Economic Development | | What is economic development? | | Economic Development is about creating an environment that enables our city to deliver jobs, services, resources and opportunities to provide an attractive quality of life for its people. It is about balancing social, cultural, environmental and economic priorities on a sustainable basis to create economic wealth.
| | What are the benefits of climate change policies? | | The benefits of reducing greenhouse gas emissions are the value of avoided impacts from climate change. These include:
Changes in resource productivity; for example, lower agricultural yields, scarcer water resources
Damages to human-built environment; for example, coastal flooding due to sea-level rise
Human-health impacts; for example, increased incidence of tropical diseases in temperate climates
Damages to ecosystems; for example, loss of biodiversity, damage to aquatic ecosystems.
| | How are the benefits of reducing greenhouse gas emissions valued? | | For impacts on commodities that are marketed goods, actual decisions by consumers are observed in real markets; for example, how in the past firms and consumers have reacted to higher prices of fossil fuels and raw materials. This method is reliable and unbiased, but has narrow applicability - in particular it is not useful for ecological impacts as these are non market impacts.
For impacts on non-marketed goods, direct observation is not possible. Thus subjective methods are used which have wide applicability but lower reliability. Research tools are used to ask people one of two questions:
1. What are you willing to pay for greater environmental quality?, or
2. What are you willing to accept as compensation for lower environmental quality?
| | What are the challenges in estimating benefits? | | Great uncertainties surround physical impacts of climate change, making them hard to value. This is compounded by:
Imprecise estimates of the economic consequences of physical impacts
Valuation of non-marketed goods/services is notoriously imprecise
Economic damage estimates should allow for adaptation
Economic estimates come from industrialized countries, mainly the U.S., but less is known about potential economic damages in developing countries which are particularly vulnerable to global climate change.
| | What other considerations are there in estimating benefits? | | Factors further complicating the valuation of impacts of climate change include:
Beyond a doubling of greenhouse gas concentrations, there may well be thresholds where impacts either accelerate or reverse; for example, higher temperatures may boost agricultural productivity to some extent but as it gets warmer and warmer, this benefit is exhausted and agriculture productivity declines
Low probability but high impact events, also know as climate surprises, may well impose considerable costs; for example, storm surges or droughts
Regional impacts may be far more pronounced that international or even national average impacts
Adaptation and coping mechanisms will act to lessen the costs of climate change
Existing vulnerabilities will place communities at greater risk; for example, real estate developments on low lying coastal areas.
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Microfinance | | What is microfinance? | | “Microfinance” is often defined as financial services for poor and low-income clients. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as “microfinance institutions” (MFIs). These institutions commonly tend to use new methods developed over the last 30 years to deliver very small loans to unsalaried borrowers, taking little or no collateral. These methods include group lending and liability, pre-loan savings requirements, gradually increasing loan sizes, and an implicit guarantee of ready access to future loans if present loans are repaid fully and promptly.
More broadly, microfinance refers to a movement that envisions a world in which low-income households have permanent access to a range of high quality financial services to finance their income-producing activities, build assets, stabilize consumption, and protect against risks. These services are not limited to credit, but include savings, insurance, and money transfers.
| | What is the difference between microfinance and microcredit? | | Microcredit refers to very small loans for unsalaried borrowers with little or no collateral, provided by legally registered institutions. Currently, consumer credit provided to salaried workers based on automated credit scoring is usually not included in the definition of microcredit, although this may change.
Microfinance typically refers to microcredit, savings, insurance, money transfers, and other financial products targeted at poor and low-income people.
| | Who are microfinance clients? | | Typical microfinance clients are poor and low-income people that do not have access to other formal financial institutions. Microfinance clients are usually self-employed, household-based entrepreneurs. Their diverse “microenterprises” include small retail shops, street vending, artisanal manufacture, and service provision. In rural areas, microentrepreneurs often have small income-generating activities such as food processing and trade; some but far from all are farmers.
Hard data on the poverty status of clients is limited, but tends to suggest that most microfinance clients fall near the poverty line, both above and below. Households in the poorest 10% of the population, including the destitute, are not traditional microcredit clients because they lack stable cash flows to repay loans. Most clients below the poverty line are in the upper half of the poor. It is clear, however, that some MFIs can serve clients at the higher end of the bottom half. Women often comprise the majority of clients.
Over the past decade, a few MFIs have started developing a range of products to meet the needs of other clients, including pensioners and salaried workers. Although little is known about the universe of potential clients, the number of households without effective access to financial services is enormous.
| | How do borrowers use microcredit loans? | | Most microcredit borrowers have microenterprises—unsalaried, informal income-generating activities. However, microloans may not predominantly be used to start or finance microenterprises. Scattered research suggests that only half or less of loan proceeds are used for business purposes. The remainder supports a wide range of household cash management needs, including stabilizing consumption and spreading out large, lumpy cash needs like education fees, medical expenses, or lifecycle events such as weddings and funerals.
| | What kinds of institutions deliver microfinance? | | Most MFIs started as not-for-profit organizations like NGOs (non-governmental organizations), credit unions and other financial cooperatives, and state-owned development and postal savings banks. An increasing number of MFIs are now organized as for-profit entities, often because it is a requirement to obtaining a license from banking authorities to offer savings services. For-profit MFIs may be organized as non-bank financial institutions (NBFIs), commercial banks that specialize in microfinance, or microfinance departments of full-service banks.
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