Safety Nets and Social Safety Nets and Social Protection: Protection:

Program Options and Design Program Options and Design ConsiderationsConsiderations

IPRCC-IFPRI International ConferenceIPRCC-IFPRI International ConferencePOVERTY REDUCTION STRATEGY IN POVERTY REDUCTION STRATEGY IN

THE NEW MILLENNIUMTHE NEW MILLENNIUMEmerging Issues, Experiences and LessonsEmerging Issues, Experiences and Lessons

23–24 May 2006, Beijing, China23–24 May 2006, Beijing, China

Dr. Michelle AdatoDr. Michelle Adato

Food Consumption and Nutrition DivisionFood Consumption and Nutrition Division

IFPRIIFPRI

Outline of PresentationOutline of Presentation

Key concepts Key concepts Why safety nets?Why safety nets? Program optionsProgram options Considerations in program choice and Considerations in program choice and

designdesign Information gaps and areas for Information gaps and areas for

researchresearch

Key concepts: Safety nets and Key concepts: Safety nets and

social protectionsocial protection

Nets, ropes, and laddersNets, ropes, and ladders Social assistance, social insurance Social assistance, social insurance Protective (relief); preventive (avert Protective (relief); preventive (avert

deprivation); promotional (enhance deprivation); promotional (enhance incomes & capabilities)incomes & capabilities)

Family, community, employer, NGO, Family, community, employer, NGO, statestate

Why public safety nets?Why public safety nets? Erosion of private safety nets (family, community, landlord, Erosion of private safety nets (family, community, landlord,

employer)employer) Economic change & changing social structureEconomic change & changing social structure Shocks: repeated, multiple & affecting manyShocks: repeated, multiple & affecting many

Climate, illness, conflictClimate, illness, conflict Reduction of formal employmentReduction of formal employment

Reduce impact of shocks and new trendsReduce impact of shocks and new trends Climate, economy, conflictClimate, economy, conflict

Protect people who suffer from chronic poverty or vulnerability Protect people who suffer from chronic poverty or vulnerability due to due to Economic conditionsEconomic conditions Natural resource endowmentsNatural resource endowments AgeAge DisabilityDisability DiscriminationDiscrimination

Why Safety Nets? Why Safety Nets? (continued)(continued)

Promote growthPromote growthTemporary shocks => long-term Temporary shocks => long-term

consequencesconsequencesHuman capital investment => Human capital investment =>

productivity =>growthproductivity =>growthReduced expenditures on social Reduced expenditures on social

problemsproblems Political stabilityPolitical stability Ethics Ethics

Short-term buffer or long-Short-term buffer or long-term development?term development?

Immediate income or food transferImmediate income or food transfer Investment in human capitalInvestment in human capital

Health, nutrition, education, skillsHealth, nutrition, education, skills Investment in productive activitiesInvestment in productive activities

Productive InfrastructureProductive InfrastructureLand or environmental improvementLand or environmental improvementAgricultureAgricultureSmall enterprisesSmall enterprises

Investment in careInvestment in careFor children; ill peopleFor children; ill people

Program options 1: InsuranceProgram options 1: Insurance

Types:Types:Health; unemployment; Injury/disability; life; Health; unemployment; Injury/disability; life;

old-age; assetsold-age; assets Life cycle or event-triggeredLife cycle or event-triggered Allocation of contributionsAllocation of contributions

From government, private sector, From government, private sector, beneficiariesbeneficiaries

Informal sectorInformal sector

Program options 2: Price Program options 2: Price subsidies and Voucherssubsidies and Vouchers

Price subsidiesPrice subsidiesFood, utilities, housing, servicesFood, utilities, housing, servicesOptions: targeted; rationed; Options: targeted; rationed;

seasonal seasonal Food stamps or vouchersFood stamps or vouchers School vouchers or scholarshipsSchool vouchers or scholarships

Program Options 3: Cash Program Options 3: Cash TransfersTransfers

UnconditionalUnconditional Direct food or cash transfer as basic safety net; no Direct food or cash transfer as basic safety net; no

obligationsobligations ConditionalConditional

E.g. on participation in services: usually health, E.g. on participation in services: usually health, nutrition and educationnutrition and education

Can be designed to achieve varied and Can be designed to achieve varied and integrated objectives, e.g. Maternal and Child integrated objectives, e.g. Maternal and Child Health, Early Childhood DevelopmentHealth, Early Childhood Development

Often includes adult educationOften includes adult education Can have work obligationsCan have work obligations Usually requires upgrading of services and Usually requires upgrading of services and

infrastructureinfrastructure

Cash Transfers (continued)Cash Transfers (continued)

Considerations in conditioningConsiderations in conditioningWhat is the problem?What is the problem?

Demand or supply constraints?Demand or supply constraints? Need for incentivesNeed for incentives Condition on what?Condition on what?

Public attitudes toward social Public attitudes toward social assistanceassistance

Labor market and disincentivesLabor market and disincentivesUrgency of social assistanceUrgency of social assistanceBarriers to participation in servicesBarriers to participation in servicesCostsCosts

Program options 4: In-kind Program options 4: In-kind transferstransfers

Food distributionFood distributionUnconditionalUnconditional

Emergencies, conflict, severe povertyEmergencies, conflict, severe poverty

ConditionalConditional on training in income generating activities, on training in income generating activities,

nutrition, literacy, numeracy, savings accounts; nutrition, literacy, numeracy, savings accounts; on school attendance; on workon school attendance; on work

In-kind Transfers (continued)In-kind Transfers (continued)

School feedingSchool feedingMeals or snacksMeals or snacks

Direct feedingDirect feeding Maternal and Child Health & NutritionMaternal and Child Health & Nutrition

Combines services with take-home food Combines services with take-home food rationsrations

Program options 5: Program options 5: Micronutrient strategiesMicronutrient strategies

SupplementationSupplementation Fortification of foodFortification of food Dietary diversity and combinationsDietary diversity and combinations

Program options 6: Program options 6: Productive activitiesProductive activities

Support for agricultureSupport for agriculture Package of seeds, inputs, credit, trainingPackage of seeds, inputs, credit, training

Public worksPublic works Transfer (cash or food?)Transfer (cash or food?) Productive infrastructure (cost-effectiveness?)Productive infrastructure (cost-effectiveness?) Skills training (current income & second round Skills training (current income & second round

effects)effects) Considerations: gender, seasonality, labor marketsConsiderations: gender, seasonality, labor markets

MicrofinanceMicrofinance Role of public and private sectorsRole of public and private sectors Individual or group-basedIndividual or group-based Usually cash but can include in-kind loansUsually cash but can include in-kind loans

Considerations in program choice & Considerations in program choice & design 1: Objectives & Capacitiesdesign 1: Objectives & Capacities

Priority problems and objectivesPriority problems and objectives E.g. income poverty; malnutrition (type?); education deficits (for E.g. income poverty; malnutrition (type?); education deficits (for

whom?) whom?) Ex-ante protection (insurance) or ex-post remedy (relief or reversal of Ex-ante protection (insurance) or ex-post remedy (relief or reversal of

trend)?trend)? Short-term or continuous?Short-term or continuous?

Budgets Budgets Time horizon of problemTime horizon of problem

Service availability or potential for increaseService availability or potential for increase Administrative complexity and capacityAdministrative complexity and capacity

Technical; information systems; governanceTechnical; information systems; governance Centralized, decentralized or mixed? Centralized, decentralized or mixed?

FinancingFinancing Design and implementationDesign and implementation Role of community participation in targeting, oversight, implementationRole of community participation in targeting, oversight, implementation Comparative advantages in capacities and knowledgeComparative advantages in capacities and knowledge

Considerations 2: TargetingConsiderations 2: Targeting TargetingTargeting

What target groups prioritized and why? Life cycle approachWhat target groups prioritized and why? Life cycle approach Conceptual basis for targetingConceptual basis for targeting

Saves budgetary resources, and avoids more taxationSaves budgetary resources, and avoids more taxation Maximizing welfare impact, equity, fairnessMaximizing welfare impact, equity, fairness Political supportPolitical support

Mechanisms for targetingMechanisms for targeting Geographic (marginality indexes)Geographic (marginality indexes) Individual/household survey (e.g. income; consumption; HH Individual/household survey (e.g. income; consumption; HH

composition; education; assets) –collected at home or composition; education; assets) –collected at home or centercenter

Categorical or demographic targeting  Categorical or demographic targeting   Self-targetingSelf-targeting Community-based targetingCommunity-based targeting Costs?Costs?

Errors of exclusion and inclusionErrors of exclusion and inclusion Measurement errorsMeasurement errors PoliticsPolitics Equality and social relationsEquality and social relations Appeals processAppeals process

Targeting: Some general findingsTargeting: Some general findings Out of 122 antipoverty interventions in 47 Out of 122 antipoverty interventions in 47

countries (Coady, Grosh and Hoddinott 2004)countries (Coady, Grosh and Hoddinott 2004) Median program transfers 25% more to the poor Median program transfers 25% more to the poor

than universal or random allocationthan universal or random allocation 25% of programs delivered less to the poor than 25% of programs delivered less to the poor than

universal or randomuniversal or random Best performance: Means testing, geographic and Best performance: Means testing, geographic and

self-selection based on work requirementself-selection based on work requirement Progressive but more variable: Proxy-means test, Progressive but more variable: Proxy-means test,

community-based, and demographic-young childrencommunity-based, and demographic-young children More limited potential: Demographic-elderly, food More limited potential: Demographic-elderly, food

subsidies and community biddingsubsidies and community bidding However, no single best targeting methodHowever, no single best targeting method

Only 20% of outcomes attributed to method choiceOnly 20% of outcomes attributed to method choice Implementation more important!Implementation more important!

Considerations 3: Costs and Considerations 3: Costs and FinancingFinancing

Cost effectiveness (in achieving Cost effectiveness (in achieving objectives)objectives)

FinancingFinancingWhat is the size of the budget?What is the size of the budget?Can it be increased? Economic and Can it be increased? Economic and

political considerationspolitical considerationsWho finances?Who finances?

Donor or treasury?Donor or treasury? Who has the resources?Who has the resources?

– Central, regional or local government?Central, regional or local government?– Public-private partnershipsPublic-private partnerships– Beneficiary contributionsBeneficiary contributions

Availability of in-kind resources? Availability of in-kind resources?

Considerations 4: Level of Considerations 4: Level of benefitsbenefits

Poverty levels and poverty linePoverty levels and poverty line Cost of livingCost of living # of HH members# of HH members Market wage ratesMarket wage rates Opportunity costs of participation in Opportunity costs of participation in

servicesservices BudgetBudget CoverageCoverage

ConsiderationsConsiderations 5: Economic and Social 5: Economic and Social factorsfactors

Functionality of marketsFunctionality of markets Structure of economyStructure of economy

Size of formal & informal sectorsSize of formal & informal sectors MigrationMigration Labor market conditionsLabor market conditions

Labor surplus or shortagesLabor surplus or shortages Will transfers reduce incentives for labor market Will transfers reduce incentives for labor market

participation?participation? Effect on wage rates?Effect on wage rates? Design features that reduce disincentives (size of transfer, Design features that reduce disincentives (size of transfer,

conditioning)conditioning) Household structure and social relations, Household structure and social relations,

including gender relationsincluding gender relations Cultural practicesCultural practices Depth of poverty, skills, individual capacities Depth of poverty, skills, individual capacities

E.g. microfinance vs. HC approachE.g. microfinance vs. HC approach

Considerations 6: Considerations 6: GovernanceGovernance

Legal frameworkLegal framework Discretionary or entitlement?Discretionary or entitlement?

IntegrityIntegrity IncentivesIncentives ConflictConflict

Special needsSpecial needs Capacities and interest of private sector and Capacities and interest of private sector and

NGOs NGOs Potential for state partnershipsPotential for state partnerships

Considerations 7: OtherConsiderations 7: Other

Health and illnessHealth and illness HIV/AIDS, otherHIV/AIDS, other

Natural disastersNatural disasters Response and anticipationResponse and anticipation

Coordination and synergies between Coordination and synergies between programsprograms E.g. Geographical; seasonalityE.g. Geographical; seasonality

Complementarity of servicesComplementarity of services E.g. Food distribution with skills training (VLDP, E.g. Food distribution with skills training (VLDP,

Bangladesh); day care and Early Childhood Bangladesh); day care and Early Childhood Development (ICDS India); public works and home-Development (ICDS India); public works and home-based care of ECD (South Africa)based care of ECD (South Africa)

Considerations 7: EvaluationConsiderations 7: Evaluation

Why evaluate?Why evaluate?Effectiveness in achieving objectivesEffectiveness in achieving objectivesEfficiency of resource allocationEfficiency of resource allocation

How often?How often? How financed?How financed? Control groups?Control groups? What to evaluateWhat to evaluate

Changes in key indicators (quantitative)Changes in key indicators (quantitative)Changes in social dynamics (qualitative)Changes in social dynamics (qualitative)OperationsOperationsEffectiveness of behavior change Effectiveness of behavior change

componentscomponents

Food versus cash for schooling in Food versus cash for schooling in Bangladesh: Impact on school Bangladesh: Impact on school

enrollmentenrollment (A. Ahmed)(A. Ahmed)

Both FFE and PES Both FFE and PES encourage poor encourage poor families to enroll their families to enroll their children in primary children in primary school. school.

The rate of increase in The rate of increase in enrollment was greater enrollment was greater for (FFE (18.7%) than for (FFE (18.7%) than for PES (13.7%)for PES (13.7%)

18.7

13.7

0

2

4

6

8

10

12

14

16

18

20

FFE (food) PES (cash)

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Information gaps & areas for Information gaps & areas for researchresearch

Comparative research on programs: costs, Comparative research on programs: costs, impacts, growth linkages, trade-offsimpacts, growth linkages, trade-offs

How to better integrate social protection and How to better integrate social protection and livelihoods activitieslivelihoods activities– Where is the line? Where is the line? – Where is the transition? Where is the transition? – Innovations in integrationInnovations in integration

Types of activitiesTypes of activities Transitions to labor marketTransitions to labor market

– Are there trade-offs?Are there trade-offs?– What is the right mix? What is the right mix?