Developing an Area is Hard

There has been a good deal of talk recently about the UN Millennium Village project. Spearheaded by rock-star economist Jeffrey Sachs, the project is a direct extension of the ideas put forth in his book The End of Poverty. Here is a good description of the basic aims:

The Millennium Project is trying to show how a few simple reforms, seven in all, can substantially improve lives and provide livelihoods. These are: fertiliser and seed to improve food yield; anti-malarial bed nets; improved water sources; diversification from staple into cash crops; a school feeding programme; deworming for all; and the introduction of new technologies, such as energy-saving stoves and mobile phones.

There are around 12 such villages in existence now, with the hope that the program will be expanded to over 1000 villages by 2009. Furthermore, Sachs and co. look to scale-up village-level interventions so as to generate "trickle-up" returns for districts and perhaps even countries. While Sachs himself seems to agree that many of these interventions may not be sustainable (i.e., they will require constant external funding to continue in place), the UN website for the project spends a good deal of time talking about "local ownership." This is basically a fancy way of saying that the average villager Joe and Jane will be able to have a say in the interventions, so as to tailor the program in ways that best resonate with the community. "Local ownership" is also a buzzword used to describe how external funded programs can become sustainable in the long-run: even after the donors leave, individuals in the village are left with the resources, expertise and desire to continue the efforts.

Time will tell whether the project goals are met. But it's always fun to speculate and form expectations about what might actually happen. On the one hand, the recent reviews about the millennium villages have been positive and, at times, quite breathtaking. On the other hand, others agree with this Marginal Revolution post and believe that the project will be difficult to scale up and sustain in over time.

Why exactly might such programs be hard to sustain? Obviously, there are a multitude of reasons. Some really interesting recent work can be used a lens to understand the roadblocks a bit more.

1) One good example is a provocatively titled paper by economists Michael Kremer and Ted Miguel called "The Illusion of Sustainability." This paper is a follow up on their classic experimental study on the economic impacts of deworming in Kenya. The basic idea is that deworming has externalities: treating some people provides benefits for everyone since some links in the transmission chain are now eliminated. In the "Illusion" paper, the authors look at four traditionally touted ways to promote sustainability and see whether these are effective in inducing people to take up deworming drugs and best practices. Learning from peers (some of whom were experimentally assigned to deworming in the original study) actually led to lower take-up, perhaps because, in a public goods world, individuals realize that the private benefit (which is less than the societal benefit because of the externality) of taking the drug is lower than the cost (side effects, etc). They also find that cost-sharing, educational interventions, and community mobilization efforts (i.e., encouraging "local ownership") did not work, either.

Miguel and Kremer go on to finish with a short discourse on why aid agencies might focus on sustainability even when such a goal is impossible. That alone is worth the price of admission here.

2) This next paper shows how well intentioned interventions can have unintended consequences. Its a clever study, and good reading for grad students or econophiles given the very intuitive and powerful theoretical section. I'll let the author explain the results himself, as the abstract is very transparent:

Water supply improvements are a frequent policy response to endemic diarrhea in developing countries. However, these interventions may unintentionally cause community sanitation to worsen. Such a response could occur because improved water supplies mitigate the consequences of poor sanitation for the community. Since sanitary behaviors have large externalities, the negative health impact of this endogenous response may overwhelm the direct benefit of clean water. This paper shows how the expansion of municipal piped water in Metro Cebu, the Philippines has exacerbated public defecation, garbage disposal, and diarrhea. I rely on instrumental variables and household fixed effects to rule out non-causal explanations for these results, and find that a neighborhood’s complete adoption of piped water increases the likelihood of observing excrement or garbage by 15-30 percent. Such a change increases diarrhea incidence by 35-40 percent.

3) Santosh forwarded me an interesting study by Abhijit Banerjee, Esther Duflo, and Rachel Glennerster, about an experimental intervention run amok in India. I wasn't able to find a link for this, but I will post the abstract here. The basic message? Existing governing and administration structures need to be brought into the intervention decision and implementation
process before they become a hindrance. If the stake-holders aren't participating (or are indifferent), you've got an uphill task.

The Indian Health Care system is plagued by high staff absence; low effort by the providers; and limited use by potential beneficiaries, who prefer private alternatives. This paper reports the results of an experiment carried out with a district administration and a nongovernmental organization (NGO). The presence of government nurses in government public health facilities (sub-centers and aid-posts) was recorded by the NGO, and the government took steps to punish the worst delinquents. Initially, the monitoring system was extremely effective. This shows that nurses are responsive to financial incentives. But after a few months, the local health administration appears to have undermined the scheme from the inside, by letting the nurses claim an increasing number of “exempt days.” Eighteen months after its inception, the program had become completely ineffective.