Policy Processes and Cost-Effectiveness of Anti-Poverty Interventions

1. Policy Processes and Cost-Effectiveness of Anti-Poverty Interventions Akhter Ahmed International Food Policy Research Institute Data Analysis and Technical Assistance Ltd

2. Why study “Policy Processes” of anti-poverty interventions? Values, motivations, and power of different policy actors matter They shape the policymaking processes Policy research community needs to understand these processes for the following reasons: To fill a research gap To enhance impact of policy research To improve the quality of decision making so that poverty reduction is accelerated in a cost-effective way (Haddad and Pelletier 2003)

3. Potential benefits of “Policy Processes” research Immediate benefits: Improved access to and use of existing knowledge What information is needed to influence agenda setting, decisions, and implementation? Greater relevance of new research Are we asking the right questions? Are we seeking to influence the right people? Intermediate benefits: Improved quality of debate, discussion, deliberation “Better” policy decisions Better implementation processes Ultimate benefits Accelerated poverty reduction (Haddad and Pelletier 2003)

4. Examples of policy process research questions Getting on to agenda How do anti-poverty interventions get on to the political and decision agendas? (e.g., the creation of FFE and its transformation to CFE) Determinants of decisions taken What were the competing considerations in deciding whether or not to fund FFE? Implementation of decisions Why were available poverty maps not used for geographic targeting of FFE? What were the factors determining the scaling up of FFE?

5. Examples of research methods for policy process questions Policy process question How did the concept of FFE get on to the political and decision agendas? Approach: ex post Potential methods Retrospective interviews with knowledgeable participants, such as bureaucrats, politicians, donors, NGOs Review project documents, donor reports, research reports Review of newspaper archives Policy process question What determines the extent to which policy options emerging from research findings of anti-poverty interventions get into the poverty reduction strategy process (PRSP)? Approach: ex ante Potential methods Multiple country case studies testing various methods for conducting PRSPs Interviews with stakeholders (e.g. Planning Commission members, politicians, donors, media) to discuss implementation potentials and obstacles

6. Are the anti-poverty interventions cost-effective? How much does it cost the government to transfer 1 taka of income to FFE/CFE participants? How much does it cost to increase school enrollment by 1%? How much does it cost to increase the monthly income (or total consumption) of program participants by 100 taka? How much does it cost to increase daily energy intakes by 100 kilocalories? What is the annual cost of reducing extreme poverty by 1 percent through each of the anti-poverty interventions?

7. Methods of cost-effectiveness analysis(1) An assessment of the cost-effectiveness of interventions involves a comparison of costs for providing measured benefits to program participants Costs of FFE/CFE transfers: The fiscal costs consist of the direct cost of the transfer itself (cash transfers and/or the value of food transfers) and costs of delivering the transfer amount to the point of distribution The benefit consists of the monetary value of the transfer received by a program participant Benefits are the supply-side values of transfers, where food commodities (wheat or rice) are valued at procurement prices Any pilferage or leakage in the process of transfer to program beneficiaries represents a system loss and, therefore, is counted in the cost calculation

8. Methods of cost-effectiveness analysis(2) Costs of microfinance: Could include the subsidy element (if any) in microfinance lending, plus administrative costs However, if the MFIs recover all costs through interests on lending, then there is no institutional costs for cost-effectiveness analysis The costs would include interests paid by program participants and transaction costs incurred by participants

9. Methods of cost-effectiveness analysis(3) Costs of agricultural technologies: Should we include costs of developing new agricultural technologies? Or, should we consider only the cost of delivering technologies, plus interests paid by program participants for borrowed funds and transaction costs incurred by participants? Any other costs?

10. Data for cost-effectiveness analysis Desk reviews of program documents Administrative data Semi-structured interviews of project officials at different levels