[Stoves] No subsidies in TLUD char peoduction

Crispin Pemberton-Pigott crispinpigott at outlook.com
Tue Dec 5 20:55:50 MST 2017


Dear Nikhil

I am not proposing a comprehensive theory of investment, I am trying to understand how the TLUD+char system is being expanded (not established) and where the money goes, who gets it and for what return.

>In economic terms, an investment is for future consumption.
>In financial terms, an investment is purchase of an asset.

There is a third indirect return which is from a governments point of view, a reduction in health care expenses for an investment in either product development that transforms a sector, or subsidising the cost of a stove or its installation or its distribution in return for less sickness. There I speak on the monetary cost, not the additional ‘improved life’ of someone who doesn’t get sick that winter, for example.

If it costs $300 to equip a poor family with a highly improved stove and the predictable consequence is zero bronchitis for that and all subsequent winters, the ‘savings’ to government warrant the ‘investment’.  Getting a believable and predictable result from an intervention is key. In the case of the aDALYs claimed for lowering the “Relative Risk” supposedly created by a stove creating (supposedly) less PM, the proof is very shaky. For increasing the ambient average temperature in the home with a far better heating stove, the proof is in comparison, solid.

Virtually eliminating chronic underheating delivers palpable, predictable health impacts.

>In your example, "donations" are what might be called "patient investments" -- no particular schedule of returns and presumably not many trades either.

Agreed. They could also be gifts motivated by a desire to assist someone. Many requests I get for donations are exactly that. Help someone to help themselves, etc. They just need a hand up. As you may know I have been manufacturing equipment for such development promotion organisations for decades.

>You say the Central Java Pilot stove project made an "investment". How?

Through the provision of a cash payment to any registered participant (Market Aggregator) that created a distribution system for approved products, the cash value of which was related to the performance of the stove on three metrics. The acceptability of the stoves was up to the MA selecting products appropriate for the market where they chose to ‘intervene’.

>What legal form did the CJP project have,

Contract between the Pilot and the MA’s.

>whose money was it, and in what form and under what conditions was it given to the private companies?

It was a grant to the Indonesian government from the WB, conducted as an experiment to see of this type of approach could establish a viable, unsubsidised supply chain selling acceptable stoves to the general public. The costs of establishing such a distribution chain and filling the channel could be what the money was used for. The MA’s were free to subsidise the stove cost if they wished – that was up to them. They were paid per stove placed and used, with definitions of use, and a use-detection mechanism contained in the contract.

It falls under the term ‘Results Based Finance”. The money only changed hands after the stoves were sold and homes visited.

>As soon as you are talking of private corporate entities, proper finance terms and laws become central.

Well of course that is the intention of the experiment: to get away from handing out a limited number of stoves at a discount without regard for how the future supply was to be established, other than ‘begging for more donations’.

I should point out that this plan was not my idea. I am a lowly technical consultant involved in the performance assessment. In the case of Central Java we were very fortunately to be allowed to use the social science team + Cecil Cook to establish how people used the stoves before selecting a test sequence for performance evaluation. The question of whether the assessment by users should come before the lab performance tests or afterwards was debated continuously. It is a worthy conversation.

During the social assessment period, we were able to refine and standardise the CSI test method which has a whole section devoted to the creation of contextual test sequences so the lab test makes a reasonable assessment of field performance.

While this had already been done in Ulaanbaatar in a combination of Robert van der Plas, Cecil and me, it was not as formalised and the technical aspects of the HTP method had evolved since then. I believe the package is now a worthy candidate for being an ISO Contextual Test Method having been demonstrated in the field multiple times.

Regards
Crispin

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