The World Bank's Social Risk Management Framework, in principle, covers many aspects of risk and vulnerability, in both domestic and productive spheres. But in practice, its focus has been on providing a "trampoline" so that those facing the risk of being forced out of productive activity (through e.g. price shocks, bad weather etc) can "bounce back". The paper below, prepared by John Farrington for the OECD PovNet, sets out some of the shortcomings of the framework and suggests what would be needed to operationalise risk and vulnerabililty-reducing mechanisms more broadly. Are these ideas realistic, or do they demand too much of governments? John Farrington DRAFT Social Protection and Livelihood Promotion in Agriculture: Towards Operational Guidelines Paper for OECD Povnet John Farrington DFID, London March 2004 Executive Summary The poor benefit from growth either through markets or (via taxation) through transfers. For many, markets do not work well because risks are high and ways of insuring against risk are unavailable. This paper asks how poor people can be protected against many kinds of risk - entrepreneurial and other. It argues that concerns over risk (often under the rubric of social protection) tend to have been treated separately from growth promotion, often by different departments within governments and international agencies. Recent efforts to treat them more coherently are to be welcomed. They are an important step in reducing poverty both directly and by promoting closer engagement by the poor in markets and in entrepreneurial activity. Taking agriculture as one example of a productive sector, and taking the World Bank's Social Risk Management (SRM) framework as a starting point, this paper argues that some modifications to the framework are necessary to ensure that the potential implications of agriculture policy decisions for social protection (SP), and vice versa, are taken into account, and that options and trade-offs within individual policy areas are considered. Modifications are also necessary to ensure that shocks and stresses in the domestic and productive spheres facing given households are treated coherently. The paper argues that questions of how to operationalise the principles contained in the (modified) SRM approach are of crucial importance, but pose considerable challenges. More nuanced classifications of rural space, people and institutions are needed than the fashionable "Rural Worlds 1, 2 and 3" if these challenges are to be met. Questions of how to treat the chronically vulnerable (who cannot fully engage in productive activity) cannot be addressed through this classification, nor does it take account of how, for instance, labour markets are constructed, what risks to livelihoods they entail, and how they link among Rural Worlds. The paper proposes a number of guidelines on how the principles underpinning a modified SRM approach can be operationalised, viz: Guideline #1. Identify how far policy at the highest levels (in relation to macro-economic and fiscal management; trade and investment, infrastructure, the legal framework...) is cognizant of SP and SRM requirements, and what scope there is for modifying it in order to mainstream these considerations. Guideline #2. Repeat this process within the productive sectors, to identify within these the types of policy arena likely to impact on the poor, and how far the tradeoffs within these (typically between growth and social protection) have been examined to date, and how they can be adjusted to obtain balances between growth and social protection, which are favourable to the poor. Within these sectors, identify how far public expenditure has been substituted by private commercial engagement, what the implications have been for the balance between SP and growth, and how imbalances might be redressed Guideline #3. Identify what measures such as insurance need to be undertaken to gain win-win outcomes by complementing production-focused measures Guideline #4. Identify who from among the poor remain marginal to the processes outlined in Guidelines 1-3, and identify what can be done for them by way of direct SP measures Guideline #5. Identify the major dimensions of risk and vulnerability within the country(ies) concerned, and how these vary according to such factors as: agro-ecology; infrastructure; links with market-oriented infrastructure and institutions; labour markets; the degree of market segmentation; location, particularly as it relates to market access and potential natural disasters, and social networks. Guideline #6. Recognising that SP can be promoted at national, provincial, community, household and individual levels, identify the main groupings that require some difference of approach; identify in particular the differences in vulnerability among, and different types of risk faced by, for instance, men and women, male and female children, widows, and the elderly. Guideline #7. On the basis of a sound understanding of the above, identify how coherence can best be achieved between domestic and productive spheres in terms of both SP and livelihood promoting measures. Guideline #8. Use existing fora of donors and international agencies to obtain agreement on the principles underpinning greater coherence between social protection and livelihood promotion. Guideline #9. Use Poverty Reduction Strategy processes as a means of discussing and implementing the principles on which these guidelines are based. Guideline #10. International agencies, governments and NGOs need to experiment with new ways of adapting policies in the productive sectors to be more socially protecting, and of adapting SP policies so that they support pro-poor growth objectives. They should also experiment with new forms of public investment, service delivery and multi-agency partnerships to deliver these new approaches more effectively. Guideline #11. New knowledge is also needed on how new SP measures impact on traditional mechanisms, and how they might be modified to build on these where appropriate. Guideline #12. Capacity needs to be built among senior officials concerned both with SP and livelihood promotion so that each appreciates more fully the perspectives of the other, and takes decisions in a coherent manner. Background and purpose Recent interest in how livelihood protection and promotion might better interface with each other has been driven by: Ø Awareness that in many countries some two thirds of the poor are found in rural areas, and two thirds of these in remote and difficult areas which are weakly integrated into market-oriented infrastructure and institutions. Compounding this is an awareness that agricultural growth in these areas has been weak, and that, increasingly, people are moving out for part or all of the year to take up work in better integrated rural areas or in urban centres. In addition to the longstanding shocks and stresses faced by people in weakly integrated areas, this trend raises new needs in relation to e.g. family protection during periods of migration. Ø On the social protection (SP) side, new conceptualizations that go beyond "social sectors" (such as health and education) and "social assistance" (e.g. welfare benefits for the elderly, sick or disabled). These see social protection both as a "trampoline" capable of helping those who might (for whatever reason) temporarily drop out of productive activity to "bounce back", and as a means of support to the critically vulnerable. The World Bank's Social Risk Management (SRM) framework (World Bank, 2001) is one of the best-known articulations of this view, and is gaining interest among donors and governments, but there are questions over how approaches of this kind can be operationalised, given for instance the administrative divisions between responsibilities for protection and promotion. Ø An awareness that better joint management of protection and promotion is likely to be central to the promotion of "pro-poor growth". To address them is all the more urgent in the context of the high risks linked to growing commercial (including global) market exposure; reduced public investment in agriculture; the imperfections in agricultural input and output markets where privatization has been overhasty, and the constraints on recurrent budgets that any expansion of SP is likely to face. Ø In areas seriously affected by HIV/AIDS, the need for coherent responses to both social protection and agriculture-related needs is particularly pressing. The purpose of this paper is to generate operational guidelines that may lead to a more coherent management of social protection and livelihood promoting interventions for low-income households and individuals whose livelihoods depend primarily on agriculture. This is seen as a contribution towards the operationalisation of new approaches towards social protection, such as the World Bank's SRM Framework, and is consistent with the need for coherence and practical orientation among donors and governments in developing poverty reduction strategies, such as Poverty Reduction Strategy Papers (PRSPs). In pursuit of this purpose, the paper: Ø first, examines definitions of social protection and livelihood promotion, including the concepts of risk and vulnerability, and their effects; Ø second, outlines the main features of the SRM framework, and proposes a number of modifications; Ø third, moves towards operationalising these by examining them against particular sub-groups of low income people in rural areas, indicating how particular aspects of the framework can be applied to these, and how the framework may need to be modified. Ø Finally, it sets out a number of guidelines for operationalising the SRM framework in the context of a new architecture of aid in which the search for coherence in approaches to poverty reduction in the context of PRSPs features prominently. Social protection and livelihood promotion - defining the scope Social protection is concerned with reducing both risk and vulnerability. It comprises: public interventions which (i) to assist individuals, households and communities to manage risk better, and/or (ii) which provide support to the critically vulnerable What makes current concepts of social protection new is that they represent a public commitment to reduce risk and vulnerability, different from the social sectors (such as health and education) and different from social welfare programmes, since they are concerned at least in part with the interface between protective measures and engagement by the poor in productive, growth-oriented processes. Others (Conway and Norton, 2002) have argued that a further novel feature of social protection is its concern with provision as a right, and not as paternalistic "handouts" by the state. In all events, many of the components of social protection are not new: informal transfers within households, extended families or communities have long existed, both to meet crises and to support those chronically unable (or only partly able) to engage in the productive economy. For the better off, there has long been the possibility of purchasing insurance in the commercial market to cover certain types of risk. In some communities, there are voluntary mechanisms to provide funds to cover "stress" events, such as death donation societies. More formally, contributory pension schemes serve much of the same purpose. Many of these are discussed below. The challenge for SP addressed in this paper is that of bringing these and new SP measures together within some form of SRM framework so that interventions geared towards protection and those geared towards livelihood promotion complement each other, and this should not just be within the context of a productive sector such as agriculture, but also in coherence between measures addressed to the domestic sphere and those addressed to the productive sphere. Risk is the likelihood of being affected by shocks or stresses. These can be external to the household (e.g. a natural disaster such as flooding, or an economic event such as price collapse), or internal, such as the loss of labour through sickness, injury and death, and the direct financial costs of these, as well as of other intra-household events such as marriage or illness among children or the elderly. Individuals or households likely to be affected particularly adversely by such events are vulnerable, as a result of e.g. low asset status, low and variable income, disadvantageous location, a high proportion of dependents in household composition or weak social networks. There are important gender differences: certain types of shock or stress (usually, occupation-related) threaten men more than women, but others (such as caring for the sick or elderly) impact more on women. Women and children (in S Asia, typically girl children) are known to suffer more from reduced food consumption in times of crisis. Livelihood promotion is concerned with enhancing the range of livelihood options open to the poor, and making these more accessible to them. Livelihood promotion has been interpreted primarily in terms of increased income opportunities, but this needs to be supplemented by measures which reduce the variance of incomes over time and space. For instance, agricultural research strategies concerned purely with raising incomes through increased per hectare crop yields are likely to require additional inputs of fertilizer and other agrochemicals, which exposes farmers to higher risk in the event of crop failure. A moderated strategy which sacrifices some growth in crop yield for greater stability (through e.g. drought tolerance, and resistance to pests and diseases) is likely both to increase incomes and reduce their variance. But some (such as Carney (ed) 1998) suggest that livelihoods embrace much more than income, such as status and "voice" (i.e. the ability to identify needs and articulate them to investment and service providers). The discussion below will not enter into these other dimensions of livelihoods in detail, other than to identify at appropriate points how voice can be strengthened. The effects of high levels of risk and vulnerability are evident in several dimensions, and this constitutes the basis for growing concern among donors and governments. For instance: Ø Entrepreneurial shocks and stresses can cause farming to fail, resulting in indebtedness, loss of productive assets and reduced income for present and future generations. Ø Domestic shocks and stresses can likewise drive households and individuals into greater poverty and at the same time impact on entrepreneurship by causing funds to switch out of enterprise in order to meet the domestic crisis. This "fungibility" of funds means that domestic and entrepreneurial risk and vulnerability have to be treated simultaneously, a central argument in our analysis below. Poorer households, and women, children and the elderly within them, tend to be the most vulnerable and have access to fewer instruments to respond to risk. Ø Perceptions of high entrepreneurial risk can discourage poor households from taking up new activities, often keeping them in low-productivity, and low-return but fairly secure livelihood activities. These might include informal arrangements such as (typically in S Asia) seeking the protection of a "patron" who will provide credit in times of need (and thereby provide a degree of social protection) but in return demand priority access to the household's labour, the sole right to market its output, and the sole rights to provide seasonal credit. This "interlocking" of labour, product, input and credit markets makes it extremely difficult for poor households to take up new economic opportunities of the kinds that market signals might indicate. Table 1 provides examples of shocks and stresses according to the scale at which they occur (viz. micro, meso and macro). It is worth noting that micro-level shocks and stresses tend to be idiosyncratic - i.e. affecting individuals and households in a more or less random fashion - whereas at macro level they tend to be covariate - i.e. a drought or flood will generate a range of related negative impacts affecting in some way practically all the households over a wide area. Innovative ways are being sought of insuring against the latter (Hess, 2003) given that insurance companies operating on a limited scale are likely to be financially threatened by the scale of covariate adverse events. SP covers a potentially wide range of arrangements, which can be grouped into three broad categories: Prevention strategies, which reduce the risk of occurrence of adverse shocks or stresses. In the agricultural sphere these can include the breeding of livestock resistant to disease, and of crops resistant to pests, diseases and drought, or the implementation of soil and water conservation measures intended to reduce the likelihood of drought, landslides, erosion, flooding etc. In the domestic sphere they can include vaccination against illness or disease, improved diet, safer water, and so on. Mitigation strategies, which reduce the potential impact of a shock or stress. These can include portfolio diversification strategies - such as the management of diverse farming systems combining elements which are not all subject in the same degree to the same covariate risks (such as drought or disease); insurance strategies (in both entrepreneurial and domestic spheres), and hedging against future price fluctuations. Coping strategies, which relieve the impact once the event has occurred, such as relief operations in response to natural disasters or civil disturbances. However, SP can also tackle vulnerability as well as risk. It can do so by enhancing the resource-base of rural households through increased income, and reduced variance in income, which, among other things will also translate into a strengthened asset base. It can also seek to (a) improve the access by poorer households (i.e. the most vulnerable) to information and to assets which they do not own, including water bodies, forest, grazing land (b) grant rights to poorer households, help in making them aware of these rights, enhance their capacity to make claims on the public sector in line with these rights, and promote stronger responsiveness by the public sector to such claims, and accountability to the claimants. To promote particular kinds of microsavings and credit may help in reducing vulnerability to shocks and stresses sufficiently to prevent the sale or mortgaging of productive assets such as livestock or land. The need for a new initiative in Social Risk Management? In addition to the requirements outlined above, a central perception among proponents of the World Bank's SRM Framework is that there is a need for a new initiative for two main sets of reasons. One is that traditional informal risk management arrangements, such as transfers within extended families, and intra-community support mechanisms, are breaking down as population pressure rises and employment patterns become increasingly casualised and migratory. In addition, new types of risk demand responses beyond the coping capacity of traditional mechanisms, such as the risks of greater product price instability driven by globalization, the risks of product rejection as a result of higher product standards imposed by supermarkets, the risks that inputs will not arrive, or products not be marketed as a result of overhasty liberalization. The "rolling back" of the state has also impacted negatively on its capacity to reduce risk or vulnerability directly through traditional social protection measures such as transfers, or to do so indirectly through, for instance, public agricultural research which develops new crops resistant to pest or disease attack, or new approaches which allow risk to be spread through farming systems containing diverse and complementary elements - this is perhaps especially the case where such services have been privatized and new commercial research is more driven by "growth" than "growth with stability". The main elements of the SRM framework are presented in Box 1, and Table 2 provides examples of types of SRM in both domestic and entrepreneurial contexts, and across the spectrum of informal, private commercial and publicly mandated arrangements. Box 1 The World Bank's Social Risk Management Framework Social Risk Management repositions the traditional areas of social protection (labour market intervention, social insurance and social safety nets) in a framework that includes three strategies to deal with risk (prevention, mitigation and coping), three levels of formality of risk management (informal, market-based, publicly-mandated) and many actors (individuals, households, communities, NGOs, governments at various levels and international organisations) against the background of asymmetric information and different types of risk. This expanded view of Social Protection emphasizes the double role of risk management instruments protecting basic livelihood as well as promoting risk taking. It focuses specifically on the poor since they are the most vulnerable to risk and typically lack appropriate risk management instruments, which constrains them from engaging in riskier but also higher return activities and hence gradually moving out of chronic poverty. Source: adapted from Holzmann and Jørgensen (2000) The World Bank argues that improved SRM is important in a static sense since it can contribute to: Ø reduced vulnerability; enhanced consumption smoothing; and improved equity. And, in a dynamic sense, enhance: Ø income and consumption smoothing; the effectiveness of informal provisions, and the cost-effectiveness of public provision. Implementation of the SRM is expected to contribute to poverty reduction by: Ø reducing transitory (consumption) poverty; Ø preventing declines into deeper poverty and destitution; and Ø supporting upward trajectories out of poverty through its support for entrepreneurial risk-taking. Public (government and donor) support for SRM is justified on the grounds that it has to substitute for widespread market failure, or get markets working. This applies to several types of market: Ø first, markets for insurance are highly imperfect - knowledge is often imperfect, information asymmetric, and transaction costs high - so that many types of risk are in effect uninsurable; Ø second, asymmetries in information and power act as barriers to entry in other markets (for products, labour and credit, for instance); Ø third, some are excluded on social, ethnic or religious grounds from markets which are segmented, and in other cases, the poor attempt to avoid risk by entering relations with patrons that often result in interlocked markets. The poor will always face difficulties of these kinds in entering markets; the provision of new forms of social protection will not guarantee that such barriers can be broken, but may provide a platform so that some, at least, can enter new markets. Making the SRM framework operational The main argument of this paper is that the SRM framework will not implement itself automatically. It has the potential to make substantial improvements to the livelihoods of the poor, but involves a number of potentially complex interactions and complementarities. Questions of how the SRM framework can be operationalised will require careful consideration in four dimensions: Ø in relation to different categories of poor people; Ø in relation to interactions between productive sectors (where entrepreneurial activity is focused) and domestic spheres (since funds are fungible between the two); Ø in relation to the interface between protection and promotion options within the sector; and Ø in relation to location-specific socio-cultural and economic conditions. Addressing different categories of poor people The OECD Povnet Agriculture group has been considering a concept of "Three Rural Worlds" advanced by the International Institute for Environment and Development as an aid to understanding who the clients of agricultural interventions are, and how they might best be reached. Basically, the concept postulates: Ø A Rural World #1, in which farming is well-established and well-linked into market-oriented institutions and infrastructure. Fluctuations in commodity prices as a result of globalization and liberalization are a major component of entrepreneurial risk in this context. Ø A Rural World #2, in which farming is less commercialized, and semi-subsistence, though with some commercial engagement. Links to market-oriented infrastructure and institutions are less strong, and major sources of risk include not only price fluctuations, but also unreliability of input supply and marketing, and climatic shocks. Ø A Rural World #3. which is near-subsistence farming, often in more remote and agro-ecologically more difficult areas, so that major sources of risk are climate- rather than market-related. Whilst this schema provides a crude but appealing categorization of production spheres and their relations with markets, it has a number of shortcomings as an aid to identifying how SRM might be operationalised. One is that it does not help in conceptualizing how those chronically unable (or only partly able) to engage in productive activity should be catered for, and whether this will differ across production spheres. The same applies to those mainly dependent on hiring out their labour, and an added problem here is that, in some contexts labour is seasonally migrant, and links both among rural worlds (and so partially confounds this schema) and between them and urban areas. Perhaps the major contribution this schema makes is that it suggests a spectrum in which those in RW #1 are concerned mainly with entrepreneurial risk, and rely mainly on private sector mechanisms for this, and so the main policy imperative is to get insurance and related markets to work better, whilst those at the opposite extreme (RW #3) need protection mainly against weather-based risk and against domestic shocks and stresses, and that combinations of informal and publicly-mandated approaches lend themselves best to achieving this. More nuanced policy analysis requires a breakdown between domestic and productive spheres, which is considered in the next section, and between different categories of labour, to which we turn later. Addressing interactions between domestic and productive spheres Funds are fungible, so that shocks and stresses in the domestic sphere may cause diversion of funds from the productive, and vice versa. This argues strongly for treating the two spheres jointly and not separately. However, in practice this has rarely happened, and the factors that have prevented it need to be addressed if the future prospects for joint treatment are to be better. These include: Ø the fact that they are generally mandated to different government departments, and to different offices within donor agencies; Ø the limited resources in most developing country governments for support to households through e.g. transfers; the pressure from the IMF and other agencies to keep down recurrent budgets; Ø the weak political power of those unable to engage in the productive economy, so that no electoral advantage is perceived in supporting them; and Ø the lack of interest among donors in even experimenting with innovative ways of making SP transfers (such as social pension payments) given their perception that these are an open-ended commitment into which they do not wish to be drawn. As Tables 2 and 3 suggests, there can be several ways of providing SP to the domestic sphere. These may include support for micro-savings and credit schemes (possibly on the Grameen Bank model), the provision of micro-insurance against sickness, injury and death, and regular payments such as social pensions to the elderly and widows, allowances to orphans or the disabled, school fee allowances, school feeding schemes etc. To transfer funds to those unable to engage in the productive economy is regarded by some as little more than a "handout". However, whilst such transfers may be too small to allow a build-up of assets, they do at least allow the recipients to engage in the economy as consumers, and may allow existing informal intra-household resource transfers to be switched into agriculture. Further, in some settings (e.g. S Africa - Devereux (2003)) there is evidence that part of social pensions paid to the elderly are invested in productive activity. One of the benefits of a closer coherence between interventions in domestic and productive spheres is the prospect of avoiding negatives, such as are caused, for instance, when poorly-timed food aid disrupts local agricultural markets. Identifying synergies between social protection and livelihood promotion The World Bank's presentation of its SRM framework is presented largely as a "win-win" scenario, in which SP protects people against sliding into poverty, and at the same time allows increased entrepreneurial risk-taking by providing social protection. In principle this can generate synergies in the narrowly defined sense of making the whole greater than the sum of its parts. Table 2 provides examples such as migration, holding multiple jobs, and insurances where this can occur. But many of these interventions are conceived as a "trampoline" which allow those producers who face temporary setbacks to "bounce back" into the productive economy. There are very few efforts to bring those largely outside the productive economy into it - along something of a trajectory from situations in which they mainly rely on social protection, to one in which they benefit more from livelihood promotion. This kind of trajectory represents synergy of a different kind. One such effort is the work done by the Bangladesh Rural Advancement Committee (BRAC) in its Income Generation for Vulnerable Group Development (IGVGD) programme (Matin and Hulme, 2003). BRAC has faced a number of field-level implementation constraints in its IGVGD programme. To keep costs down, it is obviously desirable for community development workers (who would normally handle social protection) to cover interaction with the poor over both livelihood protecting and promoting issues. However, they may lack the skills or inclination to become advisers in micro-enterprise or agriculture. The same applies to agriculture advisers - they may be a poor second-best when it comes to providing assessments and advice in relation to SP. If this applies to the well-motivated staff of a dynamic NGO, it is likely to apply even more to public sector staff in social welfare or agriculture departments. Addressing trade-offs within SP and within agriculture Not all possibilities will be "win-win". In a productive sector such as agriculture, policy decisions supporting high levels of growth may generate high levels of risk, and some growth may have to be sacrificed in order to reduce risk. Decisions over how certain SP measures are designed and implemented can impact differently on a productive sector such as agriculture. For instance, where transfers to the poor form part of the SP portfolio, the trade-offs between transfers in cash and in kind need to be assessed. Food transfers (as an example of the latter) tend to be politically popular, but are costly to administer and may suppress demand in local food markets. Cash transfers require robust transfer mechanisms if they are not to be diverted, but the advent of computerization may assist in automating payments. Cash transfers may boost demand for agricultural products in local markets. On the agriculture side, trade-offs are found in many areas, including the decisions regarding priorities for agricultural technology: a policy which "goes for growth" may generate high-yielding, but also high-risk crop varieties. One which is more concerned with risk management may trade off some growth and so generate varieties which are resistant to pests and diseases, drought avoiding etc. There is substantial unexploited scope for introducing the perspectives of the one into the design and implementation of the other, i.e. for giving aspects of SP more of a growth-promoting dimension, and for designing agriculture initiatives in ways aiming to reduce risk and vulnerability. Areas in which this might be done include (Farrington et al, 2004a; 2004b): Ø On the social protection side, SP can be growth promoting where, for instance, it stimulates thrift and credit schemes, creates physical assets through employment schemes, and promotes personal insurance, but (cash) transfer payments can also be indirectly growth promoting. Ø On the agriculture side, several types of agricultural strategy can both promote growth and reduce risk, including revisions to legislation and regulation, investments in infrastructure and soil and water conservation, innovative types of insurance, and appropriately focused provision of services, including research and extension. Addressing location-specific conditions Risk and vulnerability factors in both productive and domestic spheres will clearly vary according to a wide range of conditions. It is not possible to consider the full range of these here, but a number of illustrations can be given: Agro-ecological conditions will influence the "riskiness" of production, as will the extent to which infrastructure (such as irrigation) has been constructed to counteract these. Market-related risks will impact differentially according to the types of crop typically grown in different areas, the extent and quality of links with international markets, the international market conditions for such commodities and the extent to which these penetrate major consumer markets in a given country. Labour markets may be characterized by different levels of casualisation, different types and levels of migration, different pressures on wages coming from rural non-farm or urban labour markets, and different types and degrees of segmentation. Factors of this kind will determine the types of SP needed (such as employment creation schemes) and by whom. Location will also determine the likelihood of events such as flooding, which will impact on both production and domestic spheres. Differences in social network will determine the extent to which informal protection mechanisms can be called upon during crisis. Even these few examples suggest that policies seeking greater coherence between livelihood protection and promotion will have to be based on a clear understanding of contextual difference in spheres such as: Ø agro-ecology; Ø infrastructure; Ø links with market-oriented infrastructure and institutions; Ø the nature of labour markets; Ø the degree of market segmentation; Ø location, for instance in relation to market access and such shocks as potential natural disasters; Ø social networks. Guidelines for making SRM operational Mainstreaming SP and SRM The major difficulty with SRM is that social protection can be provided at many different levels of intervention and in many different ways. At one extreme, policies to achieve macro-economic stability or greater transparency in fiscal administration or improved transport and communication infrastructure can in some measure, and to some groups of people, help to provide social protection. In some contexts, policies to reinforce the rule of law might be an important step towards social protection. At the opposite extreme, specific kinds of targeted transfer might be needed in order to meet the SP needs of very poor individuals and households. In between, lie a very wide range of options and requirements. The scope of this paper is sectoral. For this reason, it has not considered these higher-level policies, but that is not to say that they are unimportant - certainly they need to be addressed by others concerned with macro-level economic management. The overwhelming reality is that ministries and departments concerned with the productive sectors have far more resources than those concerned with, for instance, social welfare, and, given the pressure to keep recurrent expenditure down, this appears unlikely to change. A logical conclusion therefore is that the policy areas covered by, for instance, agriculture departments, should be investigated with two things in mind: one is to review the scope of policies areas mandated to them, and to consider whether these might be broadened to include others that offering more scope for SP - promoting new forms of insurance (against crop failure, livestock death, price fluctuations etc) provides one example; the other is to consider trade-offs within existing policy areas, for instance how more social protection might be gained within them at the expense perhaps of a little less growth. To ask then who is left out from such efforts to enhance SP from within the productive sectors leads to two further sets of conclusions: one concerns the other contributions that "freestanding" SP can make to the productive sectors by way of, for instance, personal insurance and credit schemes of various kinds. The other concerns the ways in which SP can address domestic requirements and yet still impact on the productive sectors through consumption effects (as with, for instance, cash transfers) or through allowing existing informal transfers to be diverted into the productive economy. The first guidelines therefore concern the "mainstreaming" of SP and SRM: Guideline #1. Identify how far policy at the highest levels (in relation to macro-economic and fiscal management; trade and investment, the legal framework...) is cognizant of the SP and SRM requirements, and what scope there is for modifying it in order to mainstream these considerations. Guideline #2. Repeat this process within the productive sectors, to identify within these the types of policy arena likely to impact on the poor, and how far the tradeoffs within these (typically between growth and social protection) have been examined to date, and how they can be adjusted to obtain better balances between growth and social protection favourable to the poor. Within these sectors, identify how far public expenditure has been substituted by private commercial engagement, what the implications have been for the balance between SP and growth, and how imbalances might be redressed Guideline #3. Identify what measures such as insurance need to be undertaken to gain win-win outcomes by complementing production focused measures Guideline #4. Identify who from among the poor remain marginal to these processes, and identify what can be done for them by way of direct SP measures A further set of guidelines is concerned with coherence of approach between domestic and production spheres, and with the need to recognize contextual differences. Guideline #5. Identify the major dimensions of risk and vulnerability within the country(ies) concerned, and how these vary according to such factors as: agro-ecology; infrastructure; links with market-oriented infrastructure and institutions; labour markets; the degree of market segmentation; location, particularly as it relates to market access and potential natural disasters, and social networks. Guideline #6. Recognising that SP can be promoted at national, provincial, community, household and individual levels, identify the main groupings that require some difference of approach; identify in particular the differences in vulnerability among, and different types of risk faced by, for instance, men and women, male and female children, widows, and the elderly. Guideline #7. On the basis of a sound understanding of the above, identify how coherence can best be achieved between domestic and productive spheres in terms of both SP and livelihood promoting measures. There are then important questions of how all of the above can best be achieved. Agreement on the guidelines is first required among donors and other international agencies, and the OECD Povnet provides a starting point. At country level, there is already a mechanism seeking coherence in approaches to poverty reduction, in the form of Poverty Reduction Strategy Papers and the associated committees, and these provide an appropriate locus for discussing and implementing the principles on which these guidelines are based. Guideline #8. Use existing fora of donors and international agencies to obtain agreement on the principles underpinning greater coherence between social protection and livelihood promotion. Guideline #9. Use Poverty Reduction Strategy processes as a means of discussing and implementing the principles on which these guidelines are based. What is clear from several assessments of PRSPs, however, is that, whilst they make strong statements of intent on poverty reduction, they are less clear on the ways in which public investment, service delivery and public-private partnerships will change in order to deliver these intentions. This calls for experimentation with new approaches in these areas, and a coordinated lesson-learning approach Guideline #10. International agencies, governments and NGOs need to experiment with new ways of adapting policies in the productive sectors to be more socially protecting, and of adapting SP policies so that they support pro-poor growth objectives. They should also experiment with new forms of public investment, service delivery and multi-agency partnerships to deliver these new approaches more effectively. Guideline #11. New knowledge is also needed on how new SP measures impact on traditional mechanisms, and how they might be modified to build on these where appropriate. Guideline #12. Capacity needs to be built among senior officials concerned both with SP and livelihood promotion so that each appreciates more fully the perspectives of the other, and takes decisions in a coherent manner. Table 1 Sources and forms of shocks and stresses, by scale Micro (idiosyncratic) Meso Macro (co-variant) Natural Rainfall Landslide Volcanic eruption Earthquake Floods Drought Strong winds Health Illness Injury Disability Epidemic Life-cycle Birth Old-age Death Social Crime Domestic violence Terrorism Gangs Civil strife War Economic Unemployment Harvest failure Ethnic discrimination Output collapse Business failure Riots BoP, financial or currency collapse Technology or ToT shocks Resettlement Political Potential default on social prog. Environmental Pollution Deforestation Nuclear disaster Source: adapted from Holzmann and Jorgensen (2000) Table 2 Matrix of social risk management (examples) Arrangements/ strategies Informal/personal Formal/financial market-based Formal/publicly-mandated/ provided Risk reduction Les risky production Migration Labour standards VET Labour market policies Disability policies Risk mitigation Portfolio Multiple jobs Investment in human, physical and real assets Investments in multiple financial assets Multi-pillar pension systems Social funds Insurance Marriage/family Community arrangements Share tenancy Tied labour Old-age annuities Disability/accident Mandated/provided for employment, old-age, disability, survivorship, sickness, etc. Hedging Extended family Some labour contracts Risk coping Selling of physical and real assets Borrowing from neighbours Intra-community transfers/charity Sending children to work Selling of financial assets Borrowing from banks Transfers/social assistance Subsidies Public works Source: adapted from Holzmann and Jorgensen (2000) Table 3 Managing shocks and stresses in relation to the agriculture sector Types of rural household Domestic Production-related Established farmers Types of shock and stress Illness Injury Disability Death Costs of weddings and other rituals Collapse in prices resulting from globalisation Extreme weather events (drought, hail, flooding) Degradation of soil, water and other NR Inadequate access to input, finance and output markets owing in part to failed liberalisation Types of response Promote private sector insurance schemes Promote private sector input supply and marketing, and insurance schemes (which may require public start-up and regulatory controls); develop new types of crop insurance and price hedging (Hess, 2003). Public/private partnerships to control erosion and soil Marginal farmers Types of shock and stress Illness Injury Disability Death Costs of weddings and other rituals Extreme weather events (drought, hail, flooding) Degradation of soil, water and other NR Inadequate access to input, finance and output markets owing in part to failed liberalisation (Possibly) collapse in prices resulting from globalisation Types of response Promote micro-savings, micro-credit, micro-insurance Promotion of private sector inputs supply and marketing may have to be accompanied by measures to reduce market segmentation and interlocking; Insurance and savings schemes may require a strong public or community-based leadership Labourers Types of shock and stress Illness Injury Disability Death Costs of weddings and other rituals Loss of rural employment opportunities and/or reduction in real wages attributable to the above Loss of opportunities for seasonal/permanent migration attributable to same or other causes Types of response Promote micro-savings, micro-credit, micro-insurance. Investigate possibilities of occupation-linked insurance and pensions Public works programmes Support for seasonal migration through improved information, accommodation, education provision for children, easier means of making remittances etc Those unable to engage fully in productive activity Types of shock and stress Illness Injury Disability Death Costs of weddings and other rituals Reduction in informal intra-household transfers resulting from above shocks/stresses in agriculture Reduction in opportunities for gathering fodder/fuel from commons owning to NR degradation Types of response Social pensions for the elderly, widows and disabled; school feeding programmes; promotion of infant health and nutrition; distribution of free or subsidised food Social pensions for the elderly, widows and disabled; school feeding programmes; promotion of infant health and nutrition; distribution of free or subsidised food Schemes to rehabilitate the commons and ensure equitable access References Carney, D. (ed). (1998) Sustainable rural livelihoods: What contribution can we make? London: DFID. Conway, T. and Norton, A. (2002) 'Nets, Ropes, Ladders and Trampolines: The Place of Social Protection within Current Debates on Poverty Reduction', Development Policy Review 20 (5): 533-40. London: Overseas Development Institute. Devereux, S. (2003) 'Policy Options for Increasing the Contribution of Social Protection to Food Security', Second Draft Forum for Food Security in Southern Africa, London: Overseas Development Institute, accessed October 2003 at: http://www.odi.org.uk/Food-Security-Forum/docs/SocProtection_theme4.pdf Farrington, J., Slater, R. and Holmes, R. (2004a) 'Social Protection and Pro-poor Agricultural Growth: What Scope for Synergies?' Natural Resource Perspectives 91, London: Overseas Development Institute. Farrington, J., Slater, R. and Holmes, R. (2004b) 'The Search for Synergies between Social Protection and Livelihood Promotion: the Agriculture Case', Draft Working Paper. London: Overseas Development Institute. Hess, U. (2003) 'Innovative Financial Services for India: Monsoon-indexed Lending and Insurance for Smallholders', Agriculture and Rural Development Working Paper 9, Washington DC: World Bank. Holzmann, R. and Jørgensen, S. (2000) 'Social Risk Management: A New Conceptual Framework for Social Protection and Beyond', Social Protection Discussion Paper 0006, Washington DC: World Bank. Matin, I. and Hulme, D. (2003) 'Programs for the Poorest: Learning from the IGVGD Programme in Bangladesh', World Development 31 (3): 647-65. World Bank (2001) Social Protection Sector Strategy: From Safety Net to Springboard, Washington DC: OUP for the World Bank. ________________________________  Adapted from World Bank (2001)  Although the SRM stresses both the "trampoline" function of SP in preventing people from dropping out of productive activity, or bouncing them back into it again, and that of protecting the "chronically vulnerable" who are unable fully to engage in productive activity, in reality, much of the concern hitherto has been with the former, not the latter. ============================================================= To send a reply to this message that goes to all list members, make sure that you send your reply to <address removed> To unsubscribe from this list, send an email to "<address removed>", with the message body: unsubscribe risk-and-vulnerability <your-email-address>
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