The Poverty Action Lab (PAL), a research organization from MIT, carried out a project that implemented new, environmentally friendly cookstoves for 2,600 households in Orissa, India. Each household contributed a small amount of money to pay for the building of the stove and was given training on its proper use and maintenance. Although the initial take up of the technology was high, families were only cooking 1.8 meals a week on the new stove three years after its implementation. Most had reverted to using their old cookstoves, commonly called chulas.

Indoor air pollution caused by chulas is the second largest health risk in developing countries, after unclean water. Over 70% of all households in India use them. Chulas burn cheap fuels such as firewood, coal or cow manure and create particle matter concentrations of 20,000 micrograms per cubic meter; the recommended limit is just 50. For the people who are around them — mainly women and young children — it is like smoking several packs of cigarettes a day. They cause 2 million deaths in India annually.

The new cookstoves were promoted as a cleaner alternative to traditional stoves that would save families from mental hardship and health expenditures. They would also make them more productive, as adults and children would miss fewer days of work and school. Finally, the stoves were advertised as being more cost-effective as they used less fuel and more time-effective because they decreased cooking times.

Medical checkups three years into the PAL study showed that because they were rarely used, introducing these stoves to poor households even at a very low cost did nothing to change health effects. High levels of blood pressure, a tendency to develop coughs and poor infant health remained the same. People showed the same risks of developing lung cancer, cardiovascular diseases and respiratory diseases.

In addition to causing health problems, chulas cause environmental damage. Worldwide, three billion people use them, or four out of every ten people. They collectively release 6 billion kilograms of CO2 into the atmosphere. That is triple the amount of the daily emissions from all private cars in the United States.

The main issue that seems to have stopped people from using their new stoves was that they required a lot more maintenance, and their unfamiliarity with the technology was an impediment to carrying out repairs. Households reported that they spent hours getting their stoves fixed and cleaning newly added chimneys. Their old way of cooking was easy to use and never broke. Moreover, it was familiar, so people were more inclined to revert back to it when their new stoves exhibited problems.

While the new cookstoves perform well in laboratories and have the potential to drastically decrease health and environmental effects, their effectiveness depends on them actually being used. India launched a National Biomass Cookstove Initiative (NCBI) in 2010 and plans to install 2.5 million cookstoves by 2017. Moreover, Hillary Clinton helped start the Global Alliance for Clean Cookstoves (GACC), which aims to install 100 million cookstoves by 2020. Both the NCBI and GACC would do well to conduct long-term studies before spending millions of dollars in initiatives that have little to no impact.

– Radhika Singh

Sources: National Geographic, The Washington Post, Poverty Action Lab 1, Poverty Action Lab 2, Boston Globe, Ministry of New and Renewable Energy, Global Alliance for Clean Cookstoves
Photo: The Washington Post

“The initial narrative around microfinance—that it was going to unleash the entrepreneurial spirit of the poor and lead to significant growth and poverty reduction—was never really all that realistic,” stated Asli Demirguc-Kunt, the Director of Research at World Bank, during a Policy Research Talk held in March 2015 to discuss the role of microfinance in today’s economy.

At its inception, microfinance was envisioned as a beacon of economic hope for the poor, specifically those operating small businesses, who were without access to loans and basic banking services. Given current data findings, it is debatable whether microfinance is reaching the poorest communities. Research provided by the Microfinance Information eXchange, or MIX, examines a handful of institutions and their clientele, stating how the institutions have impacted issues of poverty. One set of data shows the percentage of clients of each institution that are below the poverty line of either their respective country or the U.S. Some of the lowest percentages are three percent, 22 percent and 27 percent, while the highest are 73 percent, 80 percent and 86 percent. We are seeing that in some cases, the banks reach the poorest, but in other cases, the majority of their clients do not fall in this category.

A February 2015 policy brief from Poverty Action Lab, an organization focused on poverty research, drew several conclusions on the results of microfinance, citing its successes and failures. On the positive side, because of the accessibility of credit, some entrepreneurs have increased investments in their businesses and households have experienced greater flexibility in financial management. Although microfinance has proved beneficial in some ways, no major impacts have been seen in the level of client income, female empowerment or investment in childhood education. It was also determined that “demand of many of the microcredit products was modest.”

Robert Cull, Lead Economist of the World Bank Research Department, recognized some positive results of microfinance, but also pointed out that there have been no notable improvements in income per household or wealth, and the level of poverty has not dramatically changed.

Given the varied impacts of microfinance, many question how the industry can be improved. Some are advocating for a move toward digital banking, which would make services more accessible and inclusionary, while also helping banks and their clients to cut expenses. Certain microfinance institutions charge high levels of interest to support themselves, but money saved through an increased use of online transactions may enable them to lower rates so that more customers can borrow affordably. While certain initial expectations of microfinance have not been fulfilled, many agree that the institution has had enough successes that it should remain in place but with reforms.

Amy Russo

Sources: Devex, The Mix, Poverty Action Lab, The World Bank
Photo: Flickr