Managing Extreme Events I Famine

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Managing Extreme Events IFamine

• November 5, 2007

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Announcements

• One paragraph abstract of policy brief due on
  Friday (Nov. 9th)
• Should include
• Brief description of very specific problem in a
  specific country
• Who is your audience? (USAID, World Bank, etc.)
• Brief description of causes
• Brief explanation of your policy recommendation
• Financial Crises reading and lecture cancelled

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Readings for Today

• Sen, Chapter 7
• Smith, Overcoming Humanitarian Dilemmas in the
  DPRK

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Overview

• Famines (as a category of crisis)
• Conventional view vs. political view
• North Korea

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Risk, Again

• This week, managing extreme events or (form
  earlier lecture) large, covariant risks (see next
  slide)
• Question what role can and does the
  international community play in responding to
  such crises and mitigating the risk associated
  with them
• Natural disasters flood, drought, earthquakes,
  fires
• Famines and food shortages
• Civil wars
• Financial crises

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Famine I

• Traditional view weather drought, flood,
  freezesgtcrop failuresgtfood
  shortagesgtmalnutrition and starvationgtdeath
• Revisionist views the complexity and variety of
  famines

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Famine II

• Natural or man-made weather is only one source
  of crop failure and food shortages
• policy choices with respect to agriculture,
  particularly in Communist systems (Ukraine,
  China, North Korea) but also in market economies
  (Ethiopia 1972-74)
• war, civil war or domestic conflict leads to crop
  or distribution failures or difficulty in
  humanitarian assistance (the new famines)
• Once shortages are apparent, domestic politics
  forecloses international appeals or aid (North
  Korea)

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Famines III

• Decline in aggregate food availability is neither
  a necessary nor sufficient condition for famines
  to occur (Sen Sen and Dreze)
• Mortality is high, but rarely exceeds 2-3 percent
  of population, suggesting distribution issues are
  key
• Famines can occur if rising food prices prevent
  poor from being able to purchase food
• Not just cultivators and landless labor, but
  artisans and traders affected by generalized
  recession in rural economy
• Pastoralists and fisherman see deteriorating
  terms of trade as grain prices skyrocket

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Famines IV

• Sens focus on entitlements the bundle of
  commodities--and ultimately rights--that
  individuals can command, including
• Through production
• Labor (working for food sharecropping)
• Through purchases in the market (exchange)
• Through legal rights or guarantees of transfers,
  or anti-famine compacts

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Famines V

• Re-analysis of 6 famines as entitlement failures,
  particularly exchange failures speculation and
  hoarding lead to spiraling prices and bubbles
• And dont occur in democracies primarily for
  informational and political reasons (although
  Niger raises questions)
• A case for humanitarian intervention (parallel to
  genocides)?

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Famines IV

• Sources of mortality (excess deaths)
• The vulnerable--children and elderly--and the
  need to reach them
• An evolution in thinking from starvation as
  cause
• to hunger-related diseases--diarrhoea,
  gasto-enteritis, dystentary--and infection
• to epidemics death not from susceptibility but
  exposure
• Refugees and refugee camps contribute to
• Deaths from cholera, malaria, measles, typhus
  (the Central African refugees)

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North Korea Background

• Partition
• Northern part of the peninsula more
  industrialized, the South the breadbasket.
• Devastated by 1950-53 war, armistice in 1954.
• Centrally planned economy organized along Soviet
  lines
• Agriculture collectivized, brought under state
  control.
• Food security sought through self-sufficiency
  (juche) at the national, provincial, and even
  county level.
• Agricultural production system highly
  input-intensive dependent on energy, fertilizer

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Origins of the Crisis

• The changed geo-strategic context
• Soviet aid cut-off, mid-1980s.
• Massive trade shock 1990
• Juche strategy and limited exports means
  declining access to commercial financing for
  imports
• Industrial economy collapses, deprives
  agriculture of industrial inputs
• Yields and output fall
• To maintain output levels, increasingly marginal
  land is brought into production hillsides
  denuded, soil erosion, river silting
• The 1995 floods provide cover to appeal for aid

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Aggregate Grain Supply

• The debate over famine food availability or
  distribution?
• Economic decline from mid-1980s.
• Deprived of inputs, agricultural yields fall
• The misunderstood role of weather.

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Aggregate food balances

• Demand controversies
• Normal, human, minimum human needs
• Actual v. counterfactual supply
• Was the famine avoidable, and if so by when?
• The failure of the external sector

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Crowding out aid as balance of payments support
Total Imports and Commercial Food Imports
Imports and Aid
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Microeconomic analysis of the famine the
entitlement failure

• Lets eat two meals a day
• Constrained monitoring, incentives to divert, and
  the development of markets.

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Food availability or entitlement failures?

• Historically food distributed through the Public
  Distribution System, a rationing system
• The system breaks down
• the state vs. the cultivators incentives to
  hoard, divert effort into private plots
• Central government engages in triage cant--or
  wont--distribute shortfalls
• As social compact breaks down, households resort
  to coping behavior (internal migration, foraging)
• Food increasingly allocated through markets
• Estimated excess deaths 600,000-1,000,000 (3-5
  percent of population).

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Foreign Donors and the DPRK Government

• Myth of the natural disasters
•   Relations fundamentally adversarial
•   The humanitarian principles and the concerns
  of the NGOs and donors
• The nuclear crisis and the political use of food
  aid
• The US
• Japan
• South Korea

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Conclusions and Things to Think About

• How are famines similar to or different from
  other types of humanitarian crises, and what does
  that mean for the international response?

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What is to be done?

• Aid is politically precarious.
• Agriculture-centric strategy probably
  insufficient
• WFP seeking 100 million in 2006-7
• but donor fatigue has set in.
• Industrial revival is key the fallacy of
  self-sufficiency
• Domestic and foreign incentives to muddle through
  imply continuation of food crisis
• But new agreement may provide the basis for
  resumption of external assistance