The falling costs of electronic fingerprinting make it a promising tool for cash payments of wealth from extracted resources. Photo: Dave Bleasdale (flickr)

Spy movies turn voices into passports, retinas into passwords. And modern fingerprint readers might be on the verge of helping developing nations turn oil revenues into cash transfers.

That's what Alan Gelb and Caroline Decker argue in a compelling round of research published this summer by the Center for Global Development. When people enroll in a cash payment program, their fingerprints or irises are scanned electronically; these are then used for identification before each future cash withdrawal.

It's called biometrics, and Gelb and Decker say it's a great way to fight fraud:

Evidence suggests that even well designed transfer programs experience 10-20 percent leakage, if not higher…We estimate that in a typical cash transfer program, savings from biometrics can cover initial costs in only 15 months and save an additional $60 million after five years. This is in addition to providing an auditable trail of the entire program and facilitating more efficient payment mechanisms.

Gelb and Decker also persuasively argue that biometrics can be great for voting and banking records, too. But they're especially interesting as a way for resource-rich countries to divvy up the revenues from their natural wealth. The researchers estimate, for example, that Libya's pre-war oil exports added up to an annual windfall of $6,250 for each of 6.4 million citizens.

Find a way to put most of that cash in the hands of residents, perhaps by way of a national trust fund, and you'd have some very nice working capital for up to 6.4 million business ventures or school tuitions.

There are two reasons resource-extraction cash transfers are a particularly promising application for biometrics:

Ongoing payments: The 15-month payoff period for biometric systems makes them ideal for large-scale programs that maintain long-term relationships with cash recipients. Resource extraction is a years-long process.

Decentralized wealth: Resource-rich nations have been dogged by what Gelb and Decker call "governance problems associated with the concentration of large rents in the hands of the state." By creating an efficient channel to spread that wealth to individuals, biometrics could make make it harder for future autocrats to consolidate power.

Even James Bond might be impressed by that.

Cash transfers let people choose what they want to spend money on, like these buffalo. Other purchases could be anything from farm machinery to food. Photo: andrew chang (flickr)

When people donate to charity, they don’t usually expect their money to go straight into the pocket of a needy person half a world away. But giving money directly to the poor is becoming a global trend. It's called a cash transfer and it's much more than a handout.

In principle, a cash transfer is a handout. There are usually limitations on what a recipient can spend it on — no alcohol or drugs, for instance — but the idea is that poor people know what they need more accurately than aid agencies, according to an article in The Guardian. Recipients are free to spend the money on what’s best for their families, which could include food, livestock or farm supplies.

The recipients also gain a bit of purchasing power, which they may never have had before. Being in charge of their own spending can teach people fiscal responsibility says Duncan Green, Head of Research for Oxfam Great Britain. It can also improve their self-esteem. On his blog, he writes that “cash transfers can be a good way to support and empower people.”

But can the system work? In 2006, Oxfam handed out about three months worth of wages to a group of Vietnamese farmers. They studied the results periodically over three years and their figures show that the poverty rate in that area fell from about 65 percent to about 40 percent. Among other things, Green says that the Oxfam team saw “improved community infrastructure, new opportunities for the youth and unemployed, increased community/social activities, [and] increased female participation” in community activities.

Though there are concerns that cash could do more harm than good, The Guardian notes that 45 countries have some sort of cash transfer system in place. And The Boston Globe points out that Brazil and Mexico have been using cash transfer programs since the late 90s. As more and more countries follow suit, this growing acceptance could mean that the world is ready to revamp its aid strategy.