The 21st Century climate challenge

Act guarantees 100 days of employment at theminimum wage rate for every rural householdin India. 41 The costs are estimated at US$10billion annually, or around 1 percent of GDP. 42Even relatively small cash transfers canmake a difference. In Ethiopia, the ProductiveSafety Net Programme (PSNP) provides peoplewith transfers of up to US$4 a month in cash orfood. Designed to overcome the uncertaintiesassociated with annual food aid appeals, theprogramme provides some 5 million people witha predictable source of income and employment(box 4.2). Apart from reducing vulnerability topoor nutrition during episodes of drought, thetransfers have enabled poor households to buildup their productive assets and invest in healthand education.Cash transfers. Floods, droughts and otherclimate shocks can force poor households towithdraw children from school to increaselabour supply, or to cut spending on healthand nutrition. Such coping strategies narrowfuture opportunities, locking households intolow human development traps. Cash transferslinked to clear human development goals canweaken the transmission mechanisms thatconvert risk into vulnerability. They can alsocreate incentives for the development of humancapabilities. Here are some examples:• In Mexico the Oportunidades programmetargets the poorest municipalities fortransfers conditional on parents keeping theirchildren in school and attending periodichealth checks. In 2003 Progresa supported4 million families at an annual cost ofUS$2.2 billion. Coverage under theprogramme has been found to reduce by23 percent the probability that children aged12–14 will leave school and enter the labourmarket in the event of drought, unemploymentamong parents or other shocks. 43• In Brazil a number of cash transferprogrammes have been integrated into asingle umbrella scheme—the Bolsa FamíliaProgramme (BFP)—which now coversabout 46 million people, around onequarterof the population. The BFP, whichrepresents a legal entitlement for eligiblehouseholds, has reduced vulnerability andsupported advances in human developmentacross a broad front, enabling householdsto manage shocks without withdrawingchildren from school (box 4.3).• Programmes in Central America have alsobuilt resilience against shocks. Since 2000,Nicaragua’s Red de Protección Social (RPS)has provided cash transfers conditionalon children attending school and healthclinic checks. Randomized evaluationstudies have shown that the RPS hassuccessfully protected households from arange of shocks, including a slump in coffeeprices. Expenditure levels in beneficiaryhouseholds stayed constant in 2001 whilea slump in coffee prices reduced income innon-beneficiary households by 22 percent.In Honduras, there is evidence that cashtransfers have protected school attendanceand child health during agricultural shocksthrough its Programa de AsignaciónFamiliar (PRAF). 44• In Zambia the Kalomo pilot project providesUS$6 a month (US$8 for those with children)to the poorest 10 percent of households,sufficient to meet the costs of a daily mealand preclude absolute poverty. Increasedhousehold investment and improved childnutrition and school attendance havealready been observed among beneficiaries.Additionally, some households have savedsome of the cash and have invested in seedand small animals. The project aims to reachover 9,000 households (58,000 people) bythe end of 2007 and is being consideredfor national upscaling at a projected cost ofUS$16 million (0.2 percent of GDP or 1.6percent of current aid flows) per year. 45Crisis-related transfers. Climate shocks havethe potential to lock smallholder agricultureinto downward spirals that undermine theprospects for human development. When adrought or a flood wipes out a crop, peopleare left facing immediate nutritional threats.But farmers are also left without the seeds, orthe cash to purchase seeds and other inputs, fornext season’s crop. This increases the prospectof reduced income and employment, and henceof continuing dependence on food aid. ThisCash transfers linked to clearhuman development goalscan weaken the transmissionmechanisms that convertrisk into vulnerability4Adapting to the inevitable: national action and international cooperationHUMAN DEVELOPMENT REPORT 2007/2008 179