepal? To have a general idea, I took averages of five phases in Nepal’s political economy and compared performance on key macroeconomic indicators. I divided the period between 1970 and 2009 into five phases: pre-reformed panchayat (import substitution era); reformed panchayat (structural adjustment era); constructional monarchy (economic liberalization and opening of economy era); Maoist insurgency (reform+no development reforms era); post revolution (post monarchy era). No surprise that almost all the economic indicators got worse during the Maoist insurgency.

GDP growth rate was higher even during the import substituting era than during the Maoist insurgency, which has cost the nation dearly and pushed development backwards by almost a decade.

Among other notable features: gross domestic savings are decreasing during post monarchy era; consumption expenditure is increasing; trade has slightly decreased during post monarchy era (thanks to loss of exports and high imports); exports have plunged since the Maoist insurgency began; imports is increasing; negative external balance is widening; inflation rate is still high; FDI has decreased; value added of all sectors except services sector is decreasing; similar trend with value added growth of the sectors; revenue is increasing; tax revenue on exports is decreasing; remittances are increasing; and total debt servicing has slightly declined. Overall, it is a rocky ride, irrespective of pre-reformed, reformed, conflict, or post-conflict eras. That said, growth is higher during non-conflict eras.

Economic performance during different political eras
NPL_WDI_ADB_ES_2010-11-18 Pre- reformed panchayat Reformed panchayat  Constitutional monarchy Maoist insurgency Post revolution
1971-1979 1980-1991 1992-1996 1997-2006 2007-2009
GDP growth (annual %) 2.60 4.33 4.99 3.91 4.45
GDP per capita growth (annual %) 0.21 1.87 2.41 1.60 2.55
GDP per capita, PPP (constant 2005 international $) -- 645.35 789.84 911.43 1018.18
 
Labor force, total -- 6708100 8465625 10649103 12727225
Economically active population in agriculture  (number) -- 6108083 7339200 9210800 11170000
Employment in agriculture (% of total employment) -- 81.20 -- 70.90 --
Employment in industry (% of total employment) -- 2.70 -- 11.60 --
Employment in services (% of total employment) -- 14.70 -- 17.05 --
Unemployment, total (% of total labor force) -- 4.50 8.80 --
Population ages 15-64 (% of total) 54.81 54.34 54.65 56.12 58.83
Population growth (annual %) 2.35 2.39 2.49 2.25 1.84
Poverty gap at $1.25 a day (PPP) (%) -- 31.27 26.65 19.71 --
Poverty gap at $2 a day (PPP) (%) -- 52.42 46.78 37.82 --
 
Gross national expenditure (% of GDP) 103.81 109.35 110.98 111.67 120.18
Gross domestic savings (% of GDP) 8.72 10.44 12.63 12.19 9.69
Gross fixed capital formation (% of GDP) 14.76 18.10 21.22 20.13 20.91
 
Final consumption expenditure, etc. (% of GDP) 91.28 89.56 87.37 87.81 90.31
 
Gross savings (% of GDP) 16.67 15.18 17.42 24.15 35.60
Gross capital formation (% of GDP) 12.53 19.79 23.62 23.86 29.88
 
Gross capital formation (annual % growth) -- -- -- 4.76 6.28
Gross fixed capital formation (annual % growth) -- -- -- 3.76 4.61
 
Trade (% of GDP) 20.91 32.09 51.45 50.82 47.40
Merchandise trade (% of GDP) 17.21 22.70 36.67 38.47 36.09
Exports of goods and services (% of GDP) 8.55 11.37 20.24 19.58 13.61
Imports of goods and services (% of GDP) 12.36 20.72 31.22 31.24 33.79
External balance on goods and services (% of GDP) -3.81 -9.35 -10.98 -11.67 -20.18
 
Exports of goods and services (annual % growth) -- -- -- -4.00 11.86
Imports of goods and services (annual % growth) -- -- -- 1.37 9.61
 
Inflation, consumer prices (annual %) 6.99 11.01 9.97 5.38 8.50
 
Foreign direct investment, net inflows (% of GDP) 0.01 0.03 0.42 0.13 0.12
 
Agriculture, value added (% of GDP) 67.45 54.92 42.68 38.73 33.68
Industry, value added (% of GDP) 9.95 14.63 21.69 20.03 16.57
Manufacturing, value added (% of GDP) 4.16 5.44 9.27 8.87 7.37
Services, etc., value added (% of GDP) 22.60 30.45 35.63 41.25 49.75
 
Agriculture, value added (annual % growth) 0.81 3.65 2.00 3.37 2.62
Industry, value added (annual % growth) 7.03 7.79 8.58 3.93 2.52
Manufacturing, value added (annual % growth) 2.97 8.67 12.31 2.81 0.75
Services, etc., value added (annual % growth) 4.77 4.07 6.34 4.41 5.58
 
Revenue, excluding grants (% of GDP) -- 8.43 9.47 10.77 13.06
Grants and other revenue (% of revenue) -- 33.16 30.66 30.19 30.29
Tax revenue (% of GDP) -- 6.81 7.71 8.81 11.01
Taxes on exports (% of tax revenue) -- 0.70 1.50 1.32 0.71
Taxes on goods and services (% of revenue) -- 29.96 33.12 30.97 34.18
Customs and other import duties (% of tax revenue) -- 36.58 32.73 30.40 22.20
Other taxes (% of revenue) -- 4.45 4.00 3.81 5.87
Total tax rate (% of profit) -- -- -- 32.50 35.23
 
(1993-1996)
Workers' remittances and compensation of employees, received (% of GDP) 1.25 7.43 20.77
Workers' remittances and compensation of employees, received (current US$) 51481605 539613005 2482203667
 
Net ODA received (% of central government expense) -- -- -- 37.03 --
 
Total reserves in months of imports 8.53 4.80 5.73 6.70 --
Total reserves minus gold (current US$) 122250278 187018754 591802611 1045777786 --
 
Net capital account (BoP, current US$) 22949834 107120279
 
Present value of external debt (current US$) -- -- -- 2252000000 2119601891
Debt service on external debt, total (TDS, current US$) 3236556 33477917 74539200 107542200 154611000
Total debt service (% of exports of goods, services and income) 3.31 8.77 7.82 6.36 4.02
Total debt service (% of GNI) 0.21 1.07 1.86 1.75 1.34
Interest payments (% of revenue) -- -- 12.50 9.63 5.42
 

No specific purpose to write this blog post. Sorry for a long post with too many numbers!!Just curious about Nepal’s political economy!