Davos 2007

Monday, January 29, 2007 10:36 AM by Simon Maxwell

1. The business agenda dominated at Davos this year, with fewer NGOs invited, hardly any Africans, and fewer sessions with ostensible development content.  On the other hand, our ‘What’s Next’ theme at ODI reminds us that the business agenda is actually a development agenda, as the Indians, Chinese and others were keen to emphasise.  The same can be said of climate change, which was the big story of the week.  And, to be fair, there were quite a few sessions on sectoral issues like health or water, often discussing the scope for public-private partnerships.  Trade featured prominently on the news, but less in public discussion.
2. I wondered whether the apparent downgrading of traditional development themes reflected the fact that the action had moved from Davos to the now annual Clinton Foundation meetings in New York. Clinton did not come.  Others did, however, including Bono, Gates, Wolfowitz, Veneman (UNICEF), Sheeran (WFP), Feachem (Global Fund), Kaberuka (AfDB), Ogata (JICA) and others.  They were all busy enough, but quite often in private sessions: some of the civil society people complained that development had been privatised at Davos.
3. My week started slowly, in a Davos without much snow, but picked up speed as the week progressed and the snow began to fall.  I moderated two sessions on humanitarian themes, spoke at one on the G20, attended closed meetings on education and water, and had several private meetings.  In addition, I was invited to three excellent small breakfast meetings (on disaster insurance, GMOs, and business/development links) and filled the rest of the time attending public sessions on topics ranging from China in the world to the future of cities.
4. The main news on climate change was that the US has moved and is now ready to lead the charge.  It’s a toss-up whether Stern or Gore was more influential.  Nick Stern was in Davos whereas Gore was not.  American business leaders seem ready to accept cap and trade (citing successful earlier experience with sulphur dioxide), providing fast-growing developing countries are brought into the system, and put their main hope in technology as the solution.  Nuclear power was everywhere discussed.  Blair announced that he thought a break-through was imminent on a successor to Kyoto.  Nik Gowing chaired a very good and well-researched debate for the BBC. 
5. The other over-arching theme was the ‘shifting power equation’, code for India and, mainly, China.  Lots of articulate Chinese on platforms, debating political liberalisation (accelerating, people said, complaining that Freedom House had not changed its ranking of China since 1974), the size of dollar reserves (over 1 trillion), the undesirability of a sharp revaluation of the currency, and the difference between entrepreneurialism and capitalism (China is entrepreneurial but not capitalist, allegedly).  Larry Summers observed that democracy is not the same as electocracy.  Kid gloves much in evidence, I thought.  No discussion of China in Africa. 
6. The main theme in both humanitarian sessions was working with the private sector, the topic as it happens of a forthcoming HPG report.  Business leaders turned out in some numbers, many with good stories to tell about how their companies had supported early warning, response and recovery – managing communications, manning airports, helping with supply chains, providing specific materials or skills.  They did this, we were repeatedly told, because they wanted to: ‘people want to work for companies that take their social mission seriously and our shareholders cut us some slack when we behave as they would like us to.’  As just one example, Larry Brilliant talked about the power of search engines to improve early warning by picking up stories from the web about unexpected outbreaks of illness or rising food prices.  They have digitised newspapers going back 200 years, and can use this mass of past and current information to plot trends and identify anomalies.  The Google Foundation is funding a group to do this. Some warned the business side about technological over-simplification and programmatic naivety, and there was quite a bit of talk about forgotten emergencies and the complexity of war zones, also humanitarian principles.  Still, there are real successes and real potential here, which the WEF is trying to explore through its Humanitarian Relief Initiative.  There was a lot of discussion about finding better ways to link offers of help to assessments of need, using brokers and information networks.  One specific idea I put forward is to have a relief focal point inside companies, trained in the basics of humanitarianism.  The WEF and OCHA together have published draft Principles for Philanthropic Private Sector Engagement in Humanitarian Action. 
7. Risk and risk management were big topics more generally.  The WEF Global Risks report was widely reported in the press when it was launched earlier in the month.  The Report looks at the likelihood and impact of two dozen or so core global, systemic and inter-acting risks and recommends country level risk management officers, like those in corporations.  Watch out for epidemics, asset price collapse, Chinese hard landing, among others. I took a number of opportunities to remind people that this discussion and the humanitarian discussion were two sides of the same coin, and encouraged more communication.  Of course, the global risk discussion is all about probabilities – as is the humanitarian discussion.  I told the story from Ed Clay’s review of the volcanic eruption in Montserrat, in which the Governor would ring the observatory every morning, and ask ‘should I evacuate the capital city today?’, and be told, with perfect scientific rationality, that the best they could do was say there was an x% chance of an eruption in the next y months, which left him with a very difficult decision. 
8. In this connection, SwissRe hosted an excellent breakfast session on catastrophe insurance, with examples from Mexico, Turkey and other places (Ethiopia is another they didn’t mention).  This covers earthquake and weather events, including drought. 
9. More generally on business, there are public-private partnership initiatives springing up all over in the WEF, some of which we have been involved in, through the work of Michael Warner.  This was the theme of a private education meeting, of a private water meeting, and of the Tata Breakfast, which starred C.K. Prahalad, who wrote about the fortune at the bottom of the pyramid and has just published an article in the Harvard Business Review on the dislocations associated with development and the need for a new social compact for business.  The Indian business people talked about their partnerships not just in terms of the ‘licence to operate’ but also of ‘social trusteeship’ (the legacy of people like Tata and Birla). 
10. There were several sessions on aid, more than one featuring Bill Easterly: the way to get on a panel with Bill Gates is obviously to write a book critical of aid!  I passed round copies of my review. 
11. The G-20 lunch was small but interesting.  The general feeling was that the G-8 was a busted flush and would soon be overtaken by this or another grouping.  That view was not just held by non-G8 members.  Topics on the G-20 agenda this year include Bretton Woods reform, fiscal space, commodity prices, and exchange rate volatility. 
12. The GMO breakfast featured seven or eight short interventions by proponents and opponents.  The penultimate speaker was a top German retailer, who said consumers weren’t ready to accept GMOs, and the last speaker was from an advertising agency, who explained how to turn that around: keep the science in the background, blur biotech and genetic modification by reminding people that beer and wine use biotech in fermentation, tell warm, personal stories, show individuals who had benefited from new drugs or less exposure to pesticides.  Lester Brown was especially interesting on ethanol: their research suggests that half the US maize crop will go into ethanol in 2008: that’s 139 million tons or 20% of global production.  That’s twice the USDA estimate, because they are not tracking the explosion of distilleries, which are approved at state level.  There are already impacts of this diversion on maize prices, independently of drought effects this year, with a direct link e.g. to riots in Mexico when the price of tortillas went up 40%.  I’m told that 1/3 of East Anglia’s wheat crop is now used for ethanol.  Ethanol, by the way has an energy conversion ratio of 1.8:1, c.f. sugar cane (in Brazil) which yields 8:1.  The next frontier in GM is healthy oil (already on the market – the city of New York is said to be ‘transfat free’) and drought tolerance (new maize varieties available by 2012 will use 10% less water).  Coffee varieties which ripen simultaneously and require much less labour are close.  So is cotton in different colours. 
13. The water workshop used HDR as its text and was led by Margaret Catley-Carson from the Global Water Partnership.  I guess the objective was to make companies think about water shortage, but I have to say they mostly wanted to point the finger at agriculture, which consumes 75% of the world’s water and is often subsidised.  Water, they insisted, had to be properly priced – which is actually not a proposition we would dissent from, I don’t think.  I suggested a cap and trade system for water, similar to that being proposed for carbon, and was told very firmly that that was a bad idea.  Someone at ODI will understand better than me when pricing is preferred to quotas.  Is there a standard reference?  Another issue is that the discussion was all about trends (average water per person), not at all about shocks (climate change causing more droughts).  Not much traction for that idea, but one we should pursue. 
14. Cities: this was a two and a half hour workshop, consisting mostly of architects and planners brain-storming visions for the green and connected city of the future.  Why did we need pipes and wires to deliver services, when most buildings could be self-sufficient?  Why didn’t parking spaces find cars rather than the other way round (or rather tell cars where to find a space?).  Why could you press an elevator button and travel directly in a vertical direction, and not do the same horizontally?  What kinds of cities would be demanded by a generation reared on the click culture of the internet?  This was not fanciful, there were several mayors in the room (though not Ken Livingstone, who had to leave a day early for family reasons).  Toronto was much discussed as a model, and there are many cities in China being remodelled along new lines.  I talked a bit about how cities in poor countries grow (circular migration, community and ethnic bonds, a very large informal sector, very small budgets for services) but didn’t find much leverage for a conversation about livelihoods or inequalities or the social pressures of change.  Still, we should try harder to connect to the debate about cities, given the fact that 95% of the growth in population to 2025 will be in towns in poor countries.  The World Resources Institute’s annual report is on cities. 
15. Trade.  I only watched a panel discussion on television in the hotel.  Lots of positive signals, but Peter Mandelson saying the talks would fail if people demanded too much, which I took to be a way of saying there was not much to give on agriculture.  Is he right to say that the total of offers already made in this round exceeds the value of the Uruguay Round by at least a factor of 2? 
16. After all, it seems there was quite a bit on development.  We just need to make sure we define it broadly enough.