[Stoves] Re: Do “market-based”, “results-based” distribution strategies get in the way of the poor.? (Taken from Re: GACC Webinar (that was, Paul, Ron))

Dear Nikhil,

Your reply is thoughtful and informative (at least it is to me).  

Economics terminolgy:  “Supplier finance is critical from manufacturing to distribution/after-sales service,”
If the suppliers (including the person who supplied the sales work) are not paid sufficiently, the system will break down (eventually, if not soon).  So, “paying all the bills” is ultimately the name of the game of success.

I am interested in carbon offsets for paying the bills.  And that is a crucial “demand” issue.  (“Supply” will follow demand, in this case.)   And demand for carbon credits is very much “in the eye of the beholder.” 

The financial part of the TLUD stove situation (IMO) keeps coming back to the value of carbon offsets generated.   But it is too thinly related to the purpose of the Stoves Listserv.   So I will send ANOTHER  message about this. 

(I will stay active on the Stoves Listserv, but not about carbon finance issues of stoves — except to give appropriate updates, if with merit.   And I will post appropriate messages about stoves and carbon in the EPosts section of my website   drtlud.com  )


On 9/9/2017 4:40 PM, Nikhil Desai wrote:


I have had some experience with the use and abuse of terms “market-based” and “results-based” in the aid business. “Market-based” does not exclude taxes and subsidies; in fact, it is a code word for using taxes and subsidies rather than command-and-control.  Sometimes the costs are hidden; e.g., it takes money and skills to administer taxes and subsidies.  Hence my distress.

“Results” have become quite a fad in the last 20 years — output, outcome, and identification of “benefits” are all buzzwords on which a small cottage industry burns inferior data fuel in inefficient models to produce intellectual smoke. So long as the donor and the donnee agree which expert to put in charge of Monitoring and Evaluation (M&E) and get the desired ratings on the project, career promotions are guaranteed all around. Those who ask questions are thrown out. 

1. Reliable, efficient last mile distribution chains to poor households are difficult to develop. I can write many personal stories on these. Micro-finance for the users is not the answer; too high-cost. Supplier finance is critical from manufacturing to distribution/after-sales service, and that is not easy. Several things have to just “go right” in the procurement, inventory, and human resources chains. 

2. Massive free or near-free distribution is indeed a good idea, provided the upper and middle classes are taken care of first and weaned off subsidies. This is being done with the Indian LPG scheme. though I am skeptical that Kirk Smith’s dream of “complete and permanent transition”. Not only are the costs too high, I support a Woman’s Right to Choose (stacking). And even then the subsidy burden is high and not transparent. (There is GOI subsidy under Direct Benefit Transfer L(?) or DBTL and on top of it there is a product-based “unrecovered loss” for public sector oil companies. It is complicated) Distribution to the poorest who don’t have permanent homes, and/or collect woodwaste and such, or don’t even have food to cook or time to cook, is a serious problem. 

Yes, these two problems limit effective, quick action to reach the poor (esp. those who are remote and whose income/cooking is not regular). 

Please do keep at these questions. I haven’t yet found a sure-fire alternative, or rather, it takes enormous knowledge-base and TLC to foster entrepreneurship among the poor that leverages local knowledge and capital (financial, human, physical) in order to develop successful technology innovators. (I would be happy to converse about this on the phone.) 

Like many others in such business, I have some fantasies on how small-scale local businesses can be fostered with a combination of subsidies, knowledge intermediation, to build transformative biomass supply and use industries. But I haven’t yet figured out how to do this on a large enough scale for the “stoves” projects. Definition of economic and agro/animal/forest contexts is key.