Governance

The most appropriate role of the government to help lift their people out of poverty is to provide an enabling environment. This role includes the removal of physical, legal, financial, socio-cultural and political barriers to basic services for all, in particular for the poor and disadvantaged groups.

The United Nations Economic and Social Commission for Asia and the Pacific’s (UNESCAP’s) study,Access to Basic Services:The Importance of Good Governance, argues that this is precisely what is needed to achieve their Millennium Development Goals (MDGs) and eradicate extreme poverty. The UNESCAP study does a nice job of investigating the importance of good governance and how countries with good governance in place have more effective systems to help their most vulnerable citizens. I would like to share a bit of the report with you.

The report discusses services that include primary and secondary education, primary and reproductive health care, HIV/AIDS prevention, care and treatment, and adequate water and sanitation. The study also points out the need to attend to the additional challenges that women face. Women are more vulnerable to poverty than men due to factors such as incomplete education, illiteracy, early marriage and childbearing, lack of access to employment, lower wages, lack of rights in divorce and lack of property rights.

The provision of effective and efficient services requires good governance. Good governance refers to a set of just processes by which decisions affecting public affairs are reached and implemented. Good governance ensures that all, including the poor and other disadvantaged groups, are included and have the means (a) to influence the direction of development as far as it affects their lives, (b) to make contributions to development and have these recognized, and (c) to share in the benefits of development that improve their lives and livelihoods.

The authors present the case that good governance is essential to ensure that strategies for basic service provisions and poverty reduction are effective and sustainable. Good governance involves nine principles:

1. Transparency: the degree to which the rules, standards and procedures for decision-making are open, clear, verifiable and predictable.
2. Participation: the opportunity for people affected by the decision to influence the process of decision making directly or indirectly.
3. Inclusiveness and equity: the principle that no one can be excluded from the process of development on the basis of gender, race, religion, etc.
4. Efficiency: a measure of how economically resources are used to produce the intended results.
5. Effectiveness: a measure of the extent to which the intervention achieves its objectives.
6. Subsidiary: the principle that decision-making takes place at the level most appropriate for the issue (usually the lowest level possible).
7. Adherence to the rule of law: the principle that every member of a society, even a ruler, must follow the law.
8. Accountability: the responsibility of a decision- maker to explain and justify the decisions it made and implemented, and the results these produced.
9. Sustainability: The likelihood that the positive effects of an intervention will persist for an extended period after the intervention as such ends.

 Barriers range from limited access to legal, financial, health and education services, lack of political power The authors also present a number of strategies for removing these and other barriers, including broadening the range of service providers to include the formal and informal private sector, civil society organizations and traditional institutions. Efforts should work to empower the poor and provide more efficient and equitable service provision, allowing the most vulnerable to find their own solutions that respond to their needs.

Poverty reduction requires strategies to help the poor overcome a range of physical, financial, legal and socio-cultural barriers. Good governance helps to ensure that all people have adequate access to basic services – a necessity if we are to achieve the MDGs and reduce and eventually eradicate poverty.

It is important to remember that relatively simple changes can make a major difference, but those changes must be developed in concert with good governance and designed to overcome the challenges that communities face, even as they differ from one community to another.

Questions for consideration

Can the cotton industry help the development of governance frameworks or create a culture of engagement with some of the most disadvantaged cotton communities?

Vijaya Switha Grandhi and Alec Crawford’s paper, Price Volatility in the Cotton Yarn Industry: Lessons from India, was published in October, 2011 by the International Institute for Sustainable Development (IISD). The authors look at the impact that cotton yarn price volatility has on small-scale weavers as well as at the public and private interventions that have been put in place to mitigate the effects of the impact.  While the scope of the study is quite specific and the volume of cotton that is processed by similar actors is small, the number and contribution of small-scale actors throughout the global cotton supply chain is vast. For example, the paper cites that there are 6.5 million handloom weavers in India – a workforce second in size only to agriculture. Given the recent export bans put in place by India’s government to ensure that their cotton processing industry has sufficient supply of cotton lint, this is a relevant study.

I would like to share some insight from this paper that I feel should be considered by other supply chain actors and the cotton industry to ensure a healthy supply chain.

India’s cotton yarn industry depends almost entirely on India raw cotton. Power is not evenly distributed along the supply chain. Weavers are largely dependent on traders and middlemen, who are often blamed by the weavers for price fluctuations.

The level of organization and political influence wielded by different actors (e.g. producers, weavers, spinners) determines a group’s influence or power. Strong and effective leadership is critical for cooperatives to influence and represent their constituents –mostly small-scale actors. Market share also factors into an entity’s overall power. For example, the powerloom industry, which now accounts for 40 percent of total Indian cloth production (handlooms account for less than 20 percent), employs approximately 4.8 million people (each with a vote in public elections). The powerloom industry holds more political power because of these larger market and employment positions.

The paper discusses how interconnected the various actors’ operations are. For example, if spinners stop operating then the mills will likely struggle to find the raw materials necessary to maintain their capacity and meet their customers’ needs. The authors also look at the many factors that contribute to volatility, from cotton production (unpredictable yields, government support policies) to spinning (hoarding, obsolete technology), distribution channels (monopolies, yarn hoarding), macro context (trade policies, uneven distribution of political power), technology (unclear government initiatives), finance (lack of institutional finance), and market (competition with synthetics).

The paper concludes with the following findings and recommendations:

• Institutional corrections: Traders can exploit the handloom weavers because the weavers are not well organized. Cooperatives and the government should stockpile some cotton to cushion the weaver during volatile times.
• Technology investments: Government and private actors should invest in sound and sensible technology improvements.
• Supply/trading timing: Timely delivery of reasonably priced cotton and yarn is essential to stabilizing prices and incomes.
• Finance:  Improving the inclusion of powerloom or handloom weavers – including those not in a cooperative – could have far reaching impacts on community livelihoods given the scale of the industry.
• Capacity building: Improvements in weavers’ knowledge and understanding of market and technology trends are warranted.

I believe there is a lot we can learn from this and other studies in light of recent challenges the cotton industry has faced from global price volatility. I hope we can continue to come together to strengthen the global trade of cotton – from small-scale weavers to large manufacturers and beyond.

Questions for consideration

There are many important findings in this study, but I note the importance of effective organization to help stakeholders their negotiating power. Is this an issue throughout the cotton industry? If so, can we help ensure a balance of power throughout the supply chain?

This is another post in a series of blogs presenting highlights from the International Union for Conservation of Nature's (IUCN's) Water and Nature Initiative (WANI) toolkit. 

This blog discusses Pay: Establishing payments for watershed services that provides guidance on how to improve water security by establishing rewards or payments for ecosystem services provided by a given water resource. Providing appropriate payment to land and water managers to maintain or restore watershed services is an innovative way to improve water security.

Water-related services can include producing agricultural products, supporting ecosystem functioning, regulating water flows, and providing cultural and recreational attributes. Pay presents how such services can be valued and measured and provides an overview of the various components of an effective payment scheme for watershed services.

Total Economic Value (TEV) is a common framework for valuing ecosystems. It uses two categories - use and non-use values. Use values can be:

Direct use value - mainly derived from goods that originate directly from the watershed

Indirect-use value - mainly derived from services that the surrounding ecosystem provides

Non-use values are derived from benefits from preserving the watershed and ecosystem in its natural state. These can be either keeping something in existence (existence value) or preserving the ecosystem or watershed for future generations (bequest value).

Valuations are an important basis for negotiations but in the end the values will be determined by negotiations between parties.

Designing a payment scheme should be centered on creating market-based incentives to change management choices that optimize the benefits of the watershed.

Like other documents in the WANI toolkit, Pay focuses on shared benefits and values of ecologic resources From a ecosystem perspective. It outlines how to identify and value watershed services, design a payment scheme, identify and engage stakeholders and negotiate agreements, establish rules and governance frameworks and monitor progress and share learning across different stakeholders.

Pay also describes the following payment schemes:

Private - direct payments to service providers, purchase of land or sharing of costs among private entities

Cap-and trade - trading of water permits among users with an overall cap of water withdrawal and pollution

Certification or eco-labeling - environmental and social attributes are included in the costs of a traded product

The needs and capacities of the various stakeholders must be recognized as well as clear linkages between upstream land and water use, and downstream benefits.

Pay outlines elements of an agreement - services provided, compensation, monitoring and compliance, and governance and management. It also presents the need for clear and enforceable rules and transaction mechanisms and that these must operate within a wider framework of laws, policies and customary arrangements.

Finally, Pay explains the importance of incorporating social learning to continually monitor progress and prioritize efforts. The social learning process should be accessible to all well-informed stakeholders and include a feedback loop that can lead to continuous improvement to the overall payment scheme.

To review the WANI toolkit and related documents please visit: http://www.iucn.org/about/work/programmes/water/resources/toolkits/

This blog discusses Pay: Establishing payments for watershed services that provides guidance on how to improve water security by establishing rewards or payments for ecosystem services provided by a given water resource. Providing appropriate payment to land and water managers to maintain or restore watershed services is an innovative way to improve water security.

Water-related services can include producing agricultural products, supporting ecosystem functioning, regulating water flows, and providing cultural and recreational attributes. Pay presents how such services can be valued and measured and provides an overview of the various components of an effective payment scheme for watershed services.

Total Economic Value (TEV) is a common framework for valuing ecosystems. It uses two categories – use and non-use values. Use values can be:

Direct use value – mainly derived from goods that originate directly from the watershed

Indirect-use value – mainly derived from services that the surrounding ecosystem provides

Non-use values are derived from benefits from preserving the watershed and ecosystem in its natural state. These can be either keeping something in existence (existence value) or preserving the ecosystem or watershed for future generations (bequest value).

Valuations are an important basis for negotiations but in the end the values will be determined by negotiations between parties.

Designing a payment scheme should be centered on creating market-based incentives to change management choices that optimize the benefits of the watershed.

Like other documents in the WANI toolkit, Pay focuses on shared benefits and values of ecologic resources From a ecosystem perspective. It outlines how to identify and value watershed services, design a payment scheme, identify and engage stakeholders and negotiate agreements, establish rules and governance frameworks and monitor progress and share learning across different stakeholders.

Pay also describes the following payment schemes:

Private – direct payments to service providers, purchase of land or sharing of costs among private entities

Cap-and trade – trading of water permits among users with an overall cap of water withdrawal and pollution

Certification or eco-labeling – environmental and social attributes are included in the costs of a traded product

The needs and capacities of the various stakeholders must be recognized as well as clear linkages between upstream land and water use, and downstream benefits.

Pay outlines elements of an agreement – services provided, compensation, monitoring and compliance, and governance and management. It also presents the need for clear and enforceable rules and transaction mechanisms and that these must operate within a wider framework of laws, policies and customary arrangements.

Finally, Pay explains the importance of incorporating social learning to continually monitor progress and prioritize efforts. The social learning process should be accessible to all well-informed stakeholders and include a feedback loop that can lead to continuous improvement to the overall payment scheme.

To review the WANI toolkit and related documents please visit: http://www.iucn.org/about/work/programmes/water/resources/toolkits/

Water governance incorporates systems-political, social, economic, and administrative-to develop and manage water resources and delivery to different members of society. Elements of a strong water governance program should include mechanisms and processes through which all involved stakeholders communicate their needs, exercise their legal rights and mediate their differences to develop fair and equitable water programs.

Agriculture is a major water user and is therefore likely to be impacted by potential future changes to water allocation and access. Issues of great importance to the cotton industry include:

o   Allocation of water resources for application in agriculture and industry (textile processing)

o   Access to efficient water delivery and irrigation systems

o   Pricing

o   Increased regulations or reporting

A strong governance program would guide the decision-making process, regulation creation, and execution, operation, and monitoring of all aspects of a water program. Water governance can exist at a local (watershed) level, national level, or regional (transboundary) level. The interconnections between these different governance programs should be considered to optimize their effectiveness and integrity. Communities may benefit from having a national Integrated Water Resource Management system that considers and addresses all aspects of a water program.

It is important to establish the water governance systems and mechanisms in the short-term because it will likely be more difficult and contentious as resources become more scarce, demand increase and lesser reliability of weather patterns (rainfall) due to climate change.

In future blogs, I will continue to explore water governance with a focus on introducing tools and systems that can be used to develop water governance programs and system.

Questions

- What, if any, efforts are being made within the cotton industry to evaluate, improve or develop water governance programs that protect the cotton industry's water allocation and rights?

- What are examples of strong governance programs that address local watersheds but work within a defined national or regional water governance framework?