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Shout-out to Duncan Green and Oxfam for commenting on our new book and calling, like Nicholas Kristof, for pilots of COD Aid. Best of all, Duncan noted (as have several others such as Owen Barder in this note among others) that many of the usual concerns about COD Aid (see our FAQs for some) apply as much or more to other forms of aid.
But on one big point we disagree: It’s not true that COD Aid has been tried before.
We like other incentive-based programs such as Output-Based Aid (OBA) and the European Commission’s MDG contracts, but they differ from COD Aid in important ways. For example, OBA is paid to specific service providers, while COD Aid addresses broader policy issues at the country-level; and MDG contracts involve pass/fail high-stake conditions, while COD Aid is based on an incremental indicator that is independently verified. In developing COD Aid, we built on lessons learned from these approaches (for more on evaluations of these approaches, check out this report on EC MDGs, this book on Output-Based Aid, and this book by Levine and Eichler), and we discuss how our approach differs on pages 36 to 38 of our book.
We thank Duncan and his colleagues and hope they continue to ask tough questions about the merits and impact of this and other aid approaches.