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The emerging field of precision medicine continues to offer hope for improving patient outcomes and accelerating the development of innovative and effective therapies that are tailored to the unique characteristics of each patient. To date, however, progress in the development of precision medicines has been limited due to a lack of reliable biomarkers for many diseases. Biomarkers include any defined characteristic—ranging from blood pressure to gene mutations—that can be used to measure normal biological processes, disease processes, or responses to an exposure or intervention. They can be extremely powerful tools for guiding decision-making in both drug development and clinical practice, but developing enough scientific evidence to support their use requires substantial time and resources, and there are many scientific, regulatory, and logistical challenges that impede progress in this area.

On October 27th, 2015, the Center for Health Policy at The Brookings Institution convened an expert workshop that included leaders from government, industry, academia, and patient advocacy groups to identify and discuss strategies for addressing these challenges. Discussion focused on several key areas: the development of a universal language for biomarker development, strategies for increasing clarity on the various pathways for biomarker development and regulatory acceptance, and approaches to improving collaboration and alignment among the various groups involved in biomarker development, including strategies for increasing data standardization and sharing. The workshop generated numerous policy recommendations for a more cohesive national plan of action to advance precision medicine.  

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INTRODUCTION

In recent years, there has been a resurgence of interest in the issue of inequality. Part of this resurgence can be traced to new evidence of persistent and widening wealth gaps. Average incomes may be converging globally as a result of high growth in emerging markets, stronger growth in many poor countries, and slow growth in rich countries. However, the evidence also shows that within countries a parallel process of income divergence, marginalization and rising inequality is also taking place. Put differently, the rising tide of global prosperity is not lifting all boats.

Much of the international debate on inequality focuses on the distribution of income across and within countries. Other dimensions of inequality have received less attention. This is unfortunate. Amartya Sen has described development as “a process of expanding the real freedoms that people enjoy” by building human capabilities or their capacity to lead the kind of life they value. Income is a means to that end but it is a limited indicator of well-being. Moreover, a person’s income reflects not just personal choice but also their opportunities for improving health, literacy, political participation and other areas. Education is one of the most basic building blocks for the “real freedoms” that Sen describes. People denied the chance to develop their potential through education face diminished prospects and more limited opportunities in areas ranging from health and nutrition, to employment, and participation in political processes. In other words, disparities in education are powerfully connected to wider disparities, including international and intra-country income inequalities. This is why education has been identified as one of the most critical factors in breaking down the disadvantages and social inequalities that are limiting progress toward the United Nations’ Millennium Development Goals (MDGs)—development targets adopted by the international community for 2015.

Understanding patterns of educational inequality is critical at many levels. Ethical considerations are of paramount importance. Most people would accept that children’s educational achievements should not be dictated by the wealth of their parents, their gender, their race or their ethnicity. Disparities in educational opportunities are not just inequalities in a technical sense, they are also fundamental in equities—they are unjust and unfair. In an influential paper, John Roemer differentiated between inequalities that reflect factors such as luck, effort and reasonable reward, and those attributable to circumstances that limit opportunity (Roemer 1988).1 While the dividing line may often be blurred, that distinction has an intuitive appeal. Most people have a high level of aversion to the restrictions on what people—especially children—are able to achieve as a result of disparities and inherited disadvantages that limit access to education, nutrition or health care (Wagstaff, 2002). There is a wide body of opinion across political science, philosophy and economics that equal opportunity—as distinct from equality of outcomes—is a benchmark of egalitarian social justice. The theories of distributive justice associated with thinkers such as Amartya Sen, John Rawls, Ronald Dworkin and John Roemer argue, admittedly from very different perspectives, that public policy should aim at equalizing opportunity to counteract disadvantages associated with exogenous circumstances over which individuals or social groups have no control. Given the role of education as a potential leveler of opportunity, it is a national focal point for redistributive social justice.

Considerations of economic efficiency reinforce the ethical case for equalizing educational opportunities. Education is a powerful driver of productivity, economic growth, and innovation. Econometric modeling for both rich and poor countries suggests that an increase in learning achievement (as measured by test score data) of one standard deviation is associated on average with an increase in the long-run growth rate of around 2 percent per capita annually (Hanushek and Wößmann, 2010; Hanushek, 2009; Hanushek and Wößmann, 2008). Such evidence points to the critical role of education and learning in developing a skilled workforce. Countries in which large sections of the population are denied a quality education because of factors linked to potential wealth, gender, ethnicity, language and other markers for disadvantage are not just limiting a fundamental human right. They are also wasting a productive resource and undermining or weakening the human capital of the economy.

International development commitments provide another rationale for equalizing educational opportunities. This is for two reasons. First, the commitments envisage education for all and achievement of universal primary education by 2015. Second, there is mounting evidence that inequality is acting as a brake on progress toward the 2015 goals. Since around 2005, the rate of decline in the out-of-school population has slowed dramatically. Based on current trends, there may be more children out of school in 2015 than there were in 2009. Caution has to be exercised in interpreting short-run trends, especially given the weakness of data. However, the past three editions of the UNESCO Education for All Global Monitoring Report (GMR) have highlighted the role of inequality in contributing to the slowdown with governments struggling to reach populations that face deeply entrenched disadvantages (UNESCO, 2008, 2010, 2011). Therefore, picking up the pace toward the 2015 goals requires a strengthened focus on equity and strategies that target the most marginalized groups and regions of the world (Sumner and Tiwari, 2010; UN-DESA, 2009; UNESCO, 2010). It should be added that disparities in education relate not just to access, but also to learning achievement levels.

Accelerated progress in education would generate wider benefits for the MDGs. Most of the world’s poorest countries are off-track for the 2015 MDG target of halving income poverty and a long way from reaching the targets on child survival, maternal health and nutrition. Changing this picture will require policy interventions at many levels. However, there is overwhelming evidence showing that education—especially of young girls and women—can act as a potent catalyst for change. On one estimate, if all of sub-Saharan Africa’s mothers attained at least some secondary education, there would be 1.8 million fewer child deaths in the region each year. Thus while education may lack the “quick fix” appeal of vaccinations, it can powerfully reinforce health policy interventions.

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Drive through any number of outer-ring suburbs in America, and you’ll see boarded-up and vacant strip malls, surrounded by vast seas of empty parking spaces. These forlorn monuments to the real estate crash are not going to come back to life, even when the economy recovers. And that’s because the demand for the housing that once supported commercial activity in many exurbs isn’t coming back, either.

By now, nearly five years after the housing crash, most Americans understand that a mortgage meltdown was the catalyst for the Great Recession, facilitated by underregulation of finance and reckless risk-taking. Less understood is the divergence between center cities and inner-ring suburbs on one hand, and the suburban fringe on the other.

It was predominantly the collapse of the car-dependent suburban fringe that caused the mortgage collapse.

In the late 1990s, high-end outer suburbs contained most of the expensive housing in the United States, as measured by price per square foot, according to data I analyzed from the Zillow real estate database. Today, the most expensive housing is in the high-density, pedestrian-friendly neighborhoods of the center city and inner suburbs. Some of the most expensive neighborhoods in their metropolitan areas are Capitol Hill in Seattle; Virginia Highland in Atlanta; German Village in Columbus, Ohio, and Logan Circle in Washington. Considered slums as recently as 30 years ago, they have been transformed by gentrification.

Simply put, there has been a profound structural shift — a reversal of what took place in the 1950s, when drivable suburbs boomed and flourished as center cities emptied and withered.

The shift is durable and lasting because of a major demographic event: the convergence of the two largest generations in American history, the baby boomers (born between 1946 and 1964) and the millennials (born between 1979 and 1996), which today represent half of the total population.

Many boomers are now empty nesters and approaching retirement. Generally this means that they will downsize their housing in the near future. Boomers want to live in a walkable urban downtown, a suburban town center or a small town, according to a recent survey by the National Association of Realtors.

The millennials are just now beginning to emerge from the nest — at least those who can afford to live on their own. This coming-of-age cohort also favors urban downtowns and suburban town centers — for lifestyle reasons and the convenience of not having to own cars.

Over all, only 12 percent of future homebuyers want the drivable suburban-fringe houses that are in such oversupply, according to the Realtors survey. This lack of demand all but guarantees continued price declines. Boomers selling their fringe housing will only add to the glut. Nothing the federal government can do will reverse this.

Many drivable-fringe house prices are now below replacement value, meaning the land under the house has no value and the sticks and bricks are worth less than they would cost to replace. This means there is no financial incentive to maintain the house; the next dollar invested will not be recouped upon resale. Many of these houses will be converted to rentals, which are rarely as well maintained as owner-occupied housing. Add the fact that the houses were built with cheap materials and methods to begin with, and you see why many fringe suburbs are turning into slums, with abandoned housing and rising crime.

The good news is that there is great pent-up demand for walkable, centrally located neighborhoods in cities like Portland, Denver, Philadelphia and Chattanooga, Tenn. The transformation of suburbia can be seen in places like Arlington County, Va., Bellevue, Wash., and Pasadena, Calif., where strip malls have been bulldozed and replaced by higher-density mixed-use developments with good transit connections.

Reinvesting in America’s built environment — which makes up a third of the country’s assets — and reviving the construction trades are vital for lifting our economic growth rate. (Disclosure: I am the president of Locus, a coalition of real estate developers and investors and a project of Smart Growth America, which supports walkable neighborhoods and transit-oriented development.)

Some critics will say that investment in the built environment risks repeating the mistake that caused the recession in the first place. That reasoning is as faulty as saying that technology should have been neglected after the dot-com bust, which precipitated the 2001 recession.

The cities and inner-ring suburbs that will be the foundation of the recovery require significant investment at a time of government retrenchment. Bus and light-rail systems, bike lanes and pedestrian improvements — what traffic engineers dismissively call “alternative transportation” — are vital. So is the repair of infrastructure like roads and bridges. Places as diverse as Los Angeles, Phoenix, Salt Lake City, Dallas, Charlotte, Denver and Washington have recently voted to pay for “alternative transportation,” mindful of the dividends to be reaped. As Congress works to reauthorize highway and transit legislation, it must give metropolitan areas greater flexibility for financing transportation, rather than mandating that the vast bulk of the money can be used only for roads.

For too long, we over-invested in the wrong places. Those retail centers and subdivisions will never be worth what they cost to build. We have to stop throwing good money after bad. It is time to instead build what the market wants: mixed-income, walkable cities and suburbs that will support the knowledge economy, promote environmental sustainability and create jobs.

Five years have passed since several Arab countries revolted against their repressive regimes, and peace and stability are nowhere in sight. The unraveling of their political systems pushed these countries into challenging transition processes where violence is always a serious possibility. Yemen and Libya’s civil wars present blunt examples of failed transitions, raising concerns about protracted political instability, not only in those two countries, but potentially in neighboring ones as well. Tunisia theoretically managed to complete its transition successfully. It ratified a new constitution, addressing the need for a new social contract, and held two rounds of elections. Tunisia also passed a transitional justice law to provide a framework for adjudicating both victims’ grievances and perpetrators’ crimes of the past political era. Nonetheless, Tunisia finds its stability challenged by increasing levels of polarization between its various societal segments.

An inclusive national dialogue is the starting point of a comprehensive national reconciliation process. It gives transitioning societies an opportunity to develop a vision and theoretical framework for their futures, gives legitimacy to transition processes, and encourages negotiation and compromise. Tunisia held a homegrown national dialogue driven mainly by civil society organizations and Yemen completed an eight-month, U.N.-assisted national dialogue conference. Libya’s engagement in U.N.-led negotiations raised questions over whether all parties had representation.

As each society suffered decades of repression and has a number of unanswered questions, investigating—and dealing with—the truth about the past is also essential. Relatedly, determining how to handle former regime elements has profound implications for post-revolution transitions. While Libya opted to purge all those who served in Muammar Qaddafi’s regime through adopting its “Political Isolation Law,” Yemen chose to grant President Ali Abdullah Saleh immunity from prosecution in return for his abdication—sacrificing justice to preserve peace. However, Saleh later returned to politics, allying with the Houthis to take over the state, meaning Yemen ultimately achieved neither justice nor peace. Tunisia, on the other hand, has adopted a transitional justice law that mandates, among other measures, the investigation and prosecution of the state’s crimes since 1955. While the resulting Truth and Dignity Commission has received thousands of complaints from victims of past abuses, progress has otherwise been slow, as the body has struggled to establish an effective organizational structure or execute a clearly defined work plan. Controversy over the selection of commissioners and an overall lack of publicity has also hindered the truth-seeking process.

Reparations are another important part of the pursuit of justice and healing. Done correctly, they can bring previously marginalized and abused segments of society back into the mainstream, where they can make positive contributions to the development of the country. Yemen and Tunisia experienced extensive human rights violations during the decades-long reigns of Saleh and Zine El Abidine Ben Ali, while lacking the resources to engage in meaningful and comprehensive rehabilitation of victims of past abuses. This left the two countries’ transition processes struggling with a major component—the victims—feeling further marginalization added to their past traumas. Libya, however, who has the resources to fund a process of thorough rehabilitation of victims of its dictatorship, slid into civil war that prevented the proper addressing of past wounds.

Even if these societies overcome their polarization at the personal level, however, they will not accomplish successful transitions unless their healing is accompanied by institutional reforms. “Regime renovation” rather than “regime change” in Yemen presented a serious obstacle to deep reforms of state institutions, eventually leading to some segments of security units taking part in Saleh-Houthi coup against the transitional government. After the collapse of the Qaddafi regime, revolutionaries and militias demanded a purge as a method of institutional reform—similar to de-Baathification in Iraq. The purge contributed to the outbreak of a civil war. Tunisia, on the other hand, approached institutional reform from a different angle and succeeded in putting together a sound formula, but it is facing serious challenges to implementation.

Ultimately, a variety of actors have played key roles in Libya, Yemen, and Tunisia’s national reconciliation processes. In all three countries, women have been integral to bringing about change, and must continue to be involved in reshaping their countries. As agents of change, women helped to initiate the uprisings in Yemen and Libya, and have already proven to be effective agents of reconciliation. In Yemen and Libya, tribes are key stakeholders that must be incorporated after decades of manipulation and marginalization. Depending on the way they become involved, tribes could play key role in either stabilizing or destabilizing transitions. Domestic civil society groups have been essential to Tunisia’s progress so far, and are fast developing in Yemen and Libya. Their continued involvement—and assistance from international groups—will go a long way toward consolidating new states that honor human and civil rights.

The processes of national dialogue, truth seeking, reparation, accountability, and institutional reform, especially if supported by key agents of reconciliation, including women, civil society, and tribes, can combine to create the momentum needed to bridge divides and help post-Arab Spring societies move toward sustainable peace, stability, and development.

This piece was originally published on the Yale Press Blog.

For more of Ibrahim Fraihat’s analysis on Yemen, Libya, and Tunisia after the Arab Spring, read his new book “Unfinished Revolutions” (Yale University Press).  

Event Information

Approximately two billion adults across the world lack access to formal financial services. To address this particular economic challenge, many developing countries have made significant efforts to expand access to and use of affordable financial services for the world’s poor. Financial inclusion can be achieved via traditional banking offerings, but also through digital financial services such as mobile money, among other innovative approaches.

The Brookings Financial and Digital Inclu­sion Project (FDIP) Report and Scorecard seeks to help answer a set of fundamental questions about today’s global financial inclusion efforts, including;

1. Do country commitments make a difference in progress toward financial inclusion?
2. To what extent do mobile and other digital technologies advance finan­cial inclusion?
3. What legal, policy, and regulatory approaches promote financial inclusion? 

To answer these questions, Brookings experts John D. Villasenor, Darrell M. West, and Robin J. Lewis analyzed finan­cial inclusion in 21 geographically, economically, and politically diverse countries. This year’s report and scorecard is the first of a series of annual reports examining financial inclusion activities and assessing usage of financial services in selected countries around the world. 

On August 26, the Center for Technology Innovation at Brookings held a forum to launch the 2015 FDIP Report and discuss key research findings and recommendations. Financial inclusion experts from the public and private sectors also joined the discussion.

Join the conversation on Twitter at #FinancialInclusion and @BrookingsGov

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Editor’s Note: This post is part of a series on the 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard, which were launched at a Brookings public event in August. Previous posts have highlighted five key findings from the 2015 FDIP Report, explored financial inclusion developments in India, and examined the rankings for selected FDIP countries in Southeast and Central Asia, the Middle East, and Africa.

The 2015 Financial and Digital Inclusion Project (FDIP) Report and Scorecard were launched in August of this year and generally reflect data current through May 2015. Since the end of the data collection period for the report, countries have continued to push forward to greater financial inclusion, and international organizations have continued to assert the importance of financial inclusion as a mechanism for promoting individual well-being and macroeconomic development. Financial inclusion is a key component of the United Nations’ Sustainable Development Goals, signaling international commitment to advancing access to and use of quality financial products among the underserved.

We discussed one recent groundbreaking financial inclusion development in a previous post. To learn more about the approval of payments banks in India, read “Inclusion in India: Unpacking the 2015 FDIP Report and Scorecard.”

Below are four other key developments among our 21-country sample since the end of the data collection period for the 2015 FDIP Report and Scorecard. The list is in no way intended to be exhaustive, but rather to provide a snapshot illustrating how rapidly the financial inclusion landscape is evolving globally.   

1) The Philippines launched a national financial inclusion strategy.

In July 2015, the Philippines launched a national financial inclusion strategy (NFIS) and committed to drafting an Action Plan on Financial Inclusion. The Philippines’ NFIS identifies four areas central to promoting financial inclusion: “policy and regulation, financial education and consumer protection, advocacy programs, and data and measurement.”

 As discussed in the 2015 FDIP Report, national financial inclusion strategies often serve as a platform for identifying key priorities, clarifying the roles of key stakeholders, and setting measurable targets. These strategies can foster accountability and incentivize implementation of stated initiatives. While correlation does not necessarily equal causation, it is nonetheless interesting to note that, according to the World Bank, “[o]n average, there is a 10% increase in the percentage of adults with an account at a formal financial institution for countries  that launched an NFIS after 2007, whereas the increase is only 5% for those countries that have not launched an NFIS.”

2) Peru adopted a national financial inclusion strategy.

With support from the World Bank, Peru’s Multisectoral Financial Inclusion Commission established an NFIS that was adopted in July 2015 through a Supreme Decree issued by President Ollanta Humala Tasso. The strategy contains a goal to increase financial inclusion to 50 percent of adults by 2018. This is quite an ambitious target: As of 2014, the World Bank Global Financial Inclusion (Global Findex) database found that only 29 percent of adults in Peru had an account with a formal financial services provider. The NFIS also commits the country to facilitating access to a transaction account among at least 75 percent of adults by 2021.

Peru’s NFIS emphasizes the promotion of electronic payment systems, including electronic money, as well as improvements pertaining to consumer protection and education. Advancing access to both digital and traditional financial services should boost Peru’s adoption levels over time. As noted in the 2015 FDIP Report, while Peru’s national-level commitment to financial inclusion and regulatory environment for financial services are strong, adoption levels remain low (Peru ranked 15^th on the adoption dimension of the 2015 Scorecard, the lowest ranking among the Latin American countries in our sample).

3) Colombia updated its quantifiable targets and released a financial inclusion survey.

The 2015 Maya Declaration Progress Report, published in late August 2015, highlights a number of quantifiable financial inclusion targets set by the Ministerio de Hacienda y Crédito Público de Colombia (Colombia’s primary Maya Declaration signatory) relating to the percentage of adults with financial products and savings accounts. For example, the target for the percentage of adults with a financial product is now 76 percent by 2016, up from a target of 73.7 percent by 2015. The goal for the percentage of adults with an active savings account in 2016 is now 56.6 percent, up from a target of 54.2 percent by 2015. To learn more about concrete financial inclusion targets among other FDIP countries, read the 2015 Maya Declaration Progress Report.

In July, Banca de las Oportunidades, a key financial inclusion stakeholder in Colombia, presented the results of the country’s first demand-side survey specifically related to financial inclusion. As noted by the Economist Intelligence Unit, previous national-level surveys conducted by entities such as the Superintendencia Financiera and Asobancaria have identified supply- and demand-side indicators pertaining to various financial services. As discussed in the 2015 FDIP Report, national-level surveys that focus on access to and usage of financial services can help identify areas of greatest need and enable countries to better leverage their resources to promote adoption of quality financial services among marginalized populations.

4) Nigeria’s “super agent” network enables greater access to digital financial services.

In September 2015, telecommunications company Globacom launched a “super agent” network, Glo Xchange, which can access the mobile money services of any partner mobile money operator. The network has been launched in partnership with four banks. Globacom was given approval in 2014 to develop this network; since then, the company has been recruiting and training its agents. About 1,000 agents will initially be part of this system, with a goal to recruit 10,000 agents by September 2016. Expanding access points to financial services by building agent networks is hoped to boost adoption of digital financial services.

Despite having multiple mobile money operators (19 as of October 2015, according to the GSMA’s Mobile Money Deployment Tracker), Nigeria’s mobile money adoption levels have not reached the degree of success of some other countries in Africa: The Global Findex noted that less than 3 percent of adults in Nigeria had mobile money accounts in 2014, compared with over 30 percent in Tanzania and about 60 percent in Kenya. Nigeria’s primarily bank-led approach to financial services, which excludes mobile network operators from being licensed as mobile money operators, is one factor that may have constrained adoption of mobile money services to date. You can read more about Nigeria’s regulatory environment and financial services landscape in the 2015 FDIP Report.

We welcome your feedback regarding recent financial inclusion developments. Please send any links, questions, or comments to FDIPComments@brookings.edu.

How can countries support innovative approaches to facilitating access to and usage of formal financial services among low-income and other marginalized groups while mitigating the risk of misuse within the financial sector?

As part of the Brookings Financial and Digital Inclusion Project (FDIP), the FDIP team recently hosted a roundtable to examine this central question. The objective of the roundtable was to identify and discuss salient challenges and opportunities for financial services providers, government entities, and consumers with respect to balancing anti-money laundering/countering the financing of terrorism (AML/CFT) compliance — a critical component of financial integrity and stability — with inclusive financial access and growth.

We explore several key questions and themes that emerged from the roundtable below.

Do areas of synergy exist between financial inclusion and AML/CFT efforts?

• AML/CFT requirements and financial inclusion have sometimes been perceived as being in tension with one another — for example, stringent “know your customer” (KYC) requirements associated with AML processes can restrict formal financial access among marginalized groups who are unable to fulfill the KYC documentation requirements. However, the objectives of AML/CFT (ensuring stability and integrity within the financial sector) and financial inclusion (providing access to and promoting usage of a broad range of appropriate, affordable financial services) can be mutually reinforcing.
• By moving individuals from the shadow economy into the formal financial system, greater opportunities emerge for introducing underserved populations to a broad suite of formal financial services, and ensuring those services are accompanied by suitable consumer protections. Thus, financial inclusion, financial integrity, and financial stability can act as complementary objectives.
• The 2012 Declaration of the Ministers and Representatives of the Financial Action Task Force (FATF) recognized financial exclusion as a money laundering and terrorist financing risk in approving FATF’s 2012-2020 Mandate. This mandate affirmed FATF’s 2011 guidance on AML and terrorist financing measures and financial inclusion, which stated that “[i]t is acknowledged at the same time that financial exclusion works against effective AML/CFT policies. Indeed the prevalence of a large informal, unregulated and undocumented economy negatively affects AML/CFT efforts and the integrity of the financial system. Informal, unregulated and undocumented financial services and a pervasive cash economy can generate significant money laundering and terrorist financing risks and negatively affect AML/CFT preventive, detection and investigation/prosecution efforts.”

What are key challenges and concerns with respect to balancing financial inclusion with financial integrity?

• Awareness of financial inclusion issues is not universal among individuals who work in the regulatory, compliance, and law enforcement spheres of the financial ecosystem. Engagement among these groups is critical for promoting knowledge-sharing with respect to financial integrity and inclusion.
• Although FATF and other standard-setting bodies (SSBs) have increasingly adopted recommendations favoring proportionate, risk-based approaches to AML/CFT (as evidenced by the 2013 FATF Guidance on Financial Inclusion), regulators often pursue more conservative approaches than SSB guidelines recommend. These conservative approaches may constrain access to and usage of formal financial services among marginalized groups.
• Combating the potential use of low-value transfers within countries and across borders for terrorist financing purposes is a salient concern for the law enforcement community when considering proportionate AML/CFT approaches.

How does the digital component fit into these issues?

• As its name suggests, FDIP is interested in exploring the evolving role of digital technology within the financial services ecosystem. As discussed in the 2015 FDIP Report, digitization of financial services can be more cost-effective for public and private sector providers to manage and safer for consumers than carrying or storing cash.
• For example, a 2013 report found that the Mexican government saved about $1.3 billion annually by centralizing and digitizing payments for wages, pensions, and social transfers. A 2014 report by the World Bank Development Research Group, the Better Than Cash Alliance, and the Bill & Melinda Gates Foundation highlighted several countries, including South Africa, where disbursing social transfers electronically cost significantly less than manual cash disbursement.
• Digital financial services can also promote women’s economic empowerment, as these services are often more private and convenient to access than traveling to a “brick and mortar” financial service provider. Given that as of 2014 there was a 9 percentage point gap between the number of men and women with accounts in developing economies (with women disproportionately excluded from account ownership), facilitating access to formal financial services among the 42 percent of women globally who do not have an account will be a major factor in advancing financial inclusion.
• With respect to financial integrity in particular, digital identification mechanisms such as biometric IDs can help lower access barriers to financial services while ensuring that providers have the information they need to promote security and stability in the financial ecosystem. In its June 2011 guidance, FATF recognized the use of non-documentary methods of identification verification — for example, a signed declaration from a community leader coupled with a photo taken by a mobile phone — for advancing access to formal financial services among underserved groups.
• The Aadhaar initiative in India, which the FDIP team referenced in a previous post, is currently the largest biometric identification program in the world. The unique 12-digit ID enables individuals to meet KYC requirements and has been used as a financial account among those who do not have an account with a financial institution. Another innovative digital initiative is underway in Tanzania, where the government is working in concert with mobile carrier Tigo and UNICEF to provide birth certificates via mobile phones.

What are critical questions and areas of opportunity for fostering financial inclusion and integrity moving forward?

• How can regulators and providers ensure sufficient privacy protections are in place for customers when advancing financial inclusion efforts, particularly through digital channels?
• Through what mechanisms can government entities and non-government financial services providers best mitigate the risks of centralizing sensitive customer data?
• Could an industry utility that facilitates a common solution to AML systems serve as a feasible solution for harmonizing standards?
• What is the proper role of private solutions in the AML/CFT and financial inclusion spaces?
• Could identification verification applications be developed using blockchain technology?
• In what ways can social networks be leveraged with respect to digital identity initiatives and financial inclusion?

President Obama's announcement last month that earlier this year a “U.S. counterterrorism operation” had killed two hostages, including an American citizen, has become a fresh occasion for questioning the rationales for continuing attacks from unmanned aerial vehicles aimed at presumed, suspected, or even confirmed terrorists. This questioning is desirable, although not mainly for hostage-related reasons connected to this incident. Sometimes an incident has a sufficient element of controversy to stoke debate even though what most needs to be debated is not an issue specific to the incident itself. More fundamental issues about the entire drone program need more attention than they are getting.

The plight of hostages held by terrorists has a long and sometimes tragic history, almost all of which has had nothing to do with drones. Hostage-taking has been an attractive terrorist tool for so long partly because of the inherent advantages that the hostage-holders always will have over counterterrorist forces. Those advantages include not only the ability to conceal the location of hostages—evidently a successful concealment in the case of the hostages mentioned in the president's announcement—but also the ability of terrorists to kill the hostages themselves and to do so quickly enough to make any rescue operation extraordinarily difficult. Even states highly skilled at such operations, most notably Israel, have for this reason suffered failed rescue attempts.

It is not obvious what the net effect of operations with armed drones is likely to be on the fate of other current or future hostages. The incident in Pakistan demonstrates one of the direct negative possibilities. Possibly an offsetting consideration is that fearing aerial attack and being kept on the run may make, for some terrorists, the taking of hostages less attractive and the management of their custody more difficult. But a hostage known to be in the same location as a terrorist may have the attraction to the latter of serving as a human shield.

The drone program overall has had both pluses and minuses, as anyone who is either a confirmed supporter or opponent of the program should admit. There is no question that a significant number of certified bad guys have been removed as a direct and immediate consequence of the attacks. But offsetting, and probably more than offsetting, that result are the anger and resentment from collateral casualties and damage and the stimulus to radicalization that the anger and resentment provide. There is a good chance that the aerial strikes have created more new terrorists bent on exacting revenge on the United States than the number of old terrorists the strikes have killed.

This possibility is all the more disturbing in light of what appears to be a significant discrepancy between the official U.S. posture regarding collateral casualties and the picture that comes from nonofficial sources of reporting and expertise. The public is at a disadvantage in trying to judge this subject and to assess who is right and who is wrong, but what has been pointed out by respected specialists such as Micah Zenko is enough to raise serious doubt about official versions both of the efforts made to avoid casualties among innocents and of how many innocents have become victims of the strikes.

The geographic areas in which the drone strikes are most feasible and most common are not necessarily the same places from which future terrorist attacks against the United States are most likely to originate. The core Al-Qaeda group, which has been the primary target and concern in northwest Pakistan, is but a shadow of its former self and not the threat it once was. Defenders of the drone strikes are entitled to claim that this development is in large part due to the strikes. But that leaves the question: why keep doing it now?

The principal explanation, as recognized in the relevant government circles, for the drone program has been that it is the only way to reach terrorists who cannot be reached by other tools or methods. It has been seen as the only counterterrorist game that could be played in some places. That still leaves more fundamental questions about the motivations for playing the game.

Policy-makers do not use a counterterrorist tool just because the tool is nifty—although that may be a contributing factor regarding the drones—but rather because they feel obligated to use every available tool to strike at terrorists as long as there are any terrorists against whom to strike. In the back of their minds is the thought of the next Big One, or maybe even a not so big terrorist attack on U.S. soil, occurring on their watch after not having done everything they could to prevent it, or doing what would later be seen in hindsight as having had the chance to prevent it.

The principal driver of such thoughts is the American public's zero tolerance attitude toward terrorism, in which every terrorist attack is seen as a preventable tragedy that should have been prevented, without fully factoring in the costs and risks of prevention or of attempted prevention. Presidents and the people who work for them will continue to fire missiles from drones and to do some other risky, costly, or even counterproductive things in the cause of counterterrorism because of the prospect of getting politically pilloried for not being seen to make the maximum effort on behalf of that cause.

This piece was originally published by The National Interest.

Rooftop solar is booming in U.S. cities.

One of the most exciting infrastructure developments within metropolitan America, the installation of over a million solar photovoltaic (PV) systems in recent years, represents nothing less than a breakthrough for urban sustainability — and the climate.

Prices for solar panels have fallen dramatically. Residential solar installations surged by 66 percent between 2014 and 2015 helping to ensure that solar accounted for 30 percent of all new U.S. electric generating capacity. And for that matter, recent analyses conclude that the cost of residential solar is often comparable to the average price of power on the utility grid, a threshold known as grid parity.

So, what’s not to like? Rooftop solar is a total winner, right?

Well, not quite: The spread of rooftop solar has raised tricky issues for utilities and the public utilities commissions (PUCs) that regulate them. 

Specifically, the proliferation of rooftop solar installations is challenging the traditional utility business model by altering the relationship of household and utility—and not just by reducing electricity sales. In this respect, the solar boom has prompted significant debates in states like New York and California about the best rates and policies to ensure that state utility rules and rates provide a way for distributed solar to flourish even as utilities are rewarded for meeting customer demands. Increasingly, this ferment is leading to thoughtful dialogues aimed at devising new forms of policy and rate design that can—as in New York—encourage distributed energy resources (DERs) while allowing for distribution utilities to adapt to the new era.

However, in some states, the ferment has prompted a cruder set of backlashes. Most pointedly, some utilities contend that the “net-metering” fees paid to homeowners with rooftop installations for excess solar power they send back to the grid unfairly transfer costs to the utilities and their non-solar customers.

And so in a number of states, utility interests have sought to persuade state regulators to roll back net-metering provisions, arguing they are a net cost to the overall electricity system.  Most glaringly, the local utility in Nevada successfully wielded the cost-shift theory last winter to get the Nevada Public Utilities Commission to drastically curtail the state’s net-metering payments, prompting Solar City, Sunrun, and Vivint Solar—the state’s three largest providers of rooftop panels—to leave the Nevada market entirely. The result: New residential solar installation permits plunged 92 percent in Nevada in the first quarter of 2016.

All of which highlights a burning question for the present and future of rooftop solar: Does net metering really represent a net cost shift from solar-owning households to others? Or does it in fact contribute net benefits to the grid, utilities, and other ratepayer groups when all costs and benefits are factored in? As to the answer, it’s getting clearer (even if it’s not unanimous). Net metering — contra the Nevada decision — frequently benefits all ratepayers when all costs and benefits are accounted for, which is a finding state public utility commissions, or PUCs, need to take seriously as the fight over net metering rages in states like Arizona, California, and Nevada.  Regulators everywhere need to put in place processes that fairly consider the full range of benefits (as well as costs) of net metering as well as other policies as they set and update the policies, regulations, and tariffs that will play a critical role in determining the extent to which the distributed solar industry continues to grow.

Fortunately, such cost-benefit analyses have become an important feature of state rate-setting processes and offer important guidance to states like Nevada.  So what does the accumulating national literature on costs and benefits of net metering say?  Increasingly it concludes— whether conducted by PUCs, national labs, or academics — that the economic benefits of net metering actually outweigh the costs and impose no significant cost increase for non-solar customers.  Far from a net cost, net metering is in most cases a net benefit—for the utility and for non-solar rate-payers.

Of course, there are legitimate cost-recovery issues associated with net metering, and they vary from market to market. Moreover, getting to a good rate design, which is essential for both utility revenues and the growth of distributed generation, is undeniably complicated.  If rates go too far in the direction of “volumetric energy charges”—charging customers based on energy use—utilities could have trouble recovering costs when distributed energy sources reach higher levels of penetration. On the other hand, if rates lean more towards fixed charges—not dependent on usage—it may reduce incentives for customers to consider solar and other distributed generation technologies.  

Moreover, cost-benefit assessments can vary due to differences in valuation approach and methodology, leading to inconsistent outcomes. For instance, a Louisiana Public Utility Commission study last year found that that state’s net-metering customers do not pay the full cost of service and are subsidized by other ratepayers. How that squares with other states’ analyses is hard to parse.

Nevertheless, by the end of 2015, regulators in at least 10 states had conducted studies to develop methodologies to value distributed generation and net metering, while other states conducted less formal inquiries, ranging from direct rate design or net-metering policy changes to general education of decisionmakers and the public. And there is a degree of consensus.  What do the commission-sponsored analyses show? A growing number show that net metering benefits all utility customers:

• In 2013 Vermont’s Public Service Department conducted a study that concluded that “net-metered systems do not impose a significant net cost to ratepayers who are not net-metering participants.” The legislatively mandated analysis deemed the policy a successful component of the state’s overall energy strategy that is cost effectively advancing Vermont’s renewable energy goals.

• In 2014 a study commissioned by the Nevada Public Utility Commission itself concluded that net metering provided $36 million in benefits to all NV Energy customers, confirming that solar energy can provide cost savings for both solar and non-solar customers alike. What’s more, solar installations will make fewer costly grid upgrades necessary, leading to additional savings. The study estimated a net benefit of $166 million over the lifetime of solar systems installed through 2016. Furthermore, due to changes to utility incentives and net-metering policies in Nevada starting in 2014, solar customers would not be significantly shifting costs to other ratepayers.

• A 2014 study commissioned by the Mississippi Public Services Commission concluded that the benefits of implementing net metering for solar PV in Mississippi outweigh the costs in all but one scenario. The study found that distributed solar can help avoid significant infrastructure investments, take pressure off the state's oil and gas generation at peak demand times, and lower rates. (However, the study also warned that increased penetrations of distributed solar could lead to lower revenues for utilities and suggested that the state investigate Value of Solar Tariffs, or VOST, and other alternative valuations to calculate the true cost of solar.)

• In 2014 Minnesota’s Public Utility Commission approved a first-ever statewide “value of solar” methodology which affirmed that distributed solar generation is worth more than its retail price and concluded that net metering undervalues rooftop solar. The “value of solar” methodology is designed to capture the societal value of PV-generated electricity. The PUC found that the value of solar was at 14.5 cents per kilowatt hour (kWh)—which was 3 to 3.5 cents more per kilowatt than Xcel's retail rates—when other metrics such as the social cost of carbon, the avoided construction of new power stations, and the displacement of more expensive power sources were factored in.

• Another study commissioned by the Maine Public Utility Commission in 2015 put a value of $0.33 per kWh on energy generated by distributed solar, compared to the average retail price of $0.13 per kWh — the rate at which electricity is sold to residential customers as well as the rate at which distributed solar is compensated. The study concludes that solar power provides a substantial public benefit because it reduces electricity prices due to the displacement of more expensive power sources, reduces air and climate pollution, reduces costs for the electric grid system, reduces the need to build more power plants to meet peak demand, stabilizes prices, and promotes energy security. These avoided costs represent a net benefit for non-solar ratepayers.

These generally positive PUC conclusions about the benefits of net metering have been supported by research done by a national lab and several think tanks. Important lab research has examined how substantially higher adoption of distributed resources might look.

In a forward-looking analysis of the financial impacts of net-metered energy on utilities and ratepayers, Lawrence Berkeley National Lab found that while high use of net-metered solar generation may decrease utility shareholders' earnings, it will have a "relatively modest" impact on ratepayers. The report examined solar penetration levels that are "substantially higher than [those that] exist today" — 10 percent compared to today's 0.2 percent — and concluded that “even at penetration levels significantly higher than today, the impacts of customer-sited PV on average retail rates may be relatively modest." The report further said that utilities and regulators "may have sufficient time to address concerns about the rate impacts of PV in a measured and deliberate manner"

Similarly, a growing number of academic and think tank studies have found that solar energy is being undervalued and that it delivers benefits far beyond what solar customers are receiving in net-metering credits:

• For instance, a review of 11 net metering studies by Environment America Research and Policy Center has found that distributed solar offers net benefits to the entire electric grid through reduced capital investment costs, avoided energy costs, and reduced environmental compliance costs. Eight of the 11 studies found the value of solar energy to be higher than the average local residential retail electricity rate: The median value of solar power across all 11 studies was nearly 17 cents per unit, compared to the nation’s average retail electricity rate of about 12 cents per unit.

• A 2015 cost-benefit study of net metering in Missouri by the Missouri Energy Initiative found that even accounting for increased utility administrative costs and the shifting of some fixed expenses, net metering is a net benefit for all customers regardless of whether they have rooftop solar. The study used values for two kinds of costs and two benefits and concluded that net metering’s “net effect” is positive. The typical solar owner pays only 20 percent less in fixed grid costs and costs the utility an estimated $187 per interconnection. Meanwhile, solar owners benefit the system through reduced emissions and energy costs.

• Likewise, a study by Acadia Center found the value of solar to exceed 22 cents per kWh of value for Massachusetts ratepayers through reduced energy and infrastructure costs, lower fuel prices, and lowering the cost of compliance with the Commonwealth's greenhouse gas requirements. This value was estimated to exceed the retail rate provided through net metering.

• In yet another study, researchers at the University at Albany, George Washington University, and Clean Power Research have found that solar installations in New York deliver between 15 and 40 cents per kWh to ratepayers. The study noted that these numbers provide economic justification for the existence of incentives that transfer value from those who benefit from solar electric generation to those who invest in solar electric generation.

In short, while the conclusions vary, a significant body of cost-benefit research conducted by PUCs, consultants, and research organizations provides substantial evidence that net metering is more often than not a net benefit to the grid and all ratepayers.

As to the takeaways, they are quite clear: Regulators and utilities need to engage in a broader and more honest conversation about how to integrate distributed-generation technologies into the grid nationwide, with an eye toward instituting a fair utility-cost recovery strategy that does not pose significant challenges to solar adoption.

From the state PUCs’ perspective, until broad changes are made to the increasingly outdated and ineffective standard utility business model, which is built largely around selling increasing amounts of electricity, net-metering policies should be viewed as an important tool for encouraging the integration of renewable energy into states’ energy portfolios as part of the transition beyond fossil fuels. To that end, progressive regulators should explore and implement reforms that arrive at more beneficial and equitable rate designs that do not prevent solar expansion in their states. The following reforms range from the simplest to the hardest:

• Adopt a rigorous and transparent methodology for identifying, assessing, and quantifying the full range of benefits and costs of distributed generation technologies. While it is not always possible to quantify or assess sources of benefits and costs comprehensively, PUCs must ensure that all cost-benefit studies explicitly decide how to account for each source of value and state which ones are included and which are not. Currently methodological differences in evaluating the full value of distributed generation technologies make comparisons challenging. States start from different sets of questions and assumptions and use different data. For instance, while there is consensus on the basic approach to energy value estimation (avoided energy and energy losses via the transmission and distribution system), differences arise in calculating other costs and benefits, especially unmonetized values such as financial risks, environmental benefits, and social values. In this regard, the Interstate Renewable Energy Council’s “A Regulator’s Guidebook: Calculating the Benefits and Costs of Distributed Solar Generation” and the National Renewable Energy Laboratory’s “Methods for Analyzing the Benefits and Costs of Distributed Photovoltaic Generation to the U.S. Electric Utility System” represent helpful resources for identifying norms in the selection of categories, definitions, and  methodologies to measure various benefits and costs.

• Undertake and implement a rigorous, transparent, and precise “value of solar” analytic and rate-setting approach that would compensate rooftop solar customers based on the benefit that they provide to the grid. Seen as an alternative to ‘traditional’ net-metering rate design, a “value of solar” approach would credit solar owners for (1) avoiding the purchase of energy from other, polluting sources; (2) avoiding the need to build additional power plant capacity to meet peak energy needs; (3) providing energy for decades at a fixed prices; and (4) reducing wear and tear on the electric grid. While calculating the “value of solar” is very complex and highly location-dependent, ultimately PUCs may want to head toward an approach that accurately reflects all benefits and costs from all energy sources. Value of solar tariffs are being used in Austin, Texas (active use) and Minnesota (under development).

• Implement a well-designed decoupling mechanism that will encourage utilities to promote energy efficiency and distributed generation technologies like solar PV, without seeing them as an automatic threat to their revenues. As of January 2016, 15 states have implemented electric decoupling and eight more are considering it. Not surprisingly, it is states that have not decoupled electricity (such as Nevada) that are fighting net metering the hardest. Typically, decoupling has been used as a mechanism to encourage regulated utilities to promote energy efficiency for their customers. However, it can also be used as a tool to incentivize net metering by breaking the link between utility profits and utility sales and encouraging maximum solar penetration. Advocates of decoupling note that it is even more effective when paired with time-of-use pricing and minimum monthly billing.

• Move towards a rate design structure that can meet the needs of a distributed resource future. A sizable disconnect is opening between the rapidly evolving new world of distributed energy technologies and an old world of electricity pricing. In this new world, bundled, block, “volumetric” pricing—the most common rate structure for both residential and small commercial customers—can no longer meet the needs of all stakeholders. The changing grid calls, instead, for new rate structures that respond better to the deployment of new grid technologies and the proliferation of myriad distributed energy resources, whether solar, geothermal, or other.  A more sophisticated rate design structure, in this regard, would take into consideration three things: (1) the unbundling of rates to specifically price energy, capacity, ancillary services,  and so on; (2) moving from volumetric bloc rates to pricing structures that recognize the  variable time-based value of electricity generation and consumption (moving beyond just peak versus off-peak pricing to  fully real-time pricing); and (3) moving from pricing that treats all customers equally to a pricing structure that more accurately compensates for unique, location-specific and technology specific values.

• Move towards a performance-based utility rate-making model for the modern era. Performance based regulation (PBR) is a different way of structuring utility regulation designed to align a utility’s financial success with its ability to deliver what customers and society want. Moving to a model that pays the utility based on whether it achieves quantitatively defined outcomes (like system resilience, affordability, or distributed generation integration) can make it profitable for them to pursue optimal grid solutions to meet those outcomes. The new business model would require the PUC and utilities to make a number of changes, including overhauling the regulatory framework, removing utility incentives for increasing capital assets and kilowatt hours sold, and replacing those incentives with a new set of performance standard metrics such as reliability, safety, and demand-side management. New York’s Reforming the Energy Vision  proceeding is the most high-profile attempt in the country to implement a PBR model.

Options also exist for utilities to address the challenges posed by net metering:

• Utilities, most notably, have the opportunity to adjust their existing business models by themselves owning and operating distributed PV assets (though not to the exclusion of other providers).  On this front, utilities could move to assemble distributed generation systems, such as for rooftop solar, and sell or lease them to homeowners. In this regard, utilities have an advantage over third-party installers currently dominating the residential rooftop solar industry due to their proprietary system knowledge, brand recognition, and an existing relationship with their customers. Utilities in several states such as Arizona, California, and New York are investigating or have already invested in the opportunity.

• Furthermore, utilities can also push the envelope on grid modernization by investing in a more digital and distributed power grid that enables interaction with thousands of distributed energy resources and devices.

Ultimately, distributed solar is here to stay at increasing scale, and so state policies to support it have entered an important new transitional phase. More and more states will now likely move to update their net-metering policies as the cost of solar continues to drop and more homeowners opt to install solar panels on their homes.

As they do that, states need to rigorously and fairly evaluate the costs and benefits posed by net metering, grid fees, and other policies to shape a smart, progressive regulatory system that works for all of the stakeholders touched by distributed solar.

Utilities should have a shot at fair revenues and adequate ratepayers. Solar customers and providers have a right to cost-effective, reliable access to the grid. And the broader public should be able to expect a continued solar power boom in U.S. regions as well as accelerated decarbonization of state economies. All of which matters intensely. As observes the North Carolina Clean Energy Technology Center and Meister Consultants Group: “How key state policies and rates are adapted will play a significant role in determining the extent to which the [solar PV] industry will continue to grow and in what markets.”

The debate surrounding net energy metering (NEM) and the appropriate way to reform this policy is under scrutiny in many U.S. states. This is highly warranted since NEM policies do indeed need reforming because NEM often results in subsidies to private (rooftop) solar owners and leasing companies. These subsidies are then “paid for” by non-NEM customers (customers without private rooftop solar installations). The fundamental source of the NEM subsidy is the failure of NEM customers (customers with private rooftop solar installations) to pay fully for the grid services that they use 24/7. These subsidies are well-documented and underpin much of the regulatory reform efforts underway across the United States.[1]

In a recent Brookings paper, “Rooftop solar: Net metering is a net benefit,” Mark Muro and Devashree Saha contend that net metering is a net benefit for non-NEM customers.[2] I fundamentally disagree with their findings, and argue that NEM is not a net benefit; it is, in fact, a tariff that much of the time results in a subsidy to NEM customers and a cost shift onto non-NEM customers. As Executive Director of the Institute for Electric Innovation, a non-lobbying organization focused on trends in the electric power industry, I have followed this debate and written about it for several years.

Much of the talk about NEM focuses too often on the “value” of the energy that is sold back to the grid by a NEM customer. In reality, the amount of energy sold back to the grid is relatively small. The real issue is the failure of NEM customers to pay fully for the grid services that they use while connected to the grid 24/7, as shown in Figure 1.[3] Customers need to constantly use the grid to balance supply and demand throughout the day, and the cost of these grid services can be sizeable. In fact, for a typical residential customer in the United States with an average electricity bill of $110 per month, the actual cost of grid services can range from $45 to $70 per month–however, the customer doesn’t see that charge.[4] That means, in the extreme, if a customer’s energy use “nets” to zero in a given month because the customer’s private solar system produced exactly what the customer consumed, that customer would pay $0 even though that customer is connected to the local electric company’s distribution grid and is utilizing grid services on a continuous around-the-clock basis.[5]

Although exactly netting to zero energy in a month is highly unlikely, this example demonstrates the point that the customer would pay nothing, despite using grid services at a cost ranging from $45 to $70 per month. Over the course of one year, this customer could receive a subsidy resulting from NEM of between $540 and $840. Over the life of a private rooftop solar system, which ranges from 20 to 25 years, this is a significant subsidy resulting from NEM.

Granted, this is an extreme example, and most NEM customers will pay for some portion of grid services. However, the fundamental source of the NEM subsidy is the failure of NEM customers to pay fully for the grid services that they use 24/7, and the cost of these services can be quite substantial. When a NEM customer doesn’t pay for the grid, the cost is shifted onto non-NEM customers.[6] It is a zero-sum game; plain and simple. This is the elephant in the room.

This issue was directly addressed by Austin Energy when the company implemented a “buy-sell” arrangement for the private rooftop solar customers in its service territory. The rationale for the buy-sell approach is that the customer buys all of the energy that is consumed on-site through the electric company’s retail tariff and sells all of the energy produced by their private rooftop solar system at the electric company’s avoided cost. This addresses the “elephant in the room” because, by buying all energy consumed at the retail tariff, the customer does pay for grid services that are largely captured through the retail tariff. It is an unfortunate fact that under ratemaking practices today in the United States, the majority of fixed costs (i.e., grid and other costs) are captured through a volumetric charge.

Hence, I fundamentally disagree with the Muro/Saha paper–NEM does need to be reformed. NEM is not a net benefit; it is a tariff that the much of the time results in a cost shift onto non-NEM customers. One of the first studies to quantify the magnitude of the NEM subsidy was conducted by Energy+Environmental Economics (E3) for the California Public Utilities Commission (CPUC) in 2013. There was no mention of this analysis for the CPUC in the Muro/Saha paper. The E3 study estimated that NEM would result in a cost shift of $1.1 billion annually by 2020 from NEM to non-NEM customers if current NEM policies were not reformed in California.[7] A cost shift of this magnitude–paid for by non-NEM customers–was unacceptable to California regulators. As a result, California regulators set to work to reform rates in their state; many other states followed suit and conducted similar investigations of the magnitude of the NEM subsidy.

In reviewing NEM studies, Muro and Saha chose to focus on a handful of studies that show that net metering results in a benefit to all customers. In this small group of NEM studies, they included a study that E3 conducted for the Nevada Public Utilities Commission (PUC) in 2014–perhaps the most well-known and cited of the five studies included in the Muro/Saha paper. Very soon after the E3 Nevada study was published, the cost assumptions for the base-case scenario which showed a net benefit of $36 million to non-NEM customers (assuming $100 per MWh for utility-scale solar) were found to be incorrect, completely reversing the conclusion. The $36 million benefit associated with NEM for private rooftop solar turned into a $222 million cost to non-NEM customers when utility-scale solar was priced at $80 per MWh.[8] Today, based on the two most recent utility-scale contracts approved by the Nevada PUC, utility-scale solar has an average lifetime (i.e., levelized) cost of $50 per MWh, meaning that the NEM cost shift would be far greater today. In February 2016, the Nevada PUC stated that “the E3 study is already outdated and irrelevant to the discussion of costs and benefits of NEM in Nevada…”[9] Hence, because the E3 study for the Nevada PUC that the Muro/Saha paper included has been declared outdated and irrelevant to the discussion and because costs for utility-scale solar have declined significantly, that study does not show that NEM provides a net benefit.

No doubt there is an intense debate underway about NEM for private rooftop solar, and much has changed in the past two years in terms of both NEM policies and the growth of private solar projects:

• First, several state regulatory commissions now recognize that the NEM cost shift is both real and sizeable and that all customers who use the grid, including NEM customers, need to pay for the cost of the grid. As a result, many electric companies have proposed and state regulatory commissions have approved increases in monthly fixed charges over the past few years; this partially addresses the issue of NEM customers paying for the cost of the grid services that they use.
• Second and related, getting the pricing right for distributed energy resources of all types is important because we expect those resources to grow significantly in the future. Work is underway in this area and it is one focus of the New York Reforming the Energy Vision proceeding; but there is still much to be done.

By focusing on a select group of studies that show that NEM benefits all customers (as stated by the authors); by excluding the E3 study for the CPUC which was fundamental to the NEM cost shift debate; and by not providing an update on the NEM debate today, I believe that the Muro/Saha paper is misleading.

In the second part of their paper, Muro and Saha suggest some helpful regulatory reforms such as moving toward rate designs that “can meet the needs of a distributed resource future” and moving “toward performance-based rate-making (PBR).” Some electric companies have already implemented PBR or some type of formula rate and PBR is under discussion in several states.[10] Lawrence Berkeley National Labs is looking closely at this and related issues in its Future Electric Utility Regulation series of reports currently underway.[11]

Mura and Saha also suggest decoupling as a way forward–I disagree. In my view, decoupling is a not solution for private rooftop solar. Revenue decoupling is currently used to true-up revenues that would otherwise be lost due to declining electricity sales resulting from electric company investments in energy efficiency (EE). Decoupling explicitly shifts costs from participating EE customers to non-participating EE customers causing the same cost-shifting problem that is created by NEM. However, a fundamental difference is that the magnitude of the cost shifting onto non-NEM customers is on a much larger scale than the cost shifting due to EE. A recent study revealed that decoupling rate adjustments for EE are quite small–about two to three percent of the retail rate.^[12] In contrast, as described earlier in this paper, a NEM customer could shift a significant cost onto non-NEM customers (and the NEM cost shifting is essentially invisible to customers, which is one reason that NEM customers do not believe they are subsidized).[13]

Finally, Muro and Saha suggest that electric companies should invest in a more digital and distributed power grid. In fact, electric companies across the United States are doing just that. In 2015, electric companies invested $20 billion in the distribution system alone and this is expected to continue. Over the past five to six years, electric companies invested in the deployment of nearly 65 million digital smart meters to about 50 percent of U.S. households. In addition, electric companies are investing in thousands of devices to make the power grid smarter and more state-aware. Today, in states such as California, Hawaii, and Arizona, electric companies are investing to enable and integrate the distributed energy resources that are growing exponentially. And, in some states–where regulation allows–electric companies are offering rooftop solar or solar subscriptions to their customers.

No doubt, the electric power industry is undergoing a period of profound transformation–our power generation resource mix is getting cleaner and more distributed; the energy grid is becoming more digital; and customers have different expectations.[14]

Collaboration, good public policy, and appropriate regulatory policies are critical to a successful transformation of the power sector. In the context of this paper, this means reforming NEM so that private rooftop solar customers who use the energy grid pay for the grid. One straightforward approach is to require NEM customers to pay a higher monthly fixed charge thereby reducing the cost shift.[15] Ultimately the challenge is to make the transition of the electric power industry–including the significant growth in private rooftop solar and other distributed energy resources–affordable to all customers.

Lisa Wood is a nonresident senior fellow in the Energy Security and Climate Initiative at Brookings. She is also the executive director of the Institute for Electric Innovation and vice president of The Edison Foundation whose members include electric companies and technology companies.

With over 16 million people and nearly 8.6 million jobs, America's older industrial cities remain a vital-if undervalued-part of the economy, particularly in states where they are heavily concentrated, such as Ohio and Pennsylvania. They also have a range of other physical, economic, and cultural assets that, if fully leveraged, can serve as a platform for their renewal.

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Across the country, cities today are becoming more attractive to certain segments of society. Meanwhile, economic trends-globalization, the demand for educated workers, the increasing role of universities-are providing cities with an unprecedented chance to capitalize upon their economic advantages and regain their competitive edge.

Many cities have exploited these assets to their advantage; the moment is ripe for older industrial cities to follow suit. But to do so, these cities need thoughtful and broad-based approaches to foster prosperity.

"Restoring Prosperity" aims to mobilize governors and legislative leaders, as well as local constituencies, behind an asset-oriented agenda for reinvigorating the market in the nation's older industrial cities. The report begins with identifications and descriptions of these cities-and the economic, demographic, and policy "drivers" behind their current condition-then makes a case for why the moment is ripe for advancing urban reform, and offers a five-part agenda and organizing plan to achieve it.

Publications & Presentations
Connecticut State Profile
Connecticut State Presentation 

Michigan State Profile
Michigan State Presentation 

New Jersey State Profile
New Jersey State Presentation 

New York State Profile
New York State Presentation 

Ohio State Profile
Ohio State Presentation
Ohio Revitalization Speech

Pennsylvania State Profile 

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Louisville/Jefferson County is the principal city of America’s 42nd largest metropolitan area, a 13-county, bi-state region with a 2006 population estimated at 1.2 million. It is the largest city by far in Kentucky, but it is neither Kentucky’s capital nor its center of political power.

The consolidated city, authorized by voter referendum in 2000 and implemented in 2003, is home to 701,500 residents within its 399 square miles, with a population density of 4,124.8 per square mile.² It is either the nation’s 16th or its 26th largest incorporated place, depending on whether the residents of smaller municipalities within its borders, who are eligible to vote in its elections, are counted (as local officials desire and U.S. Census Bureau officials resist). The remainder of the metropolitan statistical area (MSA) population is split between four Indiana counties (241,193) and eight Kentucky counties (279,523). Although several of those counties are growing rapidly, the new Louisville metro area remains the MSA's central hub, with 57 percent of the population and almost 70 percent of the job base.

Centrally located on the southern banks of the Ohio River, amid an agriculturally productive, mineral rich, and energy producing region, Louisville is commonly described as the northernmost city of the American South. Closer to Toronto than to New Orleans, and even slightly closer to Chicago than to Atlanta, it remains within a day’s drive of two-thirds of the American population living east of the Rocky Mountains.

This location has been the dominant influence on Louisville’s history as a regional center of trade, commerce and manufacture. The city, now the all-points international hub of United Parcel Service (UPS), consistently ranks among the nation’s top logistics centers. Its manufacturing sector, though much diminished, still ranks among the strongest in the Southeast. The many cultural assets developed during the city’s reign as a regional economic center rank it highly in various measures of quality of life and “best places.”

Despite these strengths, Louisville’s competitiveness and regional prominence declined during much of the last half of the 20th Century, and precipitously so during the economic upheavals of the 1970s and ‘80s. Not only did it lose tens of thousands of manufacturing jobs and many of its historic businesses to deindustrialization and corporate consolidation, it also confronted significant barriers to entry into the growing knowledge-based economy because of its poorly-educated workforce, lack of R&D capacity, and risk-averse business culture.

In response, Louisville began a turbulent, two-decade process of civic and economic renewal, during which it succeeded both in restoring growth in its traditional areas of strength, most notably from the large impact of the UPS hub, and in laying groundwork for 21st century competitiveness, most notably by substantially ramping up university-based research and entrepreneurship supports. Doing so required it to overhaul nearly every aspect of its outmoded economic development strategies, civic relationships, and habits of mind, creating a new culture of collaboration.

Each of the three major partners in economic development radically transformed themselves and their relationships with one another. The often-paralyzing city-suburban divide of local governance yielded to consolidation. The business community reconstituted itself as a credible champion of broad-based regional progress, and it joined with the public sector to create a new chamber of commerce that is the region’s full-service, public-private economic development agency recognized as among the best in the nation. The Commonwealth of Kentucky embraced sweeping education reforms, including major support for expanded research at the University of Louisville, and a “New Economy” agenda emphasizing the commercialization of research-generated knowledge. Creative public-private partnerships have become the norm, propelling, for instance, the dramatic resurgence of downtown.

The initial successes of all these efforts have been encouraging, but not yet sufficient for the transformation to innovation-based prosperity that is the goal. This report details those successes, and the leadership, partnerships, and strategies that helped create them. It begins by describing Louisville’s history and development and the factors that made its economy grow and thrive. It then explains why the city faltered during the latter part of the 20th century and how it has begun to reverse course. In doing so, the study offers important lessons for other cities that are striving to compete in a very new economic era. 

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Chattanooga a few years ago faced what many smaller cities are struggling with today—a sudden decline after years of prosperity in the "old" economy. This case study offers a roadmap for these cities by chronicling Chattanooga's demise and rebirth.

Chattanooga is located in the southern end of the Tennessee Valley where the Tennessee River cuts through the Smoky Mountains and the Cumberland Plateau. The city’s location, particularly its proximity to the Tennessee River, has been one of its greatest assets. Today, several major interstates (I-24, I-59, and I-75) run through Chattanooga, making it a hub of transportation business. The city borders North Georgia and is less than an hour away from both Alabama and North Carolina. Atlanta, Nashville, and Birmingham are all within two hours travel time by car.

Chattanooga is Tennessee’s fourth largest city, with a population in 2000 of 155,554, and it covers an area of 143.2 square miles. Among the 200 most populous cities in the United States, Chattanooga—with 1,086.5 persons per square mile—ranks 190th in population density.2 It is the most populous of 10 municipalities in Hamilton County, which has a population of 307,896, covers an area of 575.7 square miles, and has a population density of 534.8 persons per square mile.

With its extensive railroads and river access, Chattanooga was at one time the “Dynamo of Dixie”—a bustling, midsized, industrial city in the heart of the South. By 1940, Chattanooga’s population was centered around a vibrant downtown and it was one of the largest cities in the United States. Just 50 years later, however, it was in deep decline. Manufacturing jobs continued to leave. The city’s white population had fled to the suburbs and downtown was a place to be avoided, rather than the economic center of the region. The city lost almost 10 percent of its population during the 1960s, and another 10 percent between 1980 and 1990. It would have lost more residents had it not been for annexation of outlying suburban areas.

The tide began to turn in the 1990s, with strategic investments by developing public-private partnerships—dubbed the “Chattanooga way.” These investments spurred a dramatic turnaround. The city’s population has since stabilized and begun to grow, downtown has been transformed, and it is once again poised to prosper in the new economy as it had in the old.

This report describes how Chattanooga has turned its economy around. It begins with a summary of how the city grew and developed during its first 150 years before describing the factors driving its decline. The report concludes by examining the partnerships and planning that helped spur Chattanooga’s current revitalization and providing valuable lessons to other older industrial cities trying to ignite their own economic recovery. 

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Part of the larger Northeast Ohio regional economy, the Akron metropolitan area is composed of two counties (Summit and Portage) with a population of just over 700,000, and is surrounded by three other metropolitan areas. Akron is located approximately 40 miles south of Cleveland, 50 miles west of Youngstown, and 23 miles north of Canton. The Cleveland metro area is a five-county region with a population of 2.1 million. The Youngstown metro area includes three counties, extending into Pennsylvania, and has a population of 587,000. Canton is part of a two-county metropolitan area with a population of 410,000.

The adjacency of the Akron and Cleveland Metropolitan Statistical Areas (MSAs) is an important factor in the economic performance of the Akron region. The interdependence of economies of the two MSAs is evidenced by the strong economic growth of the northern part of Summit County adjacent to the core county of the Cleveland metropolitan area. This part of Summit County beyond the city of Akron provides available land, access to the labor pools of the two metropolitan areas, and proximity to the region’s extensive transportation network.

Although affected by economic activity in the larger region, the fate and future of Akron and its wider region are not solely determined by events in these adjacent areas. While sharing broad economic trends with its neighbors, the Akron metro area has been impacted by a different set of events and has shown different patterns of growth from other areas in Northeast Ohio.

This study provides an in-depth look at Akron’s economy over the past century. It begins by tracing the industrial history of the Akron region, describing the growth of the rubber industry from the late 1800s through much of following century, to its precipitous decline beginning in the 1970s. It then discusses how the “bottoming out” of this dominant industry gave rise to the industrial restructuring of the area. The paper explores the nature of this restructuring, and the steps and activities the city’s business, civic, and government leaders have undertaken to help spur its recovery and redevelopment. In doing so, it provides a series of lessons to other older industrial regions working to find their own economic niche in a changing global economy. 

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Introduction

Many American workers do not have access to employer-sponsored payroll deduction plans for retirement saving. Groups with low rates of access include younger workers, members of minority groups, and those with low-to-moderate incomes. 1 Small business employees are especially at risk. Only about 14 percent of businesses with 100 or fewer employees offer their employees a retirement plan, leaving between 51 and 71 percent of the roughly 42 million people who work for a small business without access to an employer-administered plan (Government Accountability Office 2013).

Lack of access makes it difficult to build retirement wealth. A study by the Employee Benefit Research Institute (2014) shows that 62 percent of employees with access to an employer-sponsored plan held more than $25,000 in saving balances and 22 percent had $100,000 or more. In contrast, among those without access to a plan, 94 percent held less than $25,000 and only three percent hold $100,000 or more. Although workers without an employer-based plan can contribute to Individual Retirement Accounts (IRAs), very few do.2 But employees at all income levels tend to participate at high rates in plans that are structured to provide guidance about the decisions they should make (Wu and Rutledge 2014).

With these considerations in mind, many experts and policy makers have advocated for increased retirement plan coverage. While a national approach would be desirable, there has been little legislative progress to date. States, however, are acting. Three states have already created state-sponsored retirement saving plans for small business employees, and 25 are in some stage of considering such a move (Pension Rights Center 2015). John and Koenig (2014) estimate that 55 million U.S. wage and salary workers between the ages of 18 and 64 lack the ability to save for retirement through an employer-sponsored payroll deduction plan. Among such workers with wages between $30,000 and $50,000 only about one out of 20 contributes regularly to an IRA (Employee Benefit Research Institute 2006).

This paper highlights a variety of issues that policymakers will need to address in creating and implementing an effective state-sponsored retirement saving plan. Section II discusses policy design choices. Section III discusses management issues faced by states administering such a plan, employers and employees. Section IV is a short conclusion.

Note: this paper was presented at a October 7, 2015 Brookings Institution event focused on state retirement policies.

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Community colleges are a vital part of America’s opportunity structure, not least because they often provide a way into higher education for adults from less advantaged backgrounds. Each year there are around 10 million undergraduates enrolled at public, two-year colleges. Among first-generation students, nearly 38 percent attend community colleges, compared to 20 percent of students with college-educated parents.

Credentials from community colleges—whether short vocational courses or two-year associate degrees—can be valuable in the labor market. In theory, community colleges also provide an on-ramp for those seeking a bachelor’s degree; in fact, four out of five students enrolling intend to get a 4-year degree.

But the potential of community college is often unrealized. Many students are not ready. Quality varies. Pathways are often unclear and/or complex. Only about 40 percent of those enrolling earn a degree within six years. Just 15 percent acquire a 4-year degree, according to analyses by Doug Shapiro and Afet Dundar at the National Student Clearinghouse Research Center.

Transfers rates from community college vary dramatically by state

The degree of alignment and integration between community and four-year colleges is much greater in some states than others. Some use common course numbering for 2- and 4-year institutions, which helps students find the classes they need without racking up costly excess credits. In others, universities and community colleges have tried to align their curriculum to ensure that students’ transfer credits will be accepted.

Individual institutions like Queensborough College (part of the CUNY system) and Miami-Dade College have streamlined course sequences to help their students stay on track to transfer into 4-year schools, as Thomas Bailey, Shanna Jaggers, and Davis Jenkins describe in their book, Redesigning America’s Community Colleges. There’s some indirect evidence that these initiatives increased retention and graduation rates.

These policy differences help to explain the very different stories of transfer rates in different states, revealed in a recent study by Davis Jenkins and John Fink. One important measure is the proportion of students transferring out of community college with a certificate or associate degree already in hand:

Florida tops the list, partly because of state legislation requiring that community colleges grant eligible transfer students degrees—but also because of concerted investments at the state and institutional levels to improve 2-year institutions.

Another measure of success is the proportion of those who transfer ending up with a four-year degree. Again, there are significant variations between states:

Since community colleges serve so many more students from poor backgrounds, the importance of the transfer pathway for social mobility is clear. Many who struggle at high school may begin to flourish in the first year or two of post-secondary education. As their skills are upgraded, so their opportunities should widen. But too often they become trapped in the silos of post-secondary education. We should continue to support efforts like pathway programs that explicitly attempt to build bridges between community colleges and high-quality four year institutions through the creation of clear and consistent major-specific program maps. Such programs allow students starting out at community colleges to easily chart out the specific, clear, and coherent set of steps needed to eventually finish their post-secondary education with a four-year degree.

Tuning an American engine of social mobility

The mission of community colleges since their inception a century ago has been to broaden access to education. Today that means providing a solid education to all students, but also providing opportunities to move on to other institutions.

“This is about governments using data for performance rather than compliance” was a resounding message coming out of the U.S. Department of Education’s conference on June 10 on the use of Pay for Success contracts in education. These contracts, known globally as social impact bonds, continue to be at the forefront of global conversations about results-based financing mechanisms, and have garnered significant momentum this week with passage of the Social Impact Partnerships for Pay for Results Act in the U.S. While limitations certainly exist, their potential to revolutionize the way we fund social projects is tremendous.

A social impact bond (SIB) is a set of contracts where a government agency agrees to pay for service outputs or outcomes, rather than funding defined service inputs, and an investor provides upfront risk capital to the service provider. The investor is potentially repaid principal and interest contingent on the achievement of the predetermined outputs or outcomes.

In our research on impact bonds at the Center for Universal Education, we have analyzed the use of SIBs for education in the U.S., other high-income countries, and low- and middle-income countries. Practitioners in each of these contexts are having far more similar conversations than they may realize—all are united in their emphasis on using SIBs to build data systems for performance. There is tremendous potential for lessons learned across these experiences and across the broader discussions of results-based financing mechanisms for education globally.

Current SIBs for education globally

There are currently five SIBs for education worldwide: two in the U.S. for preschool education, one in Portugal for computer science classes in primary school, and one each in Canada and Israel for higher education. In addition, a number of countries have used the SIB model to finance interventions to promote both education and employment outcomes for teens—there are 21 such SIBs in the U.K., three in the Netherlands, and one in Germany. There is also a Development Impact Bond (DIB), where a donor rather than government agency serves as the outcome funder, for girls’ education in India. The Center for Universal Education will host a webinar to present the enrollment and learning outcomes of the first year of the DIB on July 5 (register to join here).

U.S. activities to facilitate the use of SIBs for education

At the June 10 conference at the Department of Education, the secretary of education and the deputy assistant to the president for education said that they saw the greatest potential contribution of SIBs in helping to scale what works to promote education outcomes and in broadening the array of partners involved in improving the education system. Others pointed out the value of the mechanism to coordinate services based on the needs of each student, rather than a multitude of separately funded services engaging the student individually. In addition to using data to coordinate services for an individual, participants emphasized that SIBs can facilitate a shift away from using data to measure compliance, to using data to provide performance feedback loops.

The interest in data for performance rather than compliance is part of a larger shift across the U.S. education sector, represented by the replacement of the strict compliance standards in the No Child Left Behind Act of 2002 with the new federal education funding law, the Every Student Succeeds Act, signed into law in December of 2015. The law allows for federal outcome funding for SIBs in education for the first time, specifically for student support and academic enrichment programs. The recently passed Social Impact Partnerships for Pay for Results Act also allows for outcome funding for education outcomes. The Department of Education conference explored potential applications of SIBs across the education sector, including for early home visiting programs, programs to encourage completion of higher education programs, and career and technical education. The conference also analyzed the potential to use SIBs for programs that support specific disadvantaged populations, such as dual language learners in early education, children of incarcerated individuals, children involved in both the child protection and criminal justice systems, and Native American youth. Overall, there was a focus on areas where the U.S. is spending a great deal on remediation (such as early emergency room visits) and on particular levers to overcome persistent obstacles to student success (such as parent engagement).

To help move the sector forward, the Department of Education announced three new competitions for feasibility study funding for early learning broadly, dual language learners in early education, and technical education. The department is also facilitating connections between existing evaluation and data system development efforts and teams designing SIBs. The focus on early childhood development by the Department of Education is reflective of the national field as a whole: Programming in the early years is becoming a particularly fast-growing sector for SIBs in the U.S. with over 40 SIBs feasibility and design stages.

SIBs for education in low- and middle-income countries

There is only one DIB for education in low- and middle-income countries; however, there are a number of SIBs and DIBs for education in design and prelaunch phases. In particular, the Western Cape Province of South Africa has committed outcome funding for three SIBs across a range of health and development outcomes for children ages 0 to 5.

Though the number of impact bonds may be relatively small, a significant amount of work has been done in the last 15 years in results-based financing for education. The U.K. Department for International Development (DfID), the Dutch Ministry of Foreign Affairs, the Asian Development Bank, the World Bank, the Global Partnership for Output-Based Aid, and Cordaid had together funded 24 results-based financing initiatives for education as of 2015. Of particular interest, DfID is funding results-based financing projects through a Girls Education Challenge and the World Bank launched a new trust fund for results-based financing in education in 2015. As with impact bonds in the U.S., a primary aim of results-based financing for education in low- and middle-income countries is to strengthen data and performance systems. Early childhood development programs and technical and vocational and training programs have also been identified as sub-sectors of high potential. Here are a few final takeaways for those working on results-based financing for education in low- and middle-income countries from the U.S. Department of Education conference:

1. The differences between the No Child Left Behind Act and the Every Student Succeeds Act should be analyzed carefully to ensure other data-driven education performance management systems promote both accountability and flexibility.
2. In building data systems through results-based financing, ensure services can be coordinated around the individual, feedback loops are available for providers, and data on early education, child welfare, parent engagement, and criminal justice involvement are also incorporated.
3. There are potential lessons to be learned from the U.S. Department of Education’s effort to conduct more low-cost randomized control trials in education and the U.S. Census Bureau’s data integration efforts.
4. SIBs provide an opportunity to work across agencies or levels of government in education, which could be particularly fruitful in both low- and middle-income countries and the U.S.

As the global appetite for results-based financing continues to grow and new social and development impact bonds are implemented throughout the world, we’ll have an opportunity to learn the true potential of such financing models.

Event Information

On June 23, Global Economy and Development at Brookings and Washington University’s Center for Social Development hosted a forum to examine how international volunteering and service serve as critical tools for meeting global challenges.

The forum framed international service as an integral component of “smart power” diplomacy and as a cost effective way to build cross-cultural bridges. Ambassador Elizabeth Frawley Bagley, special representative for global partnerships at the U.S. Department of State, delivered a keynote address on how the United States can better promote international service and its impact on American diplomacy, national security and global economies.

The research panel released new data on the impact of international service on volunteers, host communities and host country perceptions of volunteers from the United States. Policymakers and sector leaders discussed options for enhancing international service, and provided recommendations for bringing global service to the forefront of American foreign policy initiatives.

View the keynote speech by Ambassador Bagley »

Video

• Global Development's National Responsibility
• Emphasize Core Competencies in Volunteering
• Shared Global Responses to Shared Global Problems
• Young People Want To Make World Better Place
• Data Are Important to Enhancing Volunteerism

Audio

• International Volunteering and Service
• International Volunteering and Service
• International Volunteering and Service
• International Volunteering and Service

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• Full Uncorrected Transcript (.pdf)
• Welcoming Remarks, Opening Remarks and Keynote - Transcript (.pdf)
• Panel One - Transcript (.pdf)
• Panel Two - Transcript (.pdf)
• Closing Remarks - Transcript (.pdf)

Event Materials

• 20100623_volunteering
• 20100623_volunteering_intro
• 20100623_volunteering_panel1
• 20100623_volunteering_panel2
• 20100623_volunteering_closing_remarks

INTRODUCTION

In December 2011, the United Nations State of the World’s Volunteering Report was released at the U.N. headquarters in New York along with a General Assembly resolution championing the role of volunteer action in peacebuilding and development. The United Nations Volunteers (UNV) Program report states that:

The contribution of volunteerism to development is particularly striking in the context of sustainable livelihoods and value-based notions of wellbeing. Contrary to common perceptions, the income poor are as likely to volunteer as those who are not poor. In doing so, they realize their assets, which include knowledge, skills and social networks, for the benefit of themselves, their families and their communities…Moreover, volunteering can reduce the social exclusion that is often the result of poverty, marginalization and other forms of inequality…There is mounting evidence that volunteer engagement promotes the civic values and social cohesion which mitigate violent conflict at all stages and that it even fosters reconciliation in post-conflict situations...

The “South Africa Conference on Volunteer Action for Development” convened in Johannesburg in October 2011, and the July 2012 “Africa Conference on Volunteer Action for Peace and Development” co-hosted with the Kenya’s Ministry of East African Community, the United Nations and partners in Nairobi give further evidence to the rise of and potential for volunteer service to impact development and conflict. Indeed, in the aftermath of the 2011 Arab Spring, youth volunteer service and empowerment have emerged as a pivotal idea in deliberations aimed at fostering greater regional cohesion and development.

In “Foresight Africa: Top Priorities for the Continent in 2012,” Mwangi S. Kimenyi and Stephen N. Karingi note that: “One of the most important pillars in determining whether the positive prospects for Africa will be realized is success in regional integration… This year is a crucial one for Africa’s regional integration project and actions by governments, regional organizations and the international community will be critical in determining the course of the continent’s development for many years to come.”

The authors note the expected completion of a tripartite regional free trade agreement by 2014 and the expected boost to intra-African trade, resulting in an expanded market of 26 African countries (representing more than half of the region’s economic output and population). At the same time, the declaration from the “South Africa Conference on Volunteer Action for Development” calls on “Governments of Southern African member states and other stakeholders to incorporate volunteering in their deliberations from Rio +20 and to recognize the transformational power as well as economic and social value of volunteering in achieving national development goals and regional priorities, which can be achieved by facilitating the creation of an enabling environment for volunteering to support, protect and empower volunteers.” This speaks directly to the urgent need to factor the social dimension into the regional integration agenda in the different African subregions.

This paper includes examples of the growth of volunteer service as a form of social capital that enhances cohesion and integration across three regions: southern, western, and eastern Africa. It further highlights civil society best practices and policy recommendations for increased volunteering in efforts to ensure positive peace, health, youth skills, assets and employment outcomes.

The importance of volunteering to development has been noted in recent United Nations consultations on the Rio+20 convening on sustainable development and the post-2015 development framework. As the U.N. reviews its Millennium Development Goals (MDG) process, Africa’s regional service initiatives offer vital lessons and strategies to further achieve the MDGs by December 2015, and to chart the way forward on the post-2015 development framework.

But how does volunteerism and civic service play out in sub-Saharan Africa? What are its institutional and non-institutional expressions? What are the benefits or impacts of volunteerism and civic service in society? Our specific purpose here is to provide evidence of the different manifestations and models of service, impact areas and range of issues in three African regions. In responding to these questions, this analysis incorporates data and observations from southern, western and eastern Africa.

In conclusion, we provide further collective insights and recommendations for the roles of the Africa Union and regional economic communities (RECs), youth, the international community, the private sector and civil society aimed at ensuring that volunteerism delivers on its promise and potential for impact on regional integration, youth development and peace.

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