Floating farms of Bangladesh: a home-grown strategy to adapt to climate change

 

Bangladesh is highly vulnerable to climate change. Flooding regularly affects about 1 million people. One prediction is that by 2050 about 20 percent of the available land will be permanently submerged under water.

More than 100,000 people are forced to move regularly as villages and livelihoods succumb to rising water levels during the monsoon season. Such enforced migration, in turn, enlarges the urban informal economy.

During the monsoon season, much of the farmland in Southern Bangladesh goes underwater and remains water-logged for about 7 to 8 months severely restricting the capacity of local farming communities to earn a living. Local resilience and innovative zeal to adapt to changing climatic conditions led some farming communities to revive an age-old technique of building ‘floating farms’.  The ensuing discussion is based on the following sources which can be found here,  here, here and here.

Floating farms – or gardens – which are usually 8 to 10 metres long and a few metres wide are constructed using water hyacinth. This is an abundantly available invasive species but can serve as a robust base for the floating gardens which are in turn covered with soil and cow dung. A variety of cash crops can be planted on them. They serve the needs of local communities while the surplus generated becomes a new form of income-generating activity. This farming technique is productive because the cropping and harvesting cycle is significantly shorter than crops grown on dryland. At the same time, it promotes agricultural diversification by encouraging the cultivation of diverse crops throughout the year. Moreover, the products are organic and that in turn enhances their appeal to local traders who can sell them at a premium price.

The floating farms must be built every year, but the debris that is left behind are used as fertilizer during the dry season.  Today, about 50,000 farmers are involved in the floating farm sector.

What role have different actors played in the revival and expansion of floating farms which are now recognised as one of 21 examples across the world of ‘globally important heritage agriculture’ (as designated by FAO)? Clearly, the innovative capacity of local farming communities was essential, but in the mid-2000s they benefited from the activism and support of local and international non-governmental organizations (NGOs). In 2005, and again in 2009, the Bangladesh government recognized the importance of floating farms as part of its climate change adaptation strategy. In 2013, the government approved a USD 1.6 million project under the Bangladesh Government Climate Change Trust (BCCTF)to promote floating farms for climate change adaptation and has targeted close to 50 localities across the country. This suggests that scaling up of the floating farm sector is contingent on appropriate support from the government.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The challenge of meeting SDG 7: Ensure access to affordable, reliable, sustainable and modern energy for all

Innovative approaches will be needed to resolve enduring challenges in meeting the unmet energy needs of people, especially in the developing world, in light of the global commitments made under SDG 7. For example, the time-honored approach to electrification of households and firms is through connections to a national grid. But this traditional model, because of its expensive and technically rigid nature, has been unable to provide access to 1.1 billion people across the world with a reliable supply of electricity, despite the impressive expansion in recent years in many low and middle-income countries. At the same time, national grids are often driven by fossil fuels making them unresponsive to concerns about climate change.

Contemporary experience across the world has shown that the off-grid solar sector (OGS) can serve as a viable and ecologically friendly supplement to a national grid in responding to the needs of unserved and underserved households and firms, especially in low-income communities. The most recent global evaluation suggests positive and enduring benefits. The sources used for this summary can be found here, here and here.

  • In 2017, OGS provided improved electricity access to 360 million people and the expectation is that this will double over this decade. This means that the OGS can play an important role in supporting the attainment of SDG 7
  • By encouraging households to switch from kerosene and other conventional fuels, OGS devices have led to an estimated savings of USD 5.2 billion
  • 6 million tons of greenhouse gas emissions have been avoided using traditional fuels
  • Providers of OGS devices have been a source of direct job creation in the formal economy. For example, in 2010, globally there were only 60 firms. By 2017, this has risen to 300
  • The market for OGS is competitive, with the market concentration ratio falling from 50 percent of annual sales to approximately 30 percent between 201 and 2017
  • OGS devices have indirectly supported an estimated 1.9 million people in income-generating activities by spawning new business and expanding existing business demonstrating an important link between formalization and electricity provision
  • An estimated 45% of OGS users reported health benefits by reducing their reliance on kerosene
  • These global benefits have been supported by a regional evaluation of several East African countries
  • In terms of job creation, estimates based on the East African experience suggest 21 fulltime equivalent (FTE) jobs per 100 OGS devices sold, with 52 percent of these FTEs being undertaken by women and 50 percent in rural areas.
  • Given that globally in 2017 an estimated 22.3 million devices were sold, the implied global job creation rate is 4.68 million that can be attributed to the OGS
  • An evaluation from India suggests a higher degree of consumer satisfaction with OGS devices than with the national grid

There is, of course, the issue of the role of the private sector, the government and donors. Certainly, the private sector has been responsible for the direct provisioning of OGS devices, but this requires the support of the government. Increasingly, governments are aware of the role that OGS can play in supporting the unmet energy needs of households and firms. Hence, as in the case of Kenya, OGS has become a formal part of the national electrification strategy. The global industry association that represents firms in OGS has argued that perhaps one of the most effective ways in which governments can support the development of the off-grid solar energy is through the provision of fiscal incentives. If taxes and tariffs are either temporarily or permanently withdrawn from all OGS devices, there will be a significant drop in prices stimulating the expansion of OGS. In Kenya, for example, a reduction in the price of a solar lamp due to fiscal incentives by 43 percent can increase household uptake of OGS devices by 22 percent.

Finally, donors can play and have played, a supportive role, especially in low-income countries that are significantly reliant on development assistance. For example, the World Bank Group has been quite active in supporting the development of the off-grid energy market in 25 countries, mostly in Sub-Saharan Africa.

 

 

 

 

 

 

 

 

 

 

Is the Australian central bank governor now toeing the party line?

In a recent speech, Mr. Philip Lowe, the governor of the Reserve Bank of Australia (RBA),  made the following remarks after the latest round of a cut in the policy rate:

…over recent times I have been drawing attention to the fact that, as a nation, there are options other than monetary easing for putting us on a better path.

One option is fiscal support, including through spending on infrastructure… It is appropriate to be thinking about further investments in this area, especially with interest rates at a record low, the economy having spare capacity and some of our existing infrastructure struggling to cope with ongoing population growth.

Another option is structural policies that support firms expanding, investing, innovating and employing people. A strong, dynamic, competitive business sector generates jobs. It can help deliver the productivity growth that is the main source of sustainable increases in our wages and incomes. So, as a country, we need to keep focused on this.

To repeat the point, it is important that we think about the task ahead holistically. Monetary policy does have a significant role to play and our decisions are helping support the Australian economy. But, we should not rely on monetary policy alone. We will achieve better outcomes for society … if the various arms of public policy are all pointing in the same direction.

The reaction of Mr. Josh Frydenberg, the Australian Treasurer was quite different. He was unwavering in the current government’s electoral pledge to attain a budget surplus rather than engaging in a fiscal stimulus – at least that is how media reports put it. The RBA and the Australian Treasury were singing different tunes against a background of the slowest growth rate of the Australian economy since 2009.

It now appears that the RBA governor has been cajoled into singing from the same hymn sheet. He seems to be saying, ‘she’ll all right mate’. Of course, he adopted a  bland style, as in the following observations, but the intent was clear (let us not rock the boat):

Thank you, Treasurer for the discussions today. I agree 100 per cent with you that the Australian economy is growing and the fundamentals are strong. The outlook is being supported by our lower interest rates, by your tax cuts, by higher levels of investment in infrastructure, by a pickup in the resources sector and the stabilisation of the housing market in Sydney and Melbourne. But I don’t think we should forget that more Australians have jobs today than ever before in Australian history. That’s a remarkable achievement. And I also agree with you that a priority is to make sure that Australia remains a great place for businesses to expand, innovate, invest and employ people and I’m sure we can do that.

Well, does the RBA really have independent views, despite central bank independence?

 

 

Australia’s ‘per capita recession’ persists

Look at the graph below which charts Australia’s GDP growth rate both on an annual (the black line) and quarterly basis (the green columns). Should one be worried?

Not really, if one reads the statement of the Chief Economist of the Australian Bureau of Statistics (ABS). In the media release accompanying the latest quarterly GDP figures, the Chief Economist of the ABS is cited as saying: “The economy continues to grow as we head towards twenty-eight years of sustained growth” but acknowledges that it is below the long-term growth rate of 3.5%. If the quarterly trends persist, then one can expect the annual growth rate for 2019 to be 1.8% – which is barely above the population growth rate of 1.6%

 

Diagram shows GROSS DOMESTIC PRODUCT, Volume measures: Seasonally adjusted

Source: ABS

What the Chief Economist of the ABS does not acknowledge is that for three consecutive quarters, the GDP growth rate has been below the population growth rate. Hence, Australia has been in a ‘per capita recession’ in recent quarters, as leading economists and analysts have often pointed out.  There is a danger that the economy might tip into a ‘real recession’ with an actual decline in overall GDP for two consecutive quarters. While the Reserve Bank has dropped the policy rate to a historic low (1.25%), there is likely to be limited stimulus from monetary policy, as the Reserve Bank Governor himself acknowledged. As he put it: ‘There are certain downsides from relying just on monetary policy and there are limitations on what, realistically, can be achieved. So, as a country, we should also be looking at other options …One option is for fiscal support’.

One needs fiscal stimulus in the form of enhanced government expenditure, especially on infrastructure.  Relying on tax cuts is unlikely to be enough as an evaluation of the latest US experience shows. Alas, the Australian government is trapped in the language of accumulating fiscal surpluses as the primary metric of good economic management.