Monthly Archives: January 2025

UN Study Suggests: Investing in Nature Could Reduce the Billion-Dollar Expenses of Droughts

As droughts, exacerbated by the human-induced degradation of the environment, are projected to affect three-quarters of the global population by 2050, it becomes crucial to invest in sustainable land and water management practices to mitigate their financial impacts, which currently exceed $307 billion annually worldwide. This urgent call for action was highlighted in a new report unveiled today at the Conference of the Parties (COP16) of the United Nations Convention to Combat Desertification (UNCCD).

The report draws upon an extensive range of evidence and case studies from various countries, such as Chile, India, Jordan, Kenya, Spain, and Tunisia. It effectively makes the economic and business case for adopting nature-based solutions (NbS) to combat drought. These solutions focus on restoring ecosystem functions and soil health to improve water flow, storage, and supply, which are vital for human well-being. Such practices include reforestation, controlled grazing, and the restoration and conservation of watersheds.

Authored collaboratively by the United Nations University Institute for Water, Environment and Health (UNU-INWEH), the Economics of Land Degradation Initiative (ELD), and the UNCCD, with financial backing from the German Federal Ministry for Economic Cooperation and Development, the International Drought Resilience Alliance (IDRA), and the European Union, the report is a cornerstone resource for policymakers and stakeholders. Andrea Meza, UNCCD Deputy Executive Secretary, stressed the importance of sustainable land and water management to spur economic growth and bolster resilience against drought, increasingly trapping communities worldwide in destructive cycles. The ongoing discussions at COP aim for a pivotal decision on drought, urging global leaders to acknowledge the significant, yet avoidable, costs of drought and to champion proactive, nature-driven solutions within the limits of our planet.

The report points out that urbanisation, deforestation, and the excessive withdrawal of surface and groundwater, compounded by climate change, alter land cover and reduce freshwater availability. Consequently, drought is influenced by scant rainfall and how we manage our terrestrial and aquatic resources. Hence, managing the risks of water shortages and the cyclical nature of droughts and floods can be effectively addressed through appropriate policies, incentives, and investments in our natural assets.

The economic repercussions of droughts and related disasters are vastly underappreciated. Costs often escalate beyond national borders, affecting sectors like energy and health and impacting the broader economy. The implementation costs outlined by countries in their national drought and associated plans are only a fraction of the annual expenses incurred due to drought.

Investing in nature-based solutions reduces the impact of drought and holds substantial economic potential. For instance, an economy that integrates natural systems rather than undermining them could generate up to $10.1 trillion annually in business value and create as many as 395 million jobs by 2030. By tripling investment in these solutions by 2030, an additional 20 million jobs could be created. German Parliamentary Secretary Niels Annen emphasised that every dollar invested in these solutions can yield returns of up to $27, enhancing farmer incomes, bolstering value chain resilience, and reducing long-term economic costs. This underscores the urgent need to revalue land management and restore sustainable practices.

The benefits of nature-based solutions extend beyond drought mitigation; they enhance the income of land and water users and offer co-benefits for climate adaptation, biodiversity conservation, and sustainable development. These benefits are invaluable, regardless of drought occurrences, rendering such solutions a no-regret option.

The report concludes with several recommendations to harness the full potential of sustainable land and water management on a landscape scale. It highlights the importance of integrating nature-based solutions into national drought management strategies, securing land tenure and water rights, and strengthening local governance to facilitate on-the-ground changes.

In conclusion, the economic impact of drought extends beyond immediate agricultural losses, affecting entire supply chains, reducing GDP, impacting livelihoods, and leading to challenges like hunger, unemployment, migration, and long-term human security. Thus, effective management and investment in natural solutions are crucial to mitigate these effects, presenting an invaluable opportunity for both public and private investors to create sustainable livelihoods and economic prosperity in harmony with nature while combating the adverse impacts of droughts and climate change, particularly in developing regions of the Global South.

More information: UNU-INWEH et al, Economics of drought — investing in nature-based solutions for drought resilience, Economics of Drought Report. DOI: 10.53328/INR24CCD001

Journal information: Economics of Drought Report Provided by United Nations University

Prolonged COVID-19 is Financially Burdening Americans

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The tumult of the early 2020s brought on by the COVID-19 pandemic might have subsided. Yet, the SARS-CoV-2 virus continues to impose significant financial strains on some Americans, as a recent study by the University of Georgia revealed.

This study highlights how long COVID-19 is exacerbating difficulties for many individuals in managing their finances, hindering their ability to pay for necessities such as groceries and utility bills. The findings suggest that these financial challenges primarily stem from the loss of employment and reduced working hours, with the adverse economic impacts of the condition cutting across all socioeconomic levels.

Ishtiaque Fazlul, the principal investigator of the study and an assistant professor affiliated with both UGA’s School of Public and International Affairs and UGA’s College of Public Health, stressed the ongoing nature of COVID. He pointed out that long COVID continues to be a significant issue, causing financial hardships for people from diverse backgrounds. Fazlul noted that while the pandemic might seem like a past event, its long-term effects, such as long COVID, are a current problem affecting individuals’ financial situations.

The financial burdens of long COVID are particularly severe for those on lower incomes. The study’s data revealed that individuals in the lowest income brackets who suffer from long COVID are 10 percentage points more likely to experience food insecurity. They also face a higher risk of losing access to crucial utilities due to financial constraints.

However, even individuals in higher income groups are not immune to these challenges, as the study found similar financial difficulties across different income levels. The study utilised data from a comprehensive survey by the Centers for Disease Control and Prevention, which included responses from over 270,000 Americans across 40 states. Out of these, approximately 20,000 participants reported suffering from long COVID, with those in lower income groups and without college degrees being disproportionately affected.

Fazlul highlighted that any decrease in income could push low-income Americans into food insecurity and make it difficult for them to manage their bills. He also pointed out that while higher-income individuals might have the option to work from home or rely on savings, those with lower incomes often have fewer resources to fall back on, exacerbating their vulnerability during such health crises.

The study also suggested several policy interventions that could mitigate these challenges. These include providing more flexibility in work hours and telecommuting policies, which could help long-term COVID sufferers maintain their employment and access to health care. Enhancing healthcare services to better manage long-term COVID symptoms could also significantly improve patients’ quality of life.

Moreover, the researchers argued that increasing job security and access to credit could provide a financial safety net for those affected by long COVID. Fazlul concluded by emphasising the importance of addressing the economic impacts of long COVID, advocating for greater attention to this ongoing issue that continues to affect the financial well-being of many Americans.

More information: Ishtiaque Fazlul et al, Long COVID and financial hardship: A disaggregated analysis at income and education levels, Health Services Research. DOI: 10.1111/1475-6773.14413

Journal information: Health Services Research Provided by University of Georgia

Research Indicates That Sympathy for ‘Sad’ Bananas Encourages Shoppers to Minimise Food Waste

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At the University of Bath’s School of Management, recent research highlights an innovative approach retailers can employ to prompt consumers to purchase single, unsold bananas by attributing emotional characteristics to them. By placing a sign next to the bananas that depicted a banana with a downturned mouth accompanied by the message “We are sad singles and want to be bought as well,” researchers found that shoppers were more likely to feel compassion towards these fruits. This emotional connection, fostered by the visual appeal of the bananas depicted as being sad and abandoned, effectively motivated customers to rescue these lonely bananas from being wasted.

Published in the journal Psychology & Marketing, the study explored how emotional cues, precisely signs displaying ‘sad singles’ versus ‘happy singles’, affected the purchase of loose bananas and tomatoes. The findings were clear: signs that evoked sadness were significantly more effective than those showing happiness. This was quantified by a remarkable 58 per cent increase in the sales of single bananas per hour when the ‘sad’ sign was used, compared to a mere 5.4 per cent increase with the ‘happy’ banana signage. This stark contrast underscores the powerful impact of emotional engagement in consumer behaviour, particularly in reducing food waste.

Dr Lisa Eckmann from the Bath Retail Lab explained that this was the first experiment to compare the effects of happy and sad expressions on bananas separated from their bunches to examine sales impact. The experiment took place in a major German supermarket chain, REWE, involving the observation of the purchasing behaviours of 3,810 customers over 192 hours. This particular supermarket had previously labelled bananas as singles wanting to be bought but had not incorporated the emotional element until this study.

In addition to the in-store research, the study was extended online with several experiments involving more than 4,700 participants, replicating the setup for bananas and tomatoes and examining the influence of price discounts on purchasing decisions. Interestingly, while price reductions proved more effective than emotional appeals in some cases, the researchers suggested that anthropomorphism—or attributing human characteristics to non-human entities—remains a valuable, low-cost, and effective strategy for boosting sales and minimising food waste when price cuts are not viable.

This research aligns with broader environmental concerns highlighted by reports from the UN Environment Programme and various research groups, which note that single bananas are significant contributors to food waste and climate impact due to selective consumer behaviour. By identifying single bananas as a primary source of avoidable waste, the study provides practical insights for retailers and policymakers on addressing these challenges through creative marketing techniques.

Furthermore, Dr Eckmann hinted at the potential for a tiered intervention strategy where anthropomorphism could initially be used to increase the appeal of single items, subsequently complemented by price discounts if necessary. She also raised an intriguing point about the long-term effectiveness of such emotional appeals, speculating whether consumers might eventually become desensitised to the sad expressions on bananas.

As this research suggests, the emotional portrayal of produce not only taps into fundamental human motivations, such as the need for belonging but also presents a novel method for retailers to engage with consumers in a way that promotes sustainability. As indicated by the team, future research might explore under which conditions emotional expressions could be less effective, such as when the produce is deformed or slightly damaged. Thus, the journey of the ‘sad’ bananas offers a poignant reflection on our consumption patterns and the potential for empathy-driven marketing to influence them significantly.

More information: Svenja Gerecht et al, Anthropomorphic Sad Expressions Reduce Waste of “Single” Imperfect Food, Psychology & Marketing. DOI: 10.1002/mar.22145

Journal information: Psychology & Marketing Provided by University of Bath

Presence of Military Directors on Boards Enhances CEO Accountability for Subpar Firm Performance

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Principles derived from military service can substantially influence corporate governance, particularly executive accountability. A study published in the Strategic Management Journal underscored this, revealing that the inclusion of board members with military backgrounds could heighten the likelihood of CEO dismissals under circumstances of poor corporate performance.

The research, conducted by Stevo Pavićević from the Frankfurt School of Finance and Management in Germany and Thomas Keil from the University of Zurich, is part of a broader investigation into how directors’ backgrounds affect board decisions, specifically concerning the dismissal of CEOs. A detailed examination of director profiles highlighted a significant presence of individuals with military experience. While expecting to find military directors primarily in defence-related industries, the researchers were intrigued to discover their widespread presence across various sectors, prompting further investigation into the potential implications for board decision-making.

Pavićević and Keil posited that boards featuring military directors might be more prone to dismiss CEOs following subpar firm performance due to a different approach to executive accountability. To substantiate their hypothesis, they conducted a comprehensive quantitative study analysing director profiles and CEO dismissals across 865 public companies in the U.S. from 2010 to 2020. The study was complemented by interviews with military directors serving on these boards.

The findings from the data analysis and the interviews indicate that military directors are likely to attribute poor performance directly to the CEO and are more assertive in advocating for stringent CEO accountability, often leading to dismissals. Notably, the impact of military directors on CEO dismissal decisions was more significant when these directors were part of the board’s nominating committee. The researchers also discovered that military directors could influence the removal of even powerful CEOs, such as those who are major shareholders or have long tenures.

Through their interactions with military directors, Pavićević and Keil observed that the ingrained values of accountability not only shaped the directors’ decision-making processes but also encouraged other board members to adopt a stricter stance on CEO accountability, particularly in scenarios typically challenging for many boards.

However, the study also identified that the influence of military directors is somewhat diminished when the CEO also holds the position of board chair. This scenario, referred to as CEO duality, limits the effect military directors can have on CEO dismissals.

Pavićević highlighted a critical insight from their research: boards that aim to bolster CEO accountability might need to look beyond the individual backgrounds of directors and consider the overall board composition and structure. While appointing directors with military experience can enhance accountability measures, the effectiveness of such appointments is affected by factors like CEO duality. It is more pronounced when these directors are part of the nominating committee. This nuanced understanding of board dynamics and director backgrounds offers a strategic lens through which companies can better structure their leadership oversight and enhance governance efficacy.

More information: Stevo Pavićević et al, The role of military directors in holding the CEO accountable for poor firm performance, Strategic Management Journal. DOI: 10.1002/smj.3675

Journal information: Strategic Management Journal Provided by Strategic Management Society